If you haven’t been paying attention the Fed said Tuesday “shit is all fucked up and bullshit and even though there’s loads we could do to diminish the shit and the fuckedupness we have decided against it.”
The ECB said today “shit is all fucked up and bullshit and even though there’s loads we could do to diminish the shit and fuckedupness we have decided against it, in fact we are going to make things worse.” See this tweet from Joe Gagnon:
The ECB have announced that if you raise taxes, and in doing so raise prices, they will respond with tighter monetary policy, just as people like Scott have feared.
Higher taxes reduce demand other things equal, this is easy to understand as everybody understands taxes making them poorer. That doesn’t have to be the case of course, because a the central bank can accommodate this. This is especially important if tax is increased on final prices because it will look like high demand is pushing up prices even though taxes are in fact reducing demand.
Let me repeat, the ECB is combining tight fiscal policy with tight money, they are quite literally making poor people poorer. They are lunatics! Or Monsters…Honestly, Trichet and now Draghi are causing an epic amount of suffering in Europe.