Austria's Central Banks Says More QE is Counterproductive


Dissent within the ECB over QE is at unprecedented levels and rising. But what does "counterproductive" really mean?

Several members of the European Central Bank’s Governing Council are against the ECB buying more bonds. Add Austrian central bank Governor Robert Holzmann to the list.

Holzmann says Draghi’s QE Policy Is Counterproductive

“The view was that the attempt to inject even more liquidity isn’t good, even counterproductive,” Holzmann told Austrian public TV broadcaster ORF in an interview. “Several governors didn’t consider this proposal the right policy for the purpose.”

There are concerns about the economic impact of the policy, which ECB President Mario Draghi flagged in a speech at a conference in Sintra, Portugal, without first discussing it in the Governing Council, Holzmann said.

“Draghi’s behavior wasn’t that of a person inclined to consider divergent views,” Holzmann said.

Holzmann was among several governors who dissented publicly with the policy after the ECB’s last policy meeting. Bundesbank President Jens Weidmann, Draghi’s most prominent and longstanding critic, previously told Germany’s tabloid Bild newspaper that the ECB delivered a package that was out of proportion with an economic prognosis that “isn’t that bad.” Dutch Governor Klaas Knot also released a statement explaining his opposition.

Negative Rates and More QE are Destabilizing

QE and negative rates are destabilizing forces.

Negative rates are a drain on bank profits and the Eurozone banks are in dire straits.

Does that make Draghi's efforts counterproductive?

The answer depends on another question.

What's Draghi's Goal?

Before one can state a policy is counterproductive, one must first understand the goal.

What is the goal?

If the goal is to stabilize banks and promote more lending, Austria's Holzmann, Germany's Weidmann, and the Netherlands' Knot are surely correct.

Draghi's Brilliant Plan

If Draghi goal is to bankrupt the banks to get Germany to agree to commingled budgets and an entire Eurozone-wide bank bailout, then Draghi's plan is brilliant.​

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What the Hell is the ECB Doing?

I discussed the setup and dissent on October 3 in What the Hell is the ECB Doing?

Mario Draghi proposed investigating MMT, a combined Eurozone budget, and "QE for the people" even though these ideas are counter to the Maastricht Treaty of 1992 which formed the Eurozone.


  • That's what it takes to save Italy
  • That's what it takes to "preserve the Euro".

Whatever it takes baby, and that's what it takes, not to save German banks, but rather Italian banks and the Eurozone itself.

So, is Draghi's QE counterproductive or not?

Mike "Mish" Shedlock

Comments (5)
No. 1-4

It is pretty obvious that if you try something and it doesn't work, then you try more and it doesn't work and then you try more and it doesn't work - you can safely conclude that you haven't tried enough - so try again. This rule works perfectly right up until it doesn't.


Great book by Barbara Tuchman, The March of Folly, chronicles bright people doing stupid things to their own detriment. She died in 1989. Funny how she's gotten so much smarter since I first read her. I'd recommend Draghi read her, but it's obvious this man is on a mission, doing whatever it takes, over and over and over and....


In Draghi's warped mind, in his elitist bubble yeah he's right. That grand vision of one fiscal and monetary union is gone, we're witnessing the cracks getting bigger. These dissenting voices don't surprise me at all. They are hoping (or pleading) for a mea culpa after the collapse. Because they know...they all know, this isn't working and the bill has come due. Just watch the squirming and fingerpointing when this whole fucking thing comes crashing down. 'Whatever it takes' was a the biggest larceny in recent history and after a decade of robbing savers and rewarding reckless lending, there's nothing left to do but crash and burn. Especially these voices from Weidmann (Germany) and Knot (Netherlands) are to be watched. Once Germany goes, Holland will as well. I know it's wishful thinking on my part, and I certainly don't want an anarchy or violence to break out, but I just hope this horrid union comes to and end and that from the ashes, the old Europe rises. As before, we continue to be neighbours and we'll work together...but free from the shackles of a failed powergrab by elitists.


Draghi's Brilliant Plan - This is what it looks like to me.

Could nations disappear as a result of failed finances? It has happened before. Scotland willingly joined the Union of the united Kingdom after their finances fell down the tubes. Was that part of a Machiavellian plot to take over a country without fighting? I cant say it wasnt.

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