Benjamin Franklin is credited with saying that, “The definition of insanity is doing the same thing over and over and expecting different results.“ If that is true, then many of our political and business leaders are certifiably insane. David Farrer points out (via Samizdata):
Let’s get this straight. The house price bubble has been caused by money printing. In today’s world, that means as a result of the Bank of England keeping interest rates artificially low. That’s why the money supply is growing at more than 10% a year and this money has to go somewhere. Lots of it has gone into the housing market. And the “solution” from all of the above is more of the same!
Those who are going to pay for this mess are the prudent, those who haven’t lived beyond their means. Their savings will be inflated away to bail out the welfare bums, many of whom are economic illiterates infesting the business world.
Of course, to point out that easy money was what got us into the current mortgage-mess will only draw the ire of those who support these measures. There are a number of people who will debate the merits of central banking and fiat money until they are blue in the face. Even if we just accept it as a reality, however, can we not operate this system with some sense of sanity?
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