F Dominicus Blog

A politically incorrect blog about matters of money, government, bureaucracy, freedom and sometimes something else.

Will they ever get it?

Well I'm not surprised, but kind of disappointed. Now the people in Portugal are demonstrating against the servings. In Germany we even use a special word for it "kaputtsparen" one probably can not translate it direct into English but it means "destroying by saving". So in fact the credit expansion which has fired the boom is the "good" situation. Now that the credit expansion begins to collapse, we're in the bad situation.

So they are seeing the disease as the normal state and the healing as the disease. Can we be very astonished? Well I guess we can't. Snakeoil seller at work and the people who want to believe, you do not need more to do bad things.

Well the opposite really is true, the credit expansion leads to booms and if if stops we have the bust. It's easy to understand, if money is cheap, suddenly a lot of things make economic sense. If this cheapness is due to market forces, well then everything is fin. But our cheap money is just cheap because of the central banks. The more or less set the interest rate and they drive it down in never seen low regions. And so the people do react and do take credit. And indeed in Germany one can see where it ends. The housing markets in good regions is not just raising but soaring.

We have not learned one lesson from Portugal, Spain, Finland, GB or even the US. And so the cure the central banks are taking is just prolonging the disease and prohibiting the healing to take place. That means we'll have to pay higher price for the cure tomorrow. One could "hope" that mankind is able to learn, but there are limits which seem to strong. And the belief in big government and fairness by government are steadfast. Even the US can not get away from it and they do have the best chances (in principle).

So to come back to the headline. It seems the answer is no. They never will get it, and so every one will have to suffer more and more irrational decisions. One day the will bite you with a whip and at the same time they will pull the reins. And they will be surprised that the people will buck. And they will bite more and pull the reins even further... Man can act reasonable but men never will.