Minerd: ECB QE could work, but not for the reason you think

Scott Minerd of Guggenheim Investment Management
Patrick T. Fallon | Bloomberg | Getty Images

The benefits of inflation—including increased employment and general economic stimulus—is a common reason people think monetary stimulus by the European Central Bank will work.

But Scott Minerd of Guggenheim Partners believes that it's really lower interest rates and increased consumer spending that will get Europe out of its economic rut.

"The real transmission mechanism will be if the ECB is able to introduce enough liquidity into the system to drive up asset prices, and through the process of driving up asset prices, drive interest rates down further," Minerd, chief investment officer of $220 billion asset manager Guggenheim, wrote in a recent client note.

"This would reduce borrowing costs for businesses, which would improve profitability and encourage them to hire more workers."