Who benefits from the money glut of the ECB?
The European Central Bank (ECB) has opened all the floodgates. Interest rates remain at a historically low level and in addition money printing machines are now running hot. Of course, this is only symbolic, because billions have long been shifted back and forth with the click of a mouse. As only virtually available money is all this no problem.
Euro banknotes
Real printed money does not exist at all in such unmanageable quantities. If, at some point in the future, many people should come up with the idea of actually taking all their money out of the bank, in bills and coins, the entire banking system will be finished in one fell swoop.
The flood of money
Now the ECB has actually decided to buy 60 billion euros worth of government bonds. And every month from today until at least September 2016. An unimaginable 1.1 trillion euros are supposed to enter the cycle this way. This flood of money is really insane and for many observers the beginning of the unstoppable end. The ECB’s actions have had nothing to do with real value creation for a long time now.
According to its own statements, the ECB wants to prevent the threat of deflation, the ever faster spiral of falling prices, which is already visible today, and in turn stimulate the economy. A noble goal. Whether this can be achieved by such measures is a matter of dispute among scholars. The next months will have to show it.
Winners of the money glut
Who wants, who has not yet? Money is available in abundance. That’s good, many will now rejoice. But just as in a debt money system – like ours – new money can only be created if new debt is created in the same amount, there are winners and losers in the money glut of the ECB. This is only not so gladly hung on the big bell. So before everyone cheers now, they should first clarify their position in the Euro game.
As Bank one definitely belongs to the Winnern. Thanks to historically low interest rates of just 0.05 percent, new money can be borrowed from the ECB at virtually zero cost and lent on for high interest rates. And now the ECB is generously buying up government bonds that have been lying heavy in the vault. With it it becomes really time to build a new money memory, for the whole coal. A real win-win situation for the banks.
As Companies one is also Winner in this game. Loans from the bank are currently available at unbeatably low interest rates and, due to the decline of the euro, exports are also becoming more and more worthwhile.
As stock investor one can also only win. The DAX has only known one direction for months, and that is upwards. New highs are tested every week. After the announcement of the ECB to flood the market with money, the upward movement even gained momentum.
Even as a Borrowers can currently look forward. If one would like to acquire for example a real estate, then the interest rates for such credits are likewise extremely favorable. However, the real estate markets in many cities are already boiling, so that the prices for houses and apartments have already risen sharply. The selection of the correct real estate location is therefore crucial, if one would like to bring in at the end a net yield.
The loser
So far there are only winners. Banks, companies, investors on the stock exchange and home buyers – all can be more or less happy about the floods of money from the ECB tower in Frankfurt’s banking district. So there are only winners? Of course not. One is always the stupid one and that is – as so often also in this case – the small saver.
Small savers, who want to put aside a little money for retirement or larger purchases, are the Losers. There is virtually no interest on savings accounts or call money accounts any more. And if they do, they are so low that they end up being eaten up by inflation. Life insurance can also be forgotten. The guaranteed interest rates of insurance companies, which are usually disproportionately invested in bonds, are not worth investing in this form of investment. Pension funds are also no longer yielding any returns.
Nothing will change in this situation for the foreseeable future. Many a plan for the end of one’s life is therefore likely to falter.
The small savers pay with their not received interest the money glut of the ECB. This expropriates you a little bit more every day and thus bleeds for the euro/financial crisis. Unlucky. Being poor has always been very expensive.