The European Central Bank just announced that it would buy an unlimited amount of government bonds issued by the European Union’s 17 member states in order to save the Euro and avoid financial disaster. A shell game, a Ponzi scheme.
Up to now the Central Bank has been playing the old kick the can down the road game. The Central Bank was lending Euros at 0.75% interest to member state banks so that they would in turn buy their own government’s bonds fetching 6% or more in interest. Paper profits to prop up the banks’ balance sheets to avoid bankruptcy and liquidation. It was a short term fix to shore up the banks and hopefully to lower the interest rate demanded by skittish investors.
With this new move the Central Bank has now become a direct investor. It is lending money to itself.