The European Central Bank announced Thursday, April 2 a new lower interest rates by 25 basis points. The rate stood at 1.25% its lowest level ever.

Before this event, always well publicized, it seems necessary to reconsider the operation and the dangers of the policies of central bankers in recent years. Why not also offer some ideas about this, so as not to revive a financial crisis as violent. The G20 should also be an opportunity to discuss monetary policy and the role of central bankers.

The reasons for the crisis are now unanimously. Excess global liquidity has led to real bubbles in many asset classes: property American, Spanish, French or

But the Central Bank of England recently announced it would buy the "good of the British Treasury. Ditto for the EDF does not do the same very soon - it has even begun.

These practices are akin to money creation ex nihilo "and the famous" printing money "phenomena as fought by those central banks. In the short term, the decline in current inflation and recession that we live does probably no alternative to these institutions. But in the medium term, the risk is great to see a money supply exploding, weakening a little capitalism and balances of our economies.

The danger is not that a rise in inflation of staple goods. The rate of capacity utilization is low and unemployment is high. Asia also offers imported disinflation on many consumer products (TV, textile ...). This is another inflation threat. More stealthy, less media, "inflation" on financial assets or real estate today is just as dangerous. We have enough trouble in recent years. But nothing guarantees that inflation will not return: when risk aversion is reduced, when economic agents invest again on equity markets, commodities or real estate.

Keynes and Lenin.

Recall Keynes, who, about the "cost inflation", told that Lenin would have said that the best way to destroy the capitalist system was to address its currency. (Keynes' Economic Consequences of Peace ").

By a continuing process of inflation, governments can, secretly, unbeknown to all, confiscate a large share of the wealth of citizens. This confiscation, moreover is purely arbitrary, impoverishing the many to benefit a few, it enriches.

The finding of this arbitrary reallocation of wealth affects not only safety but also public confidence in the fairness of the current system. Those who take advantage of the process beyond their merits or their expectations or desires, become "profiteers," objects of hatred of the bourgeoisie impoverished by inflation as much as the rancor of the proletariat. As inflation continues and that the real value of money varies greatly from month to month, all permanent relations between lenders and borrowers, the real foundation of capitalism, become so disturbed that they lose almost all meaning. The pursuit of wealth in the quest degenerate lottery game.

At this point Lenin was right. There is no more subtle, safer and more discreet to overthrow the existing order of society than to corrupt the currency. This process involves all the hidden forces of economic side of destruction, and he does so less than a man in a million is able to predict.

So there is good reason to question the quality of monetary policies pursued by the various central banks. Remember that the main function of the European Central Bank is to ensure monetary stability. Function defined by section 105 of the Treaty on European Union: "The main objective of the European system of central banks is to maintain price stability. Without prejudice to the objective of price stability, the ESCB shall support the general policies in the community ... ".

Expansionary policies

However, the central banks of OECD countries have undertaken structural expansionary policies since the early 2000s. Interest rates applied by monetary institutions were almost always lower than the rate of growth. Rates "low" conducted by central bankers, despite the massive growth of loans to households (on average between 8 and 12% more each year), despite rising house prices (10 to 20% annually) Despite the increase in global monetary base (over 10% annually).

All this was possible because inflation (based on prices of consumer goods) has remained all these years relatively stable and low, allowing monetary Institutes completing their "objectives" of targeting inflation at around 2 % ( "inflation targeting"). In emerging markets, central banks have massively supported the dollar, to avoid an excessive rise of their currencies and boost exports. This has also greatly contributed to the increase in global liquidity.

Central banks have therefore failed in their objectives. Supporters of the quantity theory of money (money is a stable function, independent of production) or neo-Keynesian (endogenous money in the economy), it seems that central bankers are directly responsible for the magnitude of the crisis for financial reasons explained above. Allan Greenspan (former Fed chairman until 2006) indeed recognized before the budget committee of the American ideological errors responsible at least in part, "Financial Tsunami".

Given this situation, a question: how can we rethink the role of central banks? "

It might be interesting to review the "inflation targeting" led explicitly by the European Central Bank or implied by the Fed and the Bank of England. The measure of inflation as calculated is also simplistic and misleading: it does not take into account changes in asset prices and capital movements. Instead of targeting inflation, several macro prudential indicators (some of which have already been raised in 2002 by economist Michel Aglietta) should be monitored and targeted:

-The evolution of credit in relation to the growth of wealth (credit to GDP ratio) -Rate debt and the burden of financial expenses in the income of private agents -rate government debt -the liquidity position of banks -the expansion or shrinkage rate credits for companies in the financial markets -the evolution of housing prices -the evolution of commodity prices -the evolution of exchange rates and capital flows

While continuing to follow the traditional measures of inflation.

Another factor is the definition of M3 (indicator for monitoring the money supply by the ECB), which seems too restrictive. It now includes notes and coins in circulation, demand deposits, time deposits of less than 2 years and UCITS money. But why not consider the actions - the vast majority is liquid and can be sold at any time - as a currency as such? The evolution of financial markets and their significance make it necessary to redefine what is potentially a new form of currency.

In our view, once the assets are liquid, they are part of the money as they perform three functions: transaction, precautionary, speculative.

As explained by Michel Aglietta "one after the other, the OECD countries have noted that there was no relationship between changes in monetary aggregates and that of the conventional price index. While price volatility is very low, the monetary aggregates is affected by the dynamic management of financial portfolios.

In addition, during previous crises, central banks have tended not to take the cash they had massively injected to stimulate economies. It will be necessary not to repeat past mistakes, ascending rates quickly from the end of the crisis, and destroying the money supply (reduction in central bank balance sheets).

Moreover, central banks in emerging countries will agree to see the dollar losing its value - since the budget and trade deficits the United States - to avoid the massive growth of foreign reserves and rising global liquidity .

Finally, the development of securitized products has allowed commercial banks to transfer a significant portion of their risk to structures much less regulated and are beyond the powers of central banks. The Monetary Institute will do everything to reduce the securitization or to control much more easily hedge funds, pension funds and institutional investors. Beyond the standard tools of management of central banks, it is now necessary to take into account the evolution of "marketization" of financing and the volatility of our economies.

Last but not least, global governance of central banks should be considered as quickly as possible given the development of the fluidity of capital and the emergence of new economic powerhouses.