One man that can “save Europe” eh? Where have I heard this before?
That may sound familiar. Once the fiscal stimulus of 2009 had passed, the U.S. Congress and administration fought to a draw, leaving the economy’s prospects in the hands of the Federal Reserve. With the recovery again losing momentum and U.S. politics stalemated, many investors expect that the Fed will soon announce a third round of quantitative easing, where the central bank buys bonds to drive down long-term interest rates. It is unorthodox, controversial and necessary. The government can’t act, so the Fed has to.
It’s controversial because when this nation was founded and we understood what “the rule of law” meant, intentional debasement of the nation’s currency was an offense punishable by death.
Go look up “The Coinage Act.”
What’s being proposed here is really nothing more or less than what a fine gentleman named Adolf attempted some 70 years ago. The means differ — slightly — but the end desire is the same. “Banking and fiscal union” is nothing more than national concatenation, and while this is perfectly fine if the people involved all choose it, what’s being promoted here is forced union.
There’s a name for that and it’s not particularly complimentary.
This is a question of propriety and legality, not economics.
Well at least Bloomberg is being honest here. It’s neither proper or legal, but that doesn’t matter, right? We “need” to do this because a bunch of people did idiotic — maybe even criminal — things in lending money they knew damn well would never be paid back. Then they levered those knowingly bad loans up even furhter.
The market’s “punishment” for such behavior is that you go bankrupt. But when you took someone’s deposits and gambled with those, well, most people would call that simple theft.
The argument that “it will all fall apart unless we protect these clowns people” is laughable. The hell it will. Vacuums are no more stable-state things in economics than anywhere else; if the outrageously crooked banks go under someone will set up another one the next morning. Payment clearing is the only true “need” for such a system, and that will continue.
The premise that the world “requires” debt leverage for economic sustenance is a fraud. All exponential games of this sort are. We live on a finite rock of finite mass; ergo, any claim that one can continually grow at “x% a year” is a per-se fraud, as such on an indefinite forward basis is impossible.
Those who make such arguments must not be allowed to turn the metaphorical “tanks in the streets” games played in the various government bodies as a means of extortion into real tanks in the streets with real soldiers and real guns.
If we simply disregard the facts of impropriety and illegality, again and again, that’s exactly where the path we are on leads.