Grant Williams on firewalls, central banks and much more in the latest things that makes you go hmmm
“But what about the Maginot Line?” I hear you cry… Well, the German army found a slightly simpler solution to that particular ‘impregnable defense’; they attacked France through Luxem- bourg and then Belgium, completely bypassing the main part of the Maginot Line – thus render- ing it virtually useless.
That’s the problem with firewalls, you see; they ALWAYS seem as though they provide a solution to the problem they are built to mitigate but they rarely do.
Since 2008, the Central Banks of the world along with their respective govern- ments have been moving heaven and earth to put in place the kind of firewalls that will protect the world from a ‘collapse of the system’ – even though we literally have no idea just what that ‘collapse’ would look like or entail.
Quantitative Easing, TARP, HAMP, LTRO I & II, Ba- sel III and all sorts of other schemes have been dreamt up by those in power in order to protect the world from something that is, essentially, unavoidable; the after-effects of two decades spent bingeing on debt and free money. And what has been the single most often-used solu- tion employed in the treatment of this particular problem? Yes, more free money.
Let’s be clear, printing money out of thin air CANNOT fix this. If it COULD, then why not just give everybody in the world $10,000,000 in cold, hard cash and we can all go about our business? The question is redundant. The answer obvious. But that hasn’t stopped the Keynesian geniuses at the wheel from persisting down this particular road for several years now in the misguided be- lief that just a LITTLE more free cash will finally get things flowing again.
So, we have a market that refuses to believe that there won’t be more free money, but that sells off on the prospect that this time, just maybe, the FOMC are telling the truth and there really WON’T be more QE to come.
I’ve got news for you, folks; there will be PLENTY more QE to come. In fact, QE will be used and used again until it is finally proven not to work and, when that day finally arrives, the world’s Central Bankers will be out of ideas – and time.
Full Hmmm Apr 29 2012 reading.