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.​

Image placeholder title

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

Dutch Central Bank President Cites “Financial Bubbles”, Voices Strong Opposition to QE in TV

Mario Draghi has strong opposition to his QE program from two sources: German central bank president Jens Weidmann and Dutch central Bank president Klaas Knot.

ECB Running Out of Bonds to Buy for QE

ECB rules say QE bond purchases must be weighted according to size of the economy. That means German bonds are the preferred issue.

Mindless Central Bank Lemmings Head Towards Cliff

John Hussman had an interesting post this week on a The Decade of Zero and its Chaotic Unwinding.

Jim Bianco Says This Is QE, Like Y2K

In contrast to Hussman, Jim Bianco, at Bianco Research says the Fed's repo actions are QE.

Central Bank Group Think: Convince the Public More Inflation is Coming

Chicago Fed chief Charles Evans is worried about the lack of inflation primarily because he is clueless about where to find it. As further proof of his economic illiteracy, Evans says "Low inflation expectations keep inflation down".

ECB's Counterproductive QE: Whatever It Takes Morphs Into "As Long As It Takes"

The ECB cut interest rates 10 basis points to -0.50% and promised more QE. Trump is howling.

Central Bank Hubris Bubbles to the Surface

Albert Edwards at Society General commented today on Central Bank Hubris, deflation, and the flattening of the US yield curve. Here are some email snips.

Draghi Open to MMT and a People's QE

Despite being against the Maastricht Treaty on which the Eurozone was founded, Dragihi want to investigate MMT.

America First, Dollar Last Says Deutsche Bank

Deutsche Bank says Trump's America First policy puts the dollar last. BMO predicts a flattish dollar.