Federal Reserve Launches Blistering Attack On The ECB In New Paper
This is hilarious : the one that is pretending that the crisis is over is talking to the one that still did not realize that there is a crisis 
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The US Federal Reserve has launched a blistering attack on the European Central Bank, calling for quantitative easing across the board to lift the eurozone fully out of its slump.
In a rare breach of central bank etiquette, a paper by the Richmond Fed said the ECB is hamstrung by institutional problems and acts on the mistaken premise that excess debt is the cause of the eurozone crisis when the real cause is the collapse of growth, which has, in turn, spawned a debt crisis that could have been avoided.
“The ECB lacks a coherent strategy for creating the monetary base required to sustain the money creation necessary for a growing economy,” said the paper, written in July by Robert Hetzel, the bank’s senior economist.
It called for direct action to buy “bundles” of small business loans, as well as “packages of government debt” across EMU states, including German Bunds. “The ECB will have to be clear that surplus countries will experience inflation above 2pc for extended periods of time,” and must be prepared to “explain to the German public” that this is desirable.
“Most important, the ECB needs to start by recognising that Europe’s problems are more than structural. It needs to stop using monetary policy as a lever for achieving structural changes and to end its contractionary policy.”
While the paper reflects the views of the author, there is no doubt that many Fed officials feel the same way.
The ECB brushed aside the advice on Thursday, leaving the main policy rate at 0.5pc. The decision to sit tight comes despite shrinking liquidity in the eurozone and a credit shock imported from the US, and amounts to “passive” tightening.
Mario Draghi, the ECB president, said there were signs of returning confidence after six quarters of recession, pointing to “gradual recovery in economic activity in the remaining part of the year and in 2014”.
The ECB has so far resisted calls from the International Monetary Fund and the OECD for more stimulus to ensure that recovery reaches “escape velocity”.
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