Sorry for the recent brief posts. I still intend to write a detailed post on the current monetary system's inevitable, mathematical collapse. But I am on the road with limited acces and now in Athens, not far from the Acropolis. Turns out that Ministry of Culture workers had barricaded themselves at the Acropolis, and were just dispersed by the police using tear gas.
But here at the Cafe, just blocks away, life goes on. Funny how some things change, yet life continues.
But back to this post. Paul Krugman, of neo-Keynesian times 1,000 claim to fame, has just made a more incredulous suggestion - the size of QE that is needed: 8 to 10 TRILLION of bond purchases!
But you know what? He's right in a perverse way. The system we have right now, debt based money, REQUIRES more debt to "solve" this recession. This is a balance sheet recession, and the only way to solve the debt issue is either through debt destruction, i.e. debts are written down, or more "printing of new debt/money, i.e. enlarge the Ponzi system's base once again.
The contraction of money that follows debt destruction makes it that much more difficult to pay off debts. That is, it becomes a vicious cycle of debt deflation, which will likely overshoot leading to a severe depression. So in way, I think Krugman is not far off. But does he realize that his "solution" merely delays the inevitable? That instead of avoiding a depression, we destroy the currency instead?
Here he is, with some unkind (though I agree somewhat) words regarding China: