Karl Denninger on who, ultimately, is to blame

A good and frank post by Denninger. In the final analysis, Denninger highlights the central problem of a socio/political system be it democratic or otherwise. In praxeology, politics is but an expression of human action and, as such, is inherently inflationary unless it is consciously and deliberately constrained. And that should be the role of government. As von Mises predicted:  “There is no means of avoiding the final collapse of a boom brought about by credit (debt) expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit (debt) expansion, or later as a final and total catastrophe of the currency system involved.”


When your income is no longer sufficient to cover the interest on your debt, you must sell assets. This holds true for households as it does for governments. Once you are on the other side of peak inflation, selling assts only reinforces the loss of value of said assets thus heralding a period of deflation… and deflation is anathema to the political establishment…

Also see:


And read part III of the my recent post



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