Investors of Last Resort - Barrons.com
Donlan touches on a topic - the funding of spending out of Central Banks - that was also a major topic of discussion back in the late 1970s and early '80s.
At that time however, the discussion included the terms 'crowding out' and the hope that government borrowing both wouldn't crowd out private borrowing needs (like mortgages and car loans) and that the government (i.e. the Federal Reserve) wouldn't have to 'print' money to provide the cash needed for the government to borrow.
Somehow it does strike one that, having clearly moved beyond even questioning the fact that the government is printing money, we've also lost the intended relationship between saver/lender and borrower.
Whenever there is a big dislocation between something inherently rational and sane, it's hard not to recall the same irrationality in support of the housing bubble or, way back when, the Tulipmania.
No one knew exactly how the housing bubble would end (we still don't - although Mr. Paulson did rather well with his guess on it) nor do we know how the excess of government borrowing and spending will end. But, it is hard to think it will end with a whimper rather than a bang.
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