The short of the century – The bubble in government bonds is finally bursting

Government bonds

"The government can always pay." This is a statement that has no basis in fact. Any rational analysis will quickly expose it to be a fallacy. Economic theory, economic history, and plain good old horse sense can demonstrate effortlessly that this statement is an illusion. Yet, it is today a widely held and deeply cherished illusion in the world of finance (and, incidentally, the world of politics). In fact, it has become one of the defining myths of the modern fiat money era. It has for decades provided portfolio managers … [Read more...]

Götterdämmerung – Germany is finished.


 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 bureaucracy versus you

dollar notes falling from sky

The global finance bureaucracy is clueless. Its policies are failing. Yet, the bureaucracy is not giving up. The same tired and idiotic explanations for what is wrong with the economy and what the economy needs are regurgitated with numbness-inducing persistency: The economy is in need of more, wait for it, "demand". Not necessarily your demand or my demand. In fact, any demand will do. And since you and me are obviously failing to produce the demand that the economy demands the required demand has to come from the state. It … [Read more...]

No way out – Why policy advice is futile, and what you should do instead

G7 Finance Ministers, anno 2008

First of all, apologies appear to be in order. Over the past six weeks, my commentary on the Schlichter Files was somewhat sporadic. I spent most of the summer with my family in Italy where I voluntarily removed myself somewhat from the fitful convulsions of the financial system's death-throes. Then, last week I attended the world conference of the International Society for Individual Liberty on the island of Vulcano where I gave a speech on my upcoming book. The conference was a very pleasant affair with many interesting … [Read more...]