The ECB intervened against inflationary risks – the door is open

I took the adpis from a magazine articleFrankfurt Papers - Issue 43, June 2026a I quote:

„JuneincreaseECB rates werenecessaryby the Transfer stepinflationary pressuresto the economy woulddid not preventnor a possible rapid drop in prices. The situation in the energy sector will not return to "normal" anytime soon after the end of the conflict in the Middle East.  Oil prices are likely to remain above pre-war levels, also due to replenishment. Whether the ECB will continue to raise rates will depend on incoming data“.

Didn't the ECB intervene too late? She took action.

The necessary step must result from something, from theory. In my bookEconomics is also a sciencefrom year2018(!!) in the section on monetary policy I write:

„Governor M. Draghi was happy to announce that the economies of the EUmonthlyinjects 60 billion euro If the monetary multiplier = 2.49, it means that they will serve the cycle of goods and services worth about 150 billion. euroWe have to wait for inflation“.

(Did M. Draghi know this?). That's itprudent policy, which was told (taught) to us by experts who went to the NBS and the Ministry of Finance? I was a participant. Unfortunately, both the ECB and the EU probably relied on the applied oneamputatedthe economy?' Why the ECB did not constructmodelstabilization of inflation?

EU economists mustthoroughlyto know, that is, even the governors of the ECB, some fundamentalsscientificinflation claims aanalyze primarily herestablished.

Inflation ispermanentgrowth tendencygeneralprice levels.

The concept is challengingpermanentageneral. The term permanent indicatesdynamics. We know that inflation is caused by several causes:

• the main one is growthoffers of money

• demand for high wages

• great demand for goods, etc

I constructed a model of the behavior of change-induced inflationoffersmoney Mand I mainly did a systematic review and acquisition of itknowledgeabout whenwon't be explosive inflation (hyperinflation). The starting point of the model is the macroeconomic equationof the quantitative theory of money, that is, this well-known econometric relationship:

Md = kPX(1)

whereMdisdemandafter moneykis a constant determined by the behavior of those who hold money,PislevelhundredaXisreal incomeor output (Yis used for nominal income).OffermoneyMis the quantity whichdetermined by the centralbank exogenously, will be in the constructed modelknownconstant, parameter. So it applies

Ms = M   (2)

WhereMis the money supply and at the equilibrium point it holds that

Ms = Md(3)

After substituting expression (1) and (2) into expression (3), and after modifying the relationship, we get

(4)

the econometric variable appears on the left side (4).levelhundred,P. She, herbehavior, iscoreof our model.  To get the answer I was looking for, I had to apply differential calculus. By deriving relation (4), if the variables will be onlyPaM, we obtain this relation:

(5)

After a certain number of steps (see in myA dynamic model of the stability of the inflationary process based on the quantitative theory of money, Jaroslav Husár, Karol Szomolányi, just enter the title with the authors into the Internet), we get:

(8)

We learned about the behavior of inflationimportant relationships, we need themto interpret. The reader has to read this part slowly to understand it, because it talks about price behavior (inflation).The final expression (8) says thatthe proportion of any change in the price level (P) to change the money supply (M) is equal to the share of the price level itself to the total money supply.This is itsignificantknowledge.  Expression (4) can be modified in another way, see my article, and after a finite number of steps we get:

(12)

Its interpretation is difficult. So,by the seconda serious insight about inflation is thatrate of change in prices(inflation) isproportional to the growth rate of the money supply (M) minusreal income growth rate(X). Challenging mathematical logic helped us gain important scientific economicknowledge. Tothey have toknow governors. The model expands the possibilitiescontentthinking. The theory gives the basis of ideasIthe economic world works, in this case inflation. We do not get this knowledge verbally.

The final solution also follows from relation (12):

(27)

P(t)iscommonprice in timetand its development is determined by the expression on the right. It is an exponential function. It has a complicated exponent. If it is positive, it grows to infinity,inflation will be explosive. Knowledge about inflation is really challenging. They have a vital role in how he behavesbank.

I must emphasize that the central bank has a responsibility to maintainstability of the national currency(drive, check andto rubinflation) astock of money. Governors cannot rely on only two economic indicatorsinflation and growth. The targeting of these quantities isonly an intermediate destination. They have to lean onarrangedset of indicators. Even the car driver has a steering wheel and arranged pedals. Our inflation rate in 1993 was 25.10 percent. Today's economic growth in the Slovak Republic is 0.7 percent. These two data are also not a set, they are from different years.

2008 was a critical year forworld economy, the reader surely remembers it. Only during 3 weekscollapsedrock follower of the AmericanbankingLehman and Brothers. In Britain in 2009, it reachedfinancial assistanceto the banking giant Lloyds TSB and Royal Bank of Scotland more than 1.4 billion. dollars. And why help?

Where were the central bank governors? Inflation is not easy to discipline.

Not even two decades after the currency crisis, the EU, along with the Western world, experienced a devastating bank failure. However, they did not guard eitherinflationof yearsamount of moneyin circulation. But for the nation's moneyshe answeredthe same group of people. Over the course of sixteen years, they managed to head two hugefinancial crises, suggesting that their understanding of exactly what money is and how it works is not, to put it mildly,solidly.

It could be worldwide educational and intellectualelitewrong about money i.e. inflation? Yes. The ECB is quite independent, but it is also totally political. Aren't central bankers obfuscating? In fact, their statements are often prophetic. We cannot destroy the economy because ofignorance.Prof. I. Karvaš, governor of the SNB, has a chapter in his 800-page bookMoneyand wrote more than 93 pages about money!

I mentioned above that inflation is a function of many variables ieinfl = f(x1,x2,x3,.., xn)and therefore requires constructionlarge model, considering the number of EU countries, by several 100 equations. I have an experimental simple inflation model in my bookMacroeconomic analysis.It has 6 equations and 10 variables.

Unfortunately, I received an article in my mailCrisis in the eurozone: causes, dilemmas and solutions ByMark Baimbridge; The Eurozone Crisis: Causes, Dilemmas and Solutions. Isn't it late?

Who is responsible for that?

Conclusion

Decision making at every level and veach areamust lean onknowledgeand experience. I don't know what M. Draghi based his decision on. Of course, in the process of getting to know the acquired knowledge, we have topenetrateto the point, to realizecontext.In relations (5), (8) and (12) we have found what he is asking forthe most completeunderstanding the context - econometrics, specificallydifferential equations.

In relation (27) I have a derived price function. It is an exponential function. It has a complicated exponent. If it ispositive, grows to infinity,inflationwill beexplosive.Knowledge of inflation is difficult today. A vital roleimpact on inflationthey have banks. Even the ECB must use itwealthsciences andNOat will.

Because inflation is a function of many variables, modeling and understanding it will only make it possiblemulti-equation model. TitleThe ECB intervened with the door open to inflationary risks, although its meaning is more difficult to understand, it requires deep economic and econometricsknowledge.

Today, unfortunately, we have not only as a result of warssvet without rules and also power games, which affects inflation. I believe I have succeeded in showing thatccentral banksthey can'treact to inflation onlyincreasing interestrates to limit the amount of money in circulation and reduce demand.

Let's not turn the economy into a casino.

Prof. J. Hussar

Rohovce 4/7/2026