[John Clark]

Dear all,

Thanks to Mish, I would like to recommend Pater Tenebrarum's work to you. By my reading, this guy is very insightful

Here is a recent piece of his: The ECB and ‘Balance Sheet Recessions’

Again, some of it is pretty technical, but so enormous are the problems coming down the line it might pay to "bone up" on a little more economic jargon.

This particular paragraph from the above-linked piece was precise to the millimetre:

In light of this, all the plans to further expand the ECB's monetary pumping measures can only delay the inevitable end game and make it even worse. There will be jubilation in the current economic mainstream once the ECB deploys the full force of its printing press, but this only confirms the extent to which the economics profession has become little more than a handmaiden for  the statism that the current financial system provides the basis for. The belief that systemic insolvency can be repaired with the printing press is sorely mistaken. There may be short term relief, we don't deny that – but at the price of an even bigger crisis down the road.

And Pater ends his current piece with this critical and very accurate summation (emphasis mine, and parts in square braces are added for clarity):

The question in the end comes always down to whether one wants to take the losses as soon as possible and begin again with a clean slate [that is, not print money], or whether one wants to delay the day of reckoning by doing again – and usually on a bigger scale – what has led to the crisis in the first place [that is, print money].  The choice is always between short term pain in exchange for long term gain or the avoidance of short term pain in exchange for long term misery. Why everyone seems to favor taking the path to long term misery remains a mystery to us. As we keep saying, the focus, especially in Europe, should be on how to revive the currently taxed-and-regulated-to-death entrepreneurial spirit. In the end, only a resumption of genuine wealth creation can solve the economic problems of the region. This requires that the market economy be freed to do what it does best. Printing more money is not going to help this process.

I would note that it's not such a mystery to me. Ultimately I see it as mostly due to selfish and short-term thinking. The politicians want quick-fixes (they tend not to care so much about the long term legacy they lead). Ignorance is also mixed in there too - thinking about how the "modern" economic theories have played a big role in exacerbating this crisis makes my blood boil too, so I try not to think about it. There are so many people out there at the moment calling for the ECB to fire up the printing presses. It's alarming. They really don't seem to comprehend how it doesn't solve anything, and just makes the problems larger in the long run.

Bye for now,

John