Can you make sense of the ECB?
Niall Ferguson has said the European Union (EU) is a perfect prophet for the weak willed Pro-Europeanists, often anxious academic personalities, trapped in their verbal formulas extracted from post-modern schools of Marxist thought, to be perennially defeated by circumstance; namely economic. They offer a self-exculpating cosmic explanation for the most normal professorial state of popular resentment, alienation, dithering passivity and inaction on the party of Brussels's bureaucrats and their own sovereign messes.
Beyond all of that though is another ivory tower; the European Central Bank (ECB).
One should first, before even contemplating what the ECB really is -- and no I'm not referring to what you think it is from watching CNBC -- is to think about the individuals who run it from its two massive buildings in Frankfurt.
Specifically, those who enact regulations and give it carte blanche in Brussels via the disseminating voices of the European Commission, to the Council of the European Union who have essentially agreed like little puppies to obey and let the ECB roam free, to the European Parliament which has no authority, whatsoever, to pass fiscal or monetary policy -- unlike the US Congress has cannot even fire Draghi or any future Chairman -- to the carapace of vanity from Berlin, with Germany's ruling coalition backstopping every deal and implicitly the ECB, without which none of this could be possible.
As the ECB juggernaut simply rolls on, it's MIT-trained economists and the fewexperienced bankers who make-up its management are almost entirely Germans. It's Economics Research Department (by last names alone) is 70% German, with a few French and Belgians dotting around.
Can we therefore even trust that the ECB is representative of what wrong with governance in the EU? Well, it is.
The ECB is not a central bank that you've come to think of like the Federal Reserve -- it's akin to another government altogether. Oddly, according to one Der Spiegel poll, more people trust the ECB than their own German government -- that says rather a lot don't you think?
It's a historical thing. If it were a time line, you would see the ECB descends from the German Bundesbank, and the Bundesbank from the Central Bank Council (Zentralbankrat), the Council from German exiles of the Freiburg School; an economic school of thought built out of the said university after the war who influenced the first Chairmans, Karl Bernard and Wilhelm Vocke. They argued for the Central Bank independence, maintaining very simple, consistent monetary objectives, and ignoring insistence of every other institution.
Every decade leading to more decisions which totally ignored German public opinion or the private words of the German Chancellor. Konrad Adenauer, the first German post-war leader tried to have the first Central Bank abolished -- the American Military Authority kept it. From 1948 to the mid-50s' it battled inflation better than the Federal government could ever achieve, and between then and the 1990s a German politician never dared forget his place and criticize the Bundesbank.
When the Maastricht Treaty came about in 1993, the Bundesbank simply became the European Central Bank -- one might say analogous to a Bank of Europe. With the historical progression the ECB, from the mid-90s inthe Bundes-dominated European Bank, everyone involved got up, walked their chairs over and tossed them into new ECB offices in Frankfurt-on-Main almost without changing the signs.
Simply, there's no other actor, group, or institution powerful to do anything to act as a counterweight. While there are number of others represented in it, which is fair due to the diversity of talent, the larger share of power driven by the old Bundesbank reflects that neither the European Commission, Parliament, the Council of the European Union, or even all their bureaucrats can maintain themselves as a counterweight to the ECB's overreach. Given that it's sometimes said that while the EU's ivory tower maybe high, we would have to agree that the ECB's is the highest.