More on the stealth effect of sterilization. Both Berdoo and Dragoo are under the impression that they can whirl paper without consequence. They're under the Friedman illusion that money matters. I've mentioned how Friedman recanted his own theory of money during the early '90s, a fact not recorded in any financial text books. Nobody ever challenges me on my unique perspective gotten from my unique perch. Too bad. Anyway, the two main clowns of the flying circus believe there's no effect from sterilized bond purchases. Wrong. What is the effect?
No one in the world, except moi, knows. I've mentioned the speed of light circle jerk. That's only an asymptotic limit. On the way out to that theoretical horizon one finds that the financial circle closes before the alleviation of some debt burden marginally improves cash flow of firms. Before the purchase representation of money can return to its true payer the value of the debt initially incurred, it must travel through another dimension. This occurs because the continuum isn't static. There is no fixed standard of value, say, as would be the case under a Gold Standard. Accordingly, the frame is translated in inflation space. By the time the circle would close under a gold standard inflation causes the circle to translate, and an adjustment must be made to the debt to reach equity. The CB doesn't do that. God will not give mankind something for nothing, so the translation increment must be compensated out of final price.
Berdoo and Dragoo with their whirling dervish no consequence bond buying results in inflation, and the inflation is not only insidious, but also can't be stopped. This was part of the lesson FED hard learned 30 years ago. It's no longer operational. Berdoo and Dragoo have more important business to attend to. And, Berdoo did promise Milty, "we won't fail this time to keep on pumping until we can get it up". |
