We know QE can control debt. We know interest rates can be controlled. We know that deficits do not deliver inflation. In other words, we know the rules of government funding have been rewritten.

6 thoughts on “Whut?”

  1. Well he’s sort of right. We can control debt, to the extent that the usual signals that would precede a debt crisis (rising interest rates) can be eliminated by just printing money and buying the debt, driving rates down. Hence how governments the world over can have rapidly rising debt levels and interest rates on the floor. No private sector investor can bet against a computer that can create infinite amounts of money. And ‘so far’ massive money printing hasn’t resulted in inflation, not as we calculate it anyway. Most of it goes into assets not the stuff Joe Public buys every day of the week. We are doing what Spud wants us to (monetising debt and spending printed money into the economy) and the world isn’t ending.

    Now obviously this is not something that can continue for ever, all its doing is pushing the can down the road and making the inevitable bust even more catastrophic. As far as I can see money printing in a Western style economy can ‘work’ for far too long, that is to say the positive effects are pretty quick to appear, whereas the negative effects take considerably longer, but are far worse when they do arrive. And mainly consist of a fundamental collapse in the exchange rate and/or collapse in confidence in the currency itself. Rising interest rates are signal that something is wrong, if you eliminate that signal everything looks fine right up to the point it isn’t. Its like having the oil warning light coming on in your car – you ‘can’ continue to drive it like that for some time, at the risk of the engine destroying itself at some unpredictable but guaranteed future date.

    That to me seems like what we are doing – ignoring vital signals and assuming because nothing goes wrong immediately that nothing will go wrong ever. The question is how long can the money printing continue before the catastrophic bust. And that is as unknowable as to how long you can drive your car with the oil light on. Could be a short period, could be a long period. Chances are the period will be longer than the lifespan of the average politician so politically the policy of money printing will continue right up to be point it all goes bang.

  2. As a wise man once said, anything that can’t go on forever will stop.

    And let’s not forget the man who went bankrupt gradually, then suddenly.

  3. When you cut through all the Bullshit, Taxation is simply the state’s imposition upon the productive activity of its citizens. Forget that and you are a moron – disregard it and you are a cunt.

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