Helicopter Ben finally hauls out the helicopter: "So there are limits to the Fed's magical powers, and they already began showing up in currency markets this afternoon, with the dollar falling sharply against the euro and other foreign currencies. The adventure continues."
The effects of magic must be to weaken intellectual inquisitiveness, to encourage the indulgence in vain procedures for controlling the universe, instead of the profitable application of developing a technique for specific ends; to substitute unreal for real achievement, imagination for action, and to breed an easy fatalism which will prevent the building of fences to keep off crocodiles, or the taking of suitable measures to prevent disease. . . . Magic is indeed a parasitic adjunct to technique which sometimes completely immobilizes it.
I am of the opinion that inflation (the devaluation of money) is now the only realistic way out of this problem. That has been true since the first AIG bailout. The bridge was crossed at that time and there is no looking back until the inflation stabilizes the real estate prices.
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