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By Paul Justice, CFA | 03-31-2010 04:16 PM

Merk: More Positive on the Eurozone than Most

Merk Funds' Axel Merk says the European Central Bank will spend and print less money than the Fed in the face of economic problems.

Paul Justice: Hi. I'm Paul Justice, associate director of ETF research at Morningstar. Today, I'm joined by currency guru and macro-economist Axel Merk. Thank you for being here.

Axel Merk: Good to be with you.

Justice: Many folks are concerned today about the U.S. dollar, but they're also concerned about the euro. They're really focusing on the policy differentials between the Fed and the ECB. You have some pretty strong opinions about differences between the two, and I thought it would be good for our viewers to hear some of your thoughts.

Merk: Sure. We have been far more positive on the eurozone than most people have. And it really starts from a structure approach how the European Central Bank approaches monetary policy versus what the Federal Reserve does.

And it also comes down to the fact that we believe that spending money and printing money in the eurozone is structurally more difficult. And as a result, they will inflate their way less so to get out of their problems.

But let's start, maybe, with the Federal Reserve. The Federal Reserve has printed an incredible amount of money to buy mortgage-backed securities. All that money is now available in the banking sector to spread to the economy. The Federal Reserve has bought mortgage-backed securities.

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