So it seems that the European Central Bank found a way to solve the whole sovereign debt crisis. As told before by that insufferable jew , instead of buying government bonds directly, ‘monetizing sovereign debt’, they are just funelling cheap money (1% interest) to private banks, who then use the money to buy southern government bonds, driving down the yield, but still getting around 4%, which is a handsome profit. So banks are happy, governments are happy, and the ECB gets to keep the euro.
Funny how Yglesias hates the scheme, because it means that by choosing not do funnel the funds, the ECB can pressure governments into do its bidding. And that’s ‘evil’. Well he seems to forget the governments can choose to have a budget surplus, which would make them free from ECB meddling. But governments having sound finances is beyond good or evil, its unthinkable.
Funny thing is he also said that he ‘suspects’ the thing will end poorly. What does it mean he ‘suspects’? Means he doesn’t know shit. Yet he has a massively popular blog on finance. I used to read a lot on economics, and have a good friend who is an authority on Austrian economic theory. Yet each day it passes this idea gets a stronger hold on me: economics is like theology. Some theories are sounder, some are crazier; yet nobody has the damnest idea. All our economic authorities are just trying shit to see what happens, according to some contested theory that some economist or bureaucrat just came up with. Sometimes it works, sometimes it doesn’t.
Well it seems that this particular scheme is working extremely well. Not to say that this is a good thing: the Germans were right that southern governments must reform, stop stealing money and make their populations be productive. Easy money breaks the incentive. But that’s a political issue, not economic.
The economic danger we all were told to fear was inflation. Hyperinflation is coming! Your savings to hell! Collapse! Buy a gun and hoard water barrels. Gold!!
Well does anyone even know how inflation happens? How is the particular process, and how it behaves? Well there’s dozens of theories. But does anybody in charge really know? Not really. The smartest minds in the world spend all day long, waking up at ungodly hours, working like Roman slaves, all discussing the nature of modern finance. Yet nobody knows shit.
The difference with theology is that Byzantines discussing the sex of angels didn’t harm anyone (aside from the cost of opportunity of their time not spent on fighting turks). But discussing the sex of inflation is influencing the world’s flows of capital.
We need economic agnosticism or something.