"THERE IS NO WAY TO FINANCIALLY ENGINEER OUR WAY OUT OF THE CRISIS..."

Economists love the idea that the Fed is all powerful, that it has some magic wand to wave which can rescue Americans from debt deflation.

I suspect this is because, deep down, they harbor ambitions to be Fed Chairman themselves. For most economists, the Fed’s printing press is the ultimate toy….one they’ve always wanted to play with.


And it is a powerful one. Most recessions are easily “solved” because the Fed can always use that printing press to inflate a credit bubble, to inflate demand artificially. This works great until it doesn’t. Eventually the credit bubble becomes so big it’s simply impossible to sustain with more printing.


I suspect this is why Keynesians never bothered asking how we’d pay for stimulus. The answer—”we can’t”—shatters their economic theories.

- Rolfe Winkler, Option Armageddon