The Fed

We’re in a terminal debt spiral. The only question is how long it will last until the patient succumbs.

According to Keynesians, wealth effects result from money creation, and they have a beneficial impact. The Keynesians are right that wealth effects exist. But they're wrong about who benefits.

When the current panic and crisis began, we were already in the late stages of a long asset price bubble. The crisis has exposed the fragility of the current system and we won't be going back to where we were before.

By protecting banks from the costs of poor investment decisions, central banks encourage further risk taking and malinvestment. They also prevent liquidation, which brings failed businesses' assets to the market at bargain prices, allowing new businesses to emerge from the detritus.