Dear Ms Lagarde, ECB money murder hurts

Dear Ms. Lagarde, welcome to the Netherlands. In the meantime you seem to be making a habit of visiting our country. Nice. Allow me to tell you something about the Netherlands, to act as a kind of economic guide, so to speak. The Netherlands is in the Top 10 of the most innovative countries in the world. Not just at the moment, but actually every year. We are almost always the best performing euro country in that ranking.

On the lists in which countries are ranked by quality of life, you will find us in the Top 3. And again as the best performing euro country. This postage stamp on the North Sea has also structurally settled in the list of countries where, according to the residents, it is a happy place. Not that our country is perfect and has no problems, far from it, but still. The fact that we are nevertheless satisfied may also have something to do with the fact that we belong to the group of least corrupt countries. France and Italy, to name your two favourites, are located in places 22 and 42 respectively, but that aside. Did I mention that our income, both median and average, is among the highest in the world? Not. Okay, with this one then.

Policy aimed at guaranteeing freedom
All those beautiful places don't come out of the blue. No, they are the result of decades of policy. Policy aimed at, for example, guaranteeing everyone's freedom, an excellent basis for innovation to thrive. Innovation that is also lush, because uncertainty about economic development is limited. Something that in turn has to do with healthy public finances (our motto is 'just act normal, that's crazy enough'), a strong currency (which we were proud of), low inflation (good) and in the extended from all that low interest rates.

There are also countries that have tried differently. The mix of ramshackle public finances with skyrocketing budget deficits and government debt, too, and cheering policymakers when the already weak currency weakens even more and inflation is high, did not turn out to be such a success. What? You want samples? Italy, Greece, Spain and yes, also your home country, France, come to mind.

Laughing at countless examples
We economists, you are not, hence 'we', often talk about correlation not being causative. Ah, how we can laugh at countless examples of it. I think I like the example devised by the undersigned myself. Germany, Switzerland, Austria and the Netherlands are not among the strong economies in which foreigners have absolute confidence, because they speak (semi-)German in all those countries. No, that all those countries had the same currency-inflation-interest-rate mix as the Netherlands for decades, which I just talked about, that is much more plausible.

Perhaps during your visit to the Rijksmuseum (beautiful art, eh, also made possible by the freedom and wealth, which in turn is the result of… well…it's clear by now I think) and the office of De Nederlandsche Bank, your hosts ask for more details. They can also tell you, after all, it is in our economic DNA (yes, the DNA of DNB, another term I have coined, is strong currency is good, low inflation is good). Money murder is also something that comes from my linguistic quiver. It pains me to see that the ECB is guilty of this under your leadership.

Bunch of sensible monetary policy
Here in the Netherlands we take flowers with us when we visit someone. You don't have to. Just bring us a bunch of sensible monetary policy (make that sustainable green, that's your hobbyhorse these days) the next time you meet. We are also satisfied. Enjoy your visit to our beautiful country and take back more than a bunch of tulips.

Kind regards, subject to your future behaviour,

Edin

Edin Mujagic

Edin Mujagić is an economist and manager at Beleggingsfonds Hoofbosch. He focuses on global central banks, and in his blogs he writes mainly about developments in interest rates and inflation. He has also written several books.

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