Money supply in Europe has been in an astonishing uptrend for the past 20 years now, driven by extremely expansionary monetary policies. The latest innovation in this field was introduced in late 2013, when the ECB announced that it was ready to cut interest rates into negative territory. More recently, the incumbent ECB President, Christine Lagarde, has signalled her intentions of further lowering rates. However, this move might be short-sighted and potentially pushing the ECB further into a corner from which it is becoming extremely difficult to get out, without massive market turmoil. Policy objectives First of all, it isn’t at all clear how negative rates would help the ECB pursuing its monetary policy objectives. The ECB has as its main target price stability above all. This is quantified as an inflation rate below but close to 2%. It is debatable whether the ECB was successful in its objectives so far, as “close” is a vague term. The yoy monthly inflation rate a...