<blockquote>"Apparently, outside Germany they haven't realized to what extent central bank financing of the (member) states erodes confidence in the value of the currency. This creates a dangerous incentive to continue to increase government debt."
- Helmut Schlesinger</blockquote>
'...Metallurgische Forschungsgesellschaft (Metallurgical Research Company), which was founded by the Nazis. The company issued bonds which the central bank of the German Reich used in the 1930s to finance the country's military buildup. In order to ease the burden on the government budget, the Nazis started up the printing presses..'<blockquote>'Schlesinger is now 86 years old. His hearing is not as good as it used to be, and he has to take off his glasses when he wants to write something down. But he's still on top of his game when it comes to monetary policy. The latest press reviews from the Bundesbank and economic journals are lying on his living room table. Schlesinger had hoped that the European Central Bank would unwaveringly pursue the same policies as the Bundesbank. But he has had his doubts ever since the euro started to stagger under the pressure of the current crisis.
"It was right to introduce a bailout package for Greece and the euro zone," he says, "but wrong for the European Central Bank to commit itself by showing a willingness to purchase government bonds."
In Schlesinger's opinion, this breaks a taboo commonly referred to in German as the Mefo bond. Mefo is an acronym for a shell corporation called the Metallurgische Forschungsgesellschaft (Metallurgical Research Company), which was founded by the Nazis. The company issued bonds which the central bank of the German Reich used in the 1930s to finance the country's military buildup. In order to ease the burden on the government budget, the Nazis started up the printing presses.
Schlesinger warns that something similar is now threatening to happen in the euro zone. "Apparently, outside Germany they haven't realized to what extent central bank financing of the (member) states erodes confidence in the value of the currency," he says. "This creates a dangerous incentive to continue to increase government debt." '
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The Lonely Fight of Monetary Dogmatist Axel Weber, 12/06/2010</blockquote>