Europe Slowly Sinks Further Into the Abyss of Timidity

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Europe’s grand experiment in negative interest rates is about to get a teensy bit grander, but not everyone is happy about it:

Analysts and portfolio managers said they remain skeptical about the efficacy of negative interest rates in stimulating growth and inflation. “The key difference this time is that the market is much less receptive to the idea of the ECB generating inflation than they were a year ago,” said Jack Kelly, head of global government-bond funds at Standard Life Investments.

….Markets anticipate that the bank will lower the interest rate it pays on overnight commercial bank deposits by 0.1 percentage point in March, to minus 0.4%, investors say.

It has long been taken as axiomatic that a motivated central bank can generate inflation whenever it wants. But is this true? In theory, it still is: if a central bank creates a vast enough pool of new money, eventually inflation has to follow. But in the real world, there are political limits to just how vast such an expansion can be, as well as plain old limits on the amount of nerve that central bankers have. So now the question is whether it’s still true in practice that a central bank can generate inflation at will. It sure looks like the answer might be no. And if that’s the case, there are also limits on the amount of monetary stimulus that a central bank can provide.

And if that’s true, then the only way out of Europe’s hole is with fiscal stimulus: lots of countries running big deficits for a good long time. But that doesn’t seem to be in the cards either. And so we’re stuck.

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WHO DOESN’T LOVE A POSITIVE STORY—OR TWO?

“Great journalism really does make a difference in this world: it can even save kids.”

That’s what a civil rights lawyer wrote to Julia Lurie, the day after her major investigation into a psychiatric hospital chain that uses foster children as “cash cows” published, letting her know he was using her findings that same day in a hearing to keep a child out of one of the facilities we investigated.

That’s awesome. As is the fact that Julia, who spent a full year reporting this challenging story, promptly heard from a Senate committee that will use her work in their own investigation of Universal Health Services. There’s no doubt her revelations will continue to have a big impact in the months and years to come.

Like another story about Mother Jones’ real-world impact.

This one, a multiyear investigation, published in 2021, exposed conditions in sugar work camps in the Dominican Republic owned by Central Romana—the conglomerate behind brands like C&H and Domino, whose product ends up in our Hershey bars and other sweets. A year ago, the Biden administration banned sugar imports from Central Romana. And just recently, we learned of a previously undisclosed investigation from the Department of Homeland Security, looking into working conditions at Central Romana. How big of a deal is this?

“This could be the first time a corporation would be held criminally liable for forced labor in their own supply chains,” according to a retired special agent we talked to.

Wow.

And it is only because Mother Jones is funded primarily by donations from readers that we can mount ambitious, yearlong—or more—investigations like these two stories that are making waves.

About that: It’s unfathomably hard in the news business right now, and we came up about $28,000 short during our recent fall fundraising campaign. We simply have to make that up soon to avoid falling further behind than can be made up for, or needing to somehow trim $1 million from our budget, like happened last year.

If you can, please support the reporting you get from Mother Jones—that exists to make a difference, not a profit—with a donation of any amount today. We need more donations than normal to come in from this specific blurb to help close our funding gap before it gets any bigger.

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