Paul Volker or Alan Greenspan, can't remember who, famously said it was the Fed's job to take the punch bowl away once the party gets to rollicking. Now, instead of taking the punch bowl away, central banks spike it with Four Loko and bring in hookers to keep the orgy going.
what we are witnessing now is simply the inflation of a world-wide bubble, which will sooner or later burst with agonizing consequences. Just as before, the cause is bad economic policy and bad central banking, too many rescue packages and too much printing of money.
But aren’t bubbles supposed to be more fun? Where’s the giddy feeling of illusory wealth, this time?
A bubble in government debt, however, is a bubble in the quantity of debt outstanding, too much borrowing against not enough tax revenue, not a bubble in its price. It’s impossible to generate speculative excitement about the coupon payments, because they’re fixed. Inflation can only decline so far before the fear of deflation takes over. (Buy Now, Pay Later)
This is not just a progressive or liberal problem. Politicians of all stripes have conspired to bring us to this brink of disaster. Printing money does not create wealth. It is like shrinking the size of an inch when you've cut the board too short.
