Silvio Berlusconi - the former Italy prime minister and a leader of the parliamentary majority at the moment, is the first of EU leaders to officially use the phrase "printing money" as a "decision" for debt crisis. Up to now the money-print has happened, but under other names (1% interest, LTRO, QE, ECB buying bonds). But no one called it "money-print". This phrase was forbidden. But up to now. Today Berlusconi directly said ECB must "print" more money to put the crisis under control...

Do you think it is a new idea of Silvio, that he never had in his mind when was in power? Obviously no. This is exactly what he has thought while being in prime minister's position. But more important is that is exactly what his successor Mario Monti and much other EU leaders are thinking.

Berlusconi is not out of politics. His party is still the leading in Italy and has most of the deputies. So this is a public speech by a still influential Italian politician. In addition Mr Berlusconi has plans of becoming a President of Italy in future. So when he talks these are not unimportant words.

On Monday we will see what will be the reaction of the markets on this funny statement.

But out of words more important is the reality. No EU leader of troubled country sees the real decision. All they are seeing just the easy decision - printing money and devaluating the Euro.

But is this a decision? Is inflating everything and crushing the economy a decision? Is there an instance in history when inflation was a decision and not a problem? I don't remember such a case.
There is a joke: "If you think money print is a decision look at Zimbabwe..."

It is good for EU leaders to look in this direction... They will see the beautiful 100 trillion dollar note that has become a souvenir around the world.

Inflation is not a decision, it is another problem that will be added to the current problems. It will not resolve them. It will upgrade them...

And the main problem with inflation is not just in Berlusconi words. It is in real ECB policy that holds low interest rates and that has printed about 1 trillion Euros in a few months time just to save indebted governments. And reached no result... Never the less EU leaders are thinking that the problem was... not enough printing... And Italy, Spain and Greece are besieging the German chancellor Angela Merkel who is  the only major EU leader that opposes the money-print and insists on austerity.

In fact no indebted EU country makes real austerity. They criticize the austerity as a "non working" strategy. But the non-working strategy obviously is the lack of austerity. The reason they don't cut enough spending is that all they are hoping the inflation will erase the debt. They are expecting a money-print and rely only on it, and not on hardworking and savings. That is the Behavior of Monti, Rajoy, and of any of the changing Greek prime-ministers. Berlusconi has said it directly, but all other politicians are thinking it.

The denouement of this Euro-drama is close. I entirely support Berlusconi in his idea to kick Germany out of Euro-zone and decide all the problems by a monetary expansion from ECB. That is exactly what must be done. Germany must revive its Deutsche Mark protecting this way itself from money-print adventures. And then we can invite some Zimbabwean leaders to teach the rest of Europe how to rule better its economy... :)))

Dobri
June 2nd 2012