Detlev Schlicchter of Paper Money Collapse blog is telling us that the bubble in government bonds is finally bursting. It is a myth, he says, that the government can always pay. That is a statement that has no basis in fact.

The fate of myths, we are then informed, is that they sooner or later clash with reality. Then they are exposed as myths, which requires a painful giving-up of beloved certainties, a readjustment of paradigms and an abrupt change in behaviour.

View full article here

I'm plodding through Mr Schlichter's book at the moment. A fascinating but chilling read. If he is right, and I suspect he is, we're not just witnessing and experiencing the meltdown of the Euro, but of the entire global monetary system. I've not reached the chapter on how we should protect ourselves, but I suspect it will be on the lines of "buy gold, buy farmland and buy some guns".

A few years back I was debating with some conspiracy loons about the usual Jewish banker/Rothschild-Rockerfeller/Illuminati/NWO guff.I found I could not answer basic questions about how Central banks worked and how money was created in our economy.So I started reading around and found the truth to be even madder than that the one put forward by the conspiracy crowd..

I have never hear of Detlev Schlicchter,but I concur with every word he writes in that article.


This is the big worry,now the genie is out of the bottle we will never get it back in.We can all see what has been going on now.Before most of us were in a cosy world where banking meant 2+2=4,but all the while what was happening was 2+2x50(leverage)+(5%interest)=107.1.It just cannot go on.

I dont blame Osborne he is just a player in the game, he did not make the rules.The big problem we have is that no electorate will allow a government to apply the solution...a more balanced budget.All those relying on the vast welfare schemes and state jobs will not tolerate it,no government would get elected on that ticket.So the madness continues till we test the limits of fiat currency to destruction.

Good to see another Austrian economist giveing Keynesian economics a good kicking. Or in fairness to Keynes the barstardisation of his thinking, as he would never have agreed with the current level of deficit spending. He apparently only advocated a touch of debt to overcome a short term difficulty, on the clear assumption that it would be paid off as soon as possible, along with a return to surplus.

The lunacy that is now running wild as supposed wisdom, would have been abhorrent to him......that's how far down the road of monetary madness. we have gone.

I do.....so far he show no signs of even understanding his job. If he did he would never go along with all the idiot thinking that comes out of his boss and those ubber dolts the limp-dums.

Are we at the stage where "a good politician is one, who, when he bankrupts his country .... " ?

... and barbed wire. Don't forget the barbed wire.

They all understand it prefectly.Just they hope they will be off doing something else when the shit hits the fan.Its a huge game of pass the parcel.It will all blow up in someones face eventually they all are just hoping it will not be them.It is government by popularity,and everyone thinks someone else should pay.

Do agree with that though

Keynes never saw debt levels like the ones we have now.The system is broken just our governments are still going through the motions as if it were not.

Keynes also said as well as spending in a recession you have to cut back and keep a lid on booms...which the western economies most certainly did not,not only letting the banks let rip during the last boom but encouraging them to do so.That is what the Keynesian advocates also conveniently forget.

What we are experiencing is the early stages of a major readjustment of the market.....it will be very painful.

I'm firmly in the Austrian camp...I was just being nice to Keynes, whose thinking has been taken way out of context and then used as justification for todays madness. Yr right Keynes lived at a time when monetary rectitude was the common standard, so he would never have seen or even dreampt of todays insanity. However the left love him, because they can hide behind his thinking, while they beever away at ruining the West and don't have to expose their true Marxist beliefs.

You never hear a word about Hayek in todays world. It's as if he never existed, as Austrian thinking is like garlic to a vampire to the clowns that run us now. Yet everything that is happening now was both predicted and explained by Hayek, if you go down the road we are on. Austrian thinking had to be debunked/trashed out of history by the left, as it is the absolute opposite of communism.

I bought a copy recently. It's a hard-ish read for the non-economist such as I, but it explains simply and with admirable clarity what money actually is and how it works. I came away considerably enlightened and very impressed with the author's good sense.

I won't spoil it for you by telling you how the plot turns out, but I can reveal that despite the love scene on the beach in Chapter 928, Rodney and Celia do not live happily ever after.

For information on consequences, I then read Adam Fergusson's "When Money Dies", which narrates the course of the Weimar Republic's hyperinflation. He relates that the effect upon savings and pensions was to obliterate them by reducing their purchasing power to nil. I expect the purchasing power of my pension to be reduced to two or three pence per annum when it happens.

Finally, I read Jens O Parsson's "Dying of Money", which has been praised recently by some elements of the blogosphere. I thought it uneven and, far from seeing the wood for the trees, lost deep in trackless forest. However, it gives a good insight into modern economic nostrums: print money to drive out inflation (ho ho); get those interest rates down; promote consumer spending; make grants to promote activity that might rescue the economy (the UK's intended recapitulation of Fannie Mae, for example); use redistributive taxation to rectify perceived social imbalances; and so on ...

After that one, I intend to stick to books by the Austrian school from now on.

Always difficult to weigh up ZH posts, as they are permanently hyperventilating. But the stuff on liquidity measures in disturbing. Solvency is normally the underlying core issue, but in the end it's liquidity (cash flow) that delivers the killer blow.