2012-06-09

In the end, intensive money printing will be the order of the day

“The guardians and architects of the European Monetary Union have shown a complete lack of understanding of the fix they have created for themselves, as they are trapped inside a structure that absolutely cannot work under its current setup. However, they refuse either to admit defeat or to ensure victory. As a result, the world continues to be caught in a no-man’s land where Europe is full of potential live financial hand grenades, and yet the ECB is hesitant to use the preferred method for disarming them, i.e., the printing press.”

That is Bill Fleckenstein’s take on the current state of the European sovereign debt ciris.  In his latest weekly column for MSN Money, Fleckenstein argued that euro zone officials remain far behind their counterparts in the U.S., U.K., and Japan with regard to their policy response to the financial crisis.
“Obviously, variations of this scenario have been at the root of the European financial psychodrama for going on two years now,” he added. “That will continue to be the case until either the euro totally fractures amid some sort of unimaginable chaos or the European Central Bank becomes extremely bold in its money printing.”

Fleckenstein – one of the more prominent long-time gold bulls – later stated that “In the end, intensive money printing will be the order of the day, but there is no way to determine ahead of time how bad the crisis is liable to get first, as measured by which markets might be pummeled the most. It is simply unknowable…But, as I have just noted, using the U.K., Japan and the U.S. as examples, any fool can see that, in the current environment, a powerful printing press creates an oasis of calm, if only temporarily.”

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