This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Eurozone to Fight Putin With Cheap Euros

Stocks in this article: INTC FB BBY

NEW YORK (TheStreet) -- The eurozone speaks softly to Russian President Vladimir Putin, but it carries a big stick in the form of the euro.

Europe now plans to deploy that stick by printing more euros.

European Central Bank President Mario Draghi is warning that the ECB will soon try to head off deflation with "further stimulus," more monetary easing aimed at cutting the euro's value relative to the dollar.

As a result, the euros that Putin is getting for his oil and gas will soon be worth less, and European governments will have more to spend on propping up the Ukraine. Or even buying renewable energy assets that will make that oil and gas worth even less.

But that's not why the bank is acting.

Europe faces the same problem America does and is coming to the same conclusions Ben Bernanke found to deal with it.

A little inflation is a good thing. There's something below a zero interest rate.

The reason for all this, I believe, is simple. It's to be found deep in Intel's (INTC) fabrication plants and Facebook's (FB) data centers.

It's deflation.

Technology causes deflation naturally. Products get cheaper and more capable all the time. That means a dollar or a euro goes further.

Deflation is good at Best Buy (BBY), but it's bad for an economy. As prices go down, commodity prices and wages fall faster. When prices rise slightly, on the other hand, people may get raises and there's more monetary oil in the financial engine. Thus, price stability today requires near-constant intervention in the market, pumping in new currency to make up for technology's deflationary effect.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 18,030.21 +6.04 0.03%
S&P 500 2,081.88 -0.29 -0.01%
NASDAQ 4,773.4720 +8.0480 0.17%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs