Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Euroland on the Brink of Reason

Politics / Euro-Zone Dec 08, 2014 - 11:39 AM GMT

By: Submissions

Politics

Tom Naysburn writes: Lets be under no illusions, Quantitative Easing QE is monetisation of sovereign government deficits, lets be even clearer, QE is government printing potentially limitless amounts of paper money to pay for its own hubris, incompetence and overspending. History tells us it always starts small and controllable but quickly as the drug takes hold, diversions and side shows are created to allow its continued consumption, welcome to our brave new world where everything you thought was untrue or impossible is now possible and very real. Maybe QE is the government and bankers financial Soma.

At this fork in the road, one path requires the Euro to face its problems, either form a fiscal union or disband the currency, the second path is potholed with denial, QE and the inevitable destructive forces it unleashes.


Classical accepted economic thought dictates that if real interest rates fall to zero or even negative all saving would be stopped and that saver would bring forward consumption from the future instead. This rationale is over simplistic and flawed. Negative real rates signal to the hard working saver that the financial system does not value its money, and the extension of that thought leads to the belief that something somewhere must be very very wrong. Confidence in the game of fiat money has been shaken regardless of whether people actually understand the minutiae of the system.

After the Bretton Woods agreement ended in 1971 and later the Glass Steagall Act was repealed, fiat money and the financialisation of the world exploded and has lasted nearly 40 years. The 2008 Financial crisis represented a bursting of a bubble, a smashing of the mirror, a lifting of the mirage that is fiat money. Ever since, the Federal Reserve and politicians have sort to maintain confidence in the system at all cost, including bank recapitalisation, government deficit financing and direct or circuitous rigging of systemically important markets. Too big to fail remains unencumbered by scrutiny. Nobody likes to fail but those with rampant ego and hubris and “skin in the game” like it less than most it seems.

The implications of monetization of government deficits include distortions which run deep to the core of human nature itself. Money without limit or intrinsic value means that failure, if your big enough, has been cancelled, as long as there is paper in the world the government can print a number on it, and as long as others accept it for what its supposed to represent, more can always be printed to pay for any trouble. With the precedent now set, surely no problem is too small to be solved, no project too big to be completed, in this brave new world. Risk, for a few, has been repriced to zero resulting in the new maxim: if it cannot be copied buy it, if its in finite supply buy it, if its a financial instrument of systemic importance to prolong the longevity of the system, for example major stock or bond markets, buy it. To protect the vested interests and designers of this hubris the bottom line is “they” cannot let these markets go down. When I say “they” I mean the antithesis of a modern day living Goddess, the Federal Reserve chair Mrs Yellen, and I don’t mind telling you, she is so wondrous in power, importance and scope I think about her everyday.

It has always been part of being human to want to value the unknown or “risk”. Risk has always had a price, just ask Icarus or Bernie Madoff. To be beholden to rigged markets, mispriced risk and too big to fail means we affectively cease to be human and act more like automatons. The automaton exists in a zombie like state, performing futile functions in an endless process of decay.

When the “big” is protected from failure this distortion will pervert events and corrupt everything in its path. Failure is to be human as success is to be applauded, both possible in a lifetime. Only when both have been experienced can a true balance be achieved. QE, too big to fail, fiat, unsound money is the distortion which has reversed human progress, productivity and the march of time.

Unless corrected, the financial system and big government will draw a noose tighter round the neck of freedom and liberty, evident in legalisation seen all round the world. To discuss any other issue is a distraction from the problem at hand. Our leaders must solidify their resolve and resist this dead end we are being driven down.

Over the English Channel in Euroland, Germany currently stands alone, the last bastion of sound money, balance and reason. The European Union is about to take another lurch to the left by contemplating letting Mr Draghi turn on the printing press in pursuit of prolonging power, privilege and the status quo of the Euro project. The Euro stands at a fork in the road and pressure is mounting on Germany to capitulate. The choice is now clear and thank goodness the Germans will be making it. German memories can win the day for truth, reason, logic and those who want to improve the lot of the many, not just the few.

By Tom Naysburn

http://zanadome.com/

Zanadome.com is an alternative news, views and commentary site, incorporating a look behind the headlines, and attempting to show an alternative, sustainable way to reason.

© 2014 Copyright Tom Naysburn - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in