Bernanke to ECB - Here, Drink Some of My Pee

What a difference a weekend makes. On Thursday night, Brian Williams disclosed to David Letterman that the dirty little secret was that the "world has no money, and the emperor has no clothes." It's Monday now and not only is the world awash in dough, the emperor is draped in more finery than a Harlem pimp.

It was so easy. The European Central Bank came up with one trillion dollars, just like that. All those dodgy PIIG bonds? No problem: the ECB is going to buy them, with help from the International Monetary Fund and the Federal Reserve. Solvency is restored, debt is paid down, and everything is okay.

Why did we wait? I don't get it. Why allow all those CDS speculators betting against European bonds to play their games so long? The solution was always within the Western world's (and that of Japan's) grasp. The central banks make entries on their computers (monetization) with which to buy all of that government debt for which buyers are scarce, and voila!, as Trichet would say (though with the accent on the final ah). We're back in the money.

It's a program pioneered by Ben Bernanke of our own Federal Reserve. When there was no support for the housing market, what did Bernanke do? He "bought" $1.25 trillion in mortgage-backed securities and threw in another $300 billion to buy the Treasury Department's own debt (see where the stodgy old Europeans got the idea? They're not as quick as we are.) Did he raise the money, for example, to buy Treasuries by using the proceeds of Treasury sales, deposited by the Treasury in the Federal Reserve "Bank." C'mon, don't be silly. That's drinking your own pee. Works for a while, but...No, Bernanke declared that the money to fund Quantitative Easing existed, and that was that.

It must have been a tedious and dreary seminar where Bernanke had to teach these European cretins how it's done. Just to be in the room, I mean. They smell funny, with all that cologne, reeking of unfiltered cigarettes. The Eurodogs were talking about dumb things like austerity and belt-tightening, and recognizing the debt and dealing with it realistically. There's no need for that anymore. America always leads the way. We're the Innovators. What you do is, you borrow as much money as humanly possible, until the buyers at auctions start to thin out. Then you start buying your own Treasury issuance, and when that's still not enough, you just print the damn money and say there! (It sounds better in French, actually.)

The alternative is to acquiesce in a mindless, old-fashioned recognition of poverty, the way Brian Williams was trying to do. It's to say, we've borrowed far more than we can ever repay, we're way underwater in debt, it's time to tell the truth about our broken banking system, with all its Mark-to-Myth accounting, it's time to recognize that taking the liabilities of Fannie & Freddie onto the Treasury's balance sheet added another $6 trillion in contingent liabilities on top of the $13 trillion we already recognize, and so very much more. Where's the fun in that? Are we going to revert to an international system where seafaring traders swap beaver pelts for spices? Why did we even come up with a free-floating fiat system of money if we're going to bind ourselves into a monetary straitjacket?

Not on your life. We have computers, and if the ECB types in one trillion dollars, and that shows up on the monitor screen, then everything's okay.

As usual, Joseph Heller anticipated all of this when Yossarian comes up with a brilliant plan for avoiding the dangerous bomb run to Bologna:

"I really can't believe it," Clevinger exclaimed to Yossarian in a voice rising and falling in protest and wonder. "It's a complete reversion to primitive superstition. They're confusing cause and effect. It makes as much sense as knocking on wood or snapping your fingers. They really believe we wouldn't have to fly that mission tomorrow if someone would only tiptoe up to the map in the middle of the night and move the bomb line over Bologna. Can you imagine? You and I must be the only rational ones left."

In the middle of the night Yossarian knocked on wood, crossed his fingers, and tiptoed out of his tent to move the bomb line up over Bologna.

I "I really can't believe it," Clevinger exclaimed to Yossarian in a voice rising and falling in protest and wonder. "It's a "I really can't believe it," Clevinger exclaimed to Yossarian in a voice rising and falling in protest and wonder. "It's a complete reversion to primitive superstition. They're confusing cause and effect. It makes as much sense as knocking on wood or crossing your fingers. They really believe we wouldn't have to fly that mission tomorrow if someone would only tiptoe up to the map in the middle of night and move the bomb line over Bologna. Can you imagine? You and I must be the only rational ones left."

In the middle of the night Yossarian knocked on wood, crossed his fingers, and tiptoed out of his tent to movedI really can't believe it," Clevinger exclaimed to Yossarian in a voice rising and falling in protest and wonder. "It's a complete reversion to primitive superstition. They're confusing cause and effect. It makes as much sense as knocking on wood or crossing your fingers. They really believe we wouldn't have to fly that mission tomorrow if someone would only tiptoe up to the map in the middle of night and move the bomb line over Bologna. Can you imagine? You and I must be the only rational ones left."

In the middle of the night Yossarian knocked on wood, crossed his fingers, and tiptoed out of his tent to move the bomb line up over Bologna.

ve the bomb line up over Bologna. reversion to primitive superstition. They're confusing cause and effect. It makes as much sense as knocking on wood or crossing your fingers. They really believe we wouldn't have to fly that mission tomorrow if someone would only tiptoe up to the map in the middle of night and move the bomb line over Bologna. Can you imagine? You and I must be the only rational ones left."
In the middle of the night Yossarian knocked on wood, crossed his fingers, and tiptoed out of his tent to move the bomb line up over Bologna. can't believe it," Clevinger exclaimed to Yossarian in a voice rising and falling in protest and wonder. "It's a complete reversion to primitive superstition. They're confusing cause and effect. It makes as much sense as knocking on wood or crossing your fingers. They really believe we wouldn't have to fly that mission tomorrow if someone would only tiptoe up to the map in the middle of night and move the bomb line over Bologna. Can you imagine? You and I must be the only rational ones left."

In the middle of the night Yossarian knocked on wood, crossed his fingers, and tiptoed out of his tent to move the bomb line up over Bologna.