Martin Wolf: Only the ignorant live in fear of hyperinflation

Martin Wolf, FT

Since the financial crisis broke in 2008, the Financial Times’ resident economic expert and leading commentator, Martin Wolf, has decidedly veered to the left. Having rediscovered the Keynesian faith and having apparently terminated his long public love affair with “free market economics” loosely defined, he has become a reliable cheerleader for fiscal and monetary ‘stimulus’ of all kind. His disdain for those still attached to free market principles and fearful of the consequences of endless debt accumulation, interest rate … [Read more...]

“But there is no inflation!” – Misconceptions about the debasement of money

Printed money

“But there is no inflation!” - This is a statement I hear quite often, sometimes from people who are, in principle, sympathetic to my arguments, sometimes from people who are less so. In either case, those who state “but there is no inflation” consider it to be a statement of fact and one that they assume must pose a challenge for me. Should the man who argues that we are heading for the collapse of paper money, for some kind of hyperinflationary endgame, not be concerned that all this money printing by central banks around … [Read more...]

Stimulus, to infinity and beyond

Ben Bernanke

There was a beautiful symmetry to last week's policy announcement by the Fed. Precisely a week after the ECB had pledged its commitment to unlimited purchases of Euro Zone government bonds, the Fed declared that its new round of debt monetization - 'quantitative easing' or QE3 - would be open-ended. Unlimited, open-ended. The concept of stimulus has certainly evolved since the crisis started. This should give us reason to pause. 'Unlimited' is not a word that is used much in economics or in business-life. The only thing … [Read more...]

Draghi: ECB to counter ‘unfounded fears’ with unlimited cash

Mario Draghi, ECB president

Yesterday, the ECB pronounced itself the official lender-of-last resort to all Euro-Zone governments. To assure that the state can always borrow at conveniently low rates has been declared an essential component of 'maintaining financial stability' and thus a standard plank of modern central banking. Despite all their professed differences and divergent legal frameworks, all major central banks have now become their respective governments' inexhaustible ATMs. - Coincidence? At the press conference yesterday Draghi declared … [Read more...]

“When they stop buying bonds, the game is over.”

Floating currency symbols

I took the title for this blog from an interview that James Turk of the GoldMoney Foundation conducted with Eric Sprott, a Canadian fund manager. You can see it here. (I also recommend you have a look at this interview with Doug Casey.) I think the quote is a succinct summation of the role that the bond market, and in particular the market for government bonds, now plays in this crisis. As you know, I would not touch bonds with a barge pole, especially government bonds. After 40 years of unending fiat money expansion, the … [Read more...]

The nightmare after Christmas

Christmas motive

 The pathetic state of the global financial system was again on display this week. Stocks around the world go up when a major central bank pumps money into the financial system. They go down when the flow of money slows and when the intoxicating influence of the latest money injection wears off. Can anybody really take this seriously? On Tuesday, the prospect of another gigantic cash infusion from the ECB's printing press into Europe's banking sector, which is in large part terminally ill but institutionally protected from … [Read more...]

Adam Smith Institute lecture: paper money collapse

Detlev Schlichter adresses the Adam Smith Institute

For those that missed it: Detlev Schlichter addresses the Adam Smith Institute Tuesday 22nd November, 2011. He argues that the present financial crisis is far from over; generally misunderstood and misrepresented, it is far from being a 'crisis of capitalism'. Detlev traces the history of failure of paper money systems and lays out why present policies pursued by various governments and institutions are misdirected and counterproductive. He describes the various endgames facing us. Last Tuesday's talk was organised by … [Read more...]

Götterdämmerung – Germany is finished.

thunderstorm

 What disturbing and nauseating image greeted us this morning from the covers of the morning papers: a smiling and moved Angela Merkel surrounded by a bunch of suited, self-satisfied, sycophantically grinning parliamentarians happily signing their country's economic future away, burdening their fellow countrymen and women with financial obligations the grotesque size of which have long ago surpassed the average German's grasp of large numbers - all in the name of Germany's "responsibility for Europe", and for personal … [Read more...]

The Paper Bureaucracy

Picture of Gordon Brown

Gordon Brown as the next head of the IMF? What a splendid idea - at least as long as Charlie Sheen is not available. No seriously, the despicable, interventionist IMF and the unpopular etatist Brown - a perfect match --perfect, I hope for further discrediting the global paper money bureaucracy, the new political elite lording it over us at our expense, the guys who brought you the crisis and now promise to fix everything - with more paper money and more debt and more policy interventions. Here is a man who was never … [Read more...]

Don’t Buy Government Bonds!

Government bonds

The reasons for completely abstaining from the sovereign debt market are manifold. They come in two categories: category one is fundamental and moral (really) and always true; category two is straightforwardly personal and applies to the present situation: it seems increasingly likely that you will lose your money! When we pick investments we want to find something where we stand a good chance of getting our initial investment back plus an attractive return on top. We do this for our own benefit. But economics tells us … [Read more...]