Governments Go Financially Insane

That definition of insanity – doing the same thing over and over again and expecting a different result – applies. From Bloomberg:

The Bank of Japan may have acted first in a new round of central bank action to prop up the global economy as recoveries in industrial nations falter.

The unexpected decision by the Japanese central bank yesterday to drop its interest rate to “virtually zero” and expand its balance sheet follows the U.S. Federal Reserve’s move toward more unconventional easing. Bank of England officials will consider further stimulus tomorrow, while the central banks of Australia, Canada and New Zealand are among those now holding fire on further interest-rate increases…

To translate from the MSM-ese:

“Governments around the world poured trillions of dollars over the past two years in to the bankrupt global financial system to revive the economy. It didn’t work. They are going to do it again.”

This is sheer insanity – the world is already over burdened with debt, and now we’re going to see massive printing of money and other fiscal tricks in order to buy up yet more worthless assets from a completely insolvent global financial system. The only way out of this is to admit that we’re broke and that a great deal of debt won’t get repaid – if we do this right, and balance our budget, then we can at least keep from defaulting on our own sovereign debt…but no matter how you slice it, the “too big to fail” banks must fail (well, strictly speaking, we must admit that they have already failed and let the free market take its course).

This is not to say there is a painless way out of this. In fact, it is an admission that we must have some pain. Printing up money and buying worthless assets is an attempt to say we can get out of this painlessly. We have to understand that we screwed up – an economy based on services and fueled by debt simply can’t work. An economy must be based on producing things and investing carefully saved money – that is what we used to have, and its the only way to fix the problem. It will take 10 to 20 years to really set things right, and two or three years just to revive wealth creation…but the longer we wait before starting, the bigger will be the ultimate crash and the longer it will take to get out of it.

And, once again, here is another reason I’m a revolutionary – the fools governing us and running our financial system are simply too blind and too compromised to do what is right..only an overturning of the Ruling Class will allow new leadership to arise which might have a clue on what to do.

HAT TIP: Mish’s