The Paradox of Theft

When central banks cause bubbles, they leave a trail of broken dreams and broken bank accounts in their wake. Many of the newly rich find they are less rich than they thought, and many of those who bought in expecting to become rich find that not only are they not rich; they are much poorer than they were before. The bottom line: these bubbles induce people to speculate more recklesslessly and spend more in aggregate than they otherwise would have.
Then comes the crash. And what happens? Central banks cut interest rates, sometimes drastically. This induces those with any savings left to save less, and continues the dislocations caused by the original bubble.
And when some unsophisticate from outside the central bank priesthood points out that abnormally low interest rates might be harming saving (thereby limiting the pool of funds that would reliquify lending) and are thus keeping household balance sheets in peril, the reply comes that we can't hike interest rates now; after all, the economy is still recovering from the collapse of the bubble!
It is like saying to someone who's been on a merry-go-round too long and is now neckdeep in dizziness and nausea that he shouldn't get off the merry-go-round just yet. After all, he's not ready to be on his feet! Much better to stay on a lurching, spinning apparatus until he is no longer dizzy...

A Monetary History of the European Union

When the smoke clears, here is what the “World Is Flat” droids will say about the failed European experiment…

It will be said that the European Union fell apart because we didn't have enough "political integration." That is, we had monetary union without fiscal union. In other words, this grand experiment in democracy failed because the individual nations had too much democracy.

They will blame Trichet for not easing soon enough or for not printing enough money. The collective wisdom will be that he made the same "mistakes" (insufficient money printing) the Fed made in the 1930s. They will say he gave in to the inflation hawks. They will blame Germany’s “irrational” memory of the Weimar hyperinflation for preventing Trichet from becoming Helicopter Trichet (should the Reichsbank President who oversaw that hyperinflation be nicknamed Dirigible Havenstein?).

Ireland, one of the darlings of the European experiment, is now among its worst off. That "Celtic Tiger" is now a paper tiger, paper as in debt. It has incurred unconscionable liabilities because it jumped headfirst into the modern blarney of “growth” through skyhigh leverage. Remember, modern economies run on paper shuffling and asset bubbles, and anyone who questions this just doesn’t “get it.” Well, those who expected to be made whole on Irish debt aren’t going to “get it” either.

For all their worship of progress through psychiatry, one thing these brain trusters don’t do is self-actualize.

The world is round. Greece isn't Germany. Technocratic global democracy is a scam.