Bundesbank President: “Helicopter Money Isn’t Manna Falling From Heaven”

Not everyone was delighted by Mario Draghi’s decision on March 10 begin monetizing corporate bonds: chief among them was Bundesbank president Jens Weidmann whose opposition to unorthodox monetary policies is well known, and whose “Northern Block” was among those voting against the ECB’s QE expansion (Weidmann himself was not among those voting last week). Of course, complaining about it does not mean stopping it, and for three years now the “Germans” on the ECB council have complained loudly even as the ECB is on track to double its balance sheet in the next few years.

And, as is customary, after every dramatic easing step by the ECB, Weidmann takes to the media to express his frustration with the ECB’s ever bolder attempts to recreate Weimar, something the German press has repeatedly made clear is not welcome:

According to Bloomberg, this time Weidmann preempted the next central bank step, namely helicopter money, and warned against starting a discussion about handing out cash to stimulate growth, Funke Mediengruppe reported, citing an interview.

“Helicopter money isn’t manna falling from heaven, but would rip huge holes in central bank balance sheets,” Weidmann, who heads Germany’s Bundesbank, said, according to the newspaper. “The euro area states and taxpayers would pay the bill in the end.”

Dear Jens: in case you have still failed to grasp the greatest stealthy wealth transfer in history, one from the middle class to the 1% rent-seeking financial oligarchy, that is precisely the point!

Weidmann, aware how the ECB’s game ends, warned that “instead of suggesting ever more reckless monetary policy experiments, it would make sense to pause,” Weidmann was cited as saying in German. “Monetary policy is not a panacea, doesn’t replace the necessary reforms in individual countries and won’t solve all of Europe’s growth problems.”

No, but it does kick the can so Europe’s dysfunctional governments, whose bonds would be trading with double digits yields if it wasn’t for the ECB’s backstop, can pretend all is well and avoid making any difficult decisions as they all know the moment the apple cart lans over there would be a groundswell in anti-establishment sentiment and the legacy status quo would be swept from power, something which would also impair the ECB, and Europe’s banking system. After just look at the “unprecedented” rise of Donald Trump.

Weidmann was also cited as saying he was not convinced on the whole by the measures the ECB announced this month. “I’ve always said the effect of ultra loose monetary policy gets weaker the longer it lasts. At the same time, the more you put your foot on the gas, the bigger the risks and side effects become,” Weidmann said.

Separately, Weidmann said he doesn’t think that eliminating the 500 euro note would “noticeably” reduce criminal activity. Such a move would also present a logistical challenge, he said, according to Funke.

It will indeed, however, if it means eliminating 30% of the physical European currency in circulation…