The Central Banks have not finished their reflationary job yet

By Carlo Pelanda*

The Central Banks did their job, though the ECB not fully yet, and provided the globe with tons of liquidity being able to restore and keep decently high the confidence in the market. Technically and in theory they cannot do much more. Now the responsibility of boosting global growth passes to the western politicians. In fact China and other emerging economies show that to become less dependent on exports is a long way to go. The global demand still needs the drive of the American and European locomotives. The Obama Administration should make a fiscal policy less uncertain and more friendly toward the small business. The main national economies in the Eurozone – France, Germany and Italy – should start to change their inefficient models in order to stimulate growth – investments, in particular - in their stagnant internal markets. Can we hope that a pro-market season of reforms will rapidly take place in the West? I doubt it. Therefore the Central Banks has not finished their job yet and will have to explore new inflationary territories in order to compensate the political inertia. Dangerous.

*Prof. Carlo Pelanda, www.carlopelanda.com, is Director of the PH. D. Program in Geopolitical Economy, Marconi University, Rome, and Member of the Academic and Policy Board of the Oxford Institute for Economic Policy (OXONIA), Oxford.