In "Central Bankers" I Trust

1- Do not forget Finland is part of the Eurozone :

"The European Central Bank will act quickly if the European policy response to the economic crisis becomes inflationary, ECB Governing Council Member Axel Weber said on Sunday. "I can promise you the European response to this crisis will not be inflationary -- that is why guys like me exist," Weber told a business conference."

First you will hear a lot of information flowing that will try to scare you about inflation and that central bankers are not any more in control (or sometime are part of some kind of malign association).

This could make you act and behave in an irrational way and could probably push you to buy overpriced assets, be it real estate, stocks or anything that has been inflated in the past 10 if not 20 years.

2- Independence underlined by serious bias for inflation fighting:

" "We are independent central banks and we know exactly when to start tightening balances. "What we see in the crisis response now is not inflationary," he said." But I can promise you once it starts looking inflationary we will tidy up the mess," he said. "

So here you will get a clear signal when inflation could become a threat. When the ECB will start tightening i.e start raising interest rates, it would mean that their indicators are showing that inflation is about to appear. At that moment, you would have to make very important decisions.

But for now, we are in the reverse situation, the ECB has not finish cutting rates and could in the year to come implement extraordinary measures to counter the existing threat and a real one: deflation.

3- Inflation, yes, but that is not today battle.

"Weber said that while he could not exclude the need for further policy measures to address the economic crisis if the situation were to deteriorate further, the focus should be on the already agreed steps, much of which were not implemented yet.

"I cannot rule out, if the situation deteriorates further, that there will be additional measures ... it is very hard to judge the overall impact this crisis has had on the economy," he said, and added: "Let's first implement all that has been decided.""

This crisis should not be underestimated. Lots of folks have been accustomed to have a quick recovery after 1-2 years of benign global recession. This time it could be worse, no one can predict now what, and how long it would take to have a global economy growing at sustainable levels .

But the transition will have a price...that is : asset deflation.

It doesn't mean that the world will go into the chaos but instead it would have readjusted itself toward a better foundation. A new financial framework is being put in place, that is robust (better regulation and supervision) and reliable (not going from one bubble to another, where greed is the prime factor).

So what we need is some lesson learned and the capacity from our financial and political leaders to look further away and have a vision for a better world.

The idea that the system can only be cured by debt is advising what has put the U.S. economy the way it is. Irresponsible creditors giving credits to irresponsible debtor.

Government, in a Keynesian way, will use debt to keep unemployment from catastrophic levels and put a floor to the exceptionally fast deteriorating GDP. I would like to note that the Finnish government has clearly chosen this path, albeit a measured one.

And then hearing that central bankers will "wiped out" debt by creating inflation is first, in total contradiction with their mandate and second will promote what is called "Moral Hazard" i.e rewarding the bad economical agents and punishing the responsible one, the good economical agent that do save before buying assets and do not buy or invest if they judge they cannot afford or think it would be a bad investment.

So "in Central Bankers I trust", would be my last word, since they have the power to put us in a stable, sustainable and responsible world. They can commit mistakes, they can underestimate a problem, but what we want from them is the capacity of acting at the most crucial and critical time, and today we are in such situation.

There is no alternative, since the other path will probably put us back few centuries ago.