"There is no means of avoiding a final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion or later as a final and total catastrophe of the currency system involved."
- Ludwig von Mises

Tuesday, September 21, 2010

Max Keiser and Yves Smith of Naked Capitalism

Excellent dialogue between two of my favorite financial bloggers.  The extremely knowledgeable Yves Smith, and the shoot first ask questions later Max Keiser.  Interview begins 14 minutes into the video below.  Great overview of the financial crisis from a banking perspective.

My view:

Fiat money, over time, needs to "go casino" so to speak, in order to survive  It's a natural evolution, despite all the immoral behavior that goes with that evolution.  That is, the geometric growth of debt surpasses the productive economy and the financial players of the economic system, the banks, need to create a casino, a "new economy" to survive.   That "casino" economy of exotic financial instruments becomes inherently fraudulent.  The monetary fiction of fiat then grows on a completely different level.  Hence, the explosive growth of the derivatives market and the subsequent meltdown that has been absorbed by sovereigns.  The question now is, how long can governments absorb losses and stimulate spending at the same time?


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