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World Edges Towards Financial Insanity.Near Bankrupt Ireland Can’t Print Money So Goes For “Quantative Cheesing” (And Palin is Ridiculed calling For Common Sense?)

Posted by M.Joseph Sheppard At Palin4President2016 on November 14, 2010

No I am not making this up-how could anyone? This is “economics” straight out of the world of the Bavarian Republic’s Cabinet Minister Dr.Lipp of glorious memory.

“The Irish agriculture minister, Brendan Smith, said the free cheddar scheme was ‘contributing towards the well-being of the most deprived citizens’. A caller to RTÉ radio asked, ‘have they taken leave of their senses?’

The country may be a few heartbeats away from intervention by the International Monetary Fund but today the Irish government had a novel message for the public: let them eat cheese.

Brendan Smith, the agriculture minister, announced a European Union-funded scheme today that will enable the country to tuck into the EU’s cheese mountain. 53 tonnes of fresh cheddar will be distributed from 15 November with collection centres in towns and cities around the country.”

And this highly ironic, but salutary column gives further background on this sad state of affairs, from the highly entertaining Nadeem Walayat, a regular contributor to the financial blog Market Oracle Walayat said:

“An exhausted Irish Government devoid of any new workable solutions to the spiraling debt crisis, unable to print money and inflate their way out of debt are instead announcing policies the likes of Quantitative Cheesing, which literally boils down to handing out parcels of cheese from the European Unions Cheese Mountain to Irish families to consume or trade as opposed to handing out money which they are unable to do. This is no joke, as a 55 ton handout of E.U. cheese is heading for Irish towns and cities, which does not exactly send a message of confidence to the financial markets as to the state of the Irish economy.”

America has the ability to print money and debase the currency.The idea being that banks, which are currently hoarding money, will be forced to lend it as it will lose value sitting in their vaults so to speak. Thus the economy will receive, at last, an injection of funds which will go to create jobs.

All well in theory but in practice the banks, instead of lending to small business/home purchasers do not have to take any risk with this money they can simply send it offshore. They can get high rates of interest in Australia for example, or they can use it to finance business ventures or real estate in the hot economies of Asia.

This of course exactly why President Obama got such a poor reception at the G20-these countries, which are overheating already e.g. China, do not want a huge pile of hot money pouring in and creating a bubble which will inevitably lead to a crash. Of course if that happens, the last bastion of economic growth for America to export to will collapse, leading to a further recession for the US economy.

With the US currency still a reserve currency (for the time being) America has the option of riding the recession out without cutting spending to the point where, like in Ireland, the economy goes further into recession. Neither does it have to endlessly print money which leads to inflation, as Sarah Palin pointed out, or worse, to stagflation. If, when the 2008 financial crisis hit, the rotten firms and banks had been left to go out of business and the natural business cycle had been allowed to let new, better firms and finance companies take their place, and the government had immediately cut taxes to ensure spending power went to where it was best used and needed, then we would not be in the seemingly intractable unemployment and stagflation situation we are in.

The tax cut option, is still the best way forward-Palin’s “common sense solution”. There is an alternative however, the USA can, like Ireland,become a beggar nation-perhaps the Chinese can send us mountains of noodles?

2 Responses to “World Edges Towards Financial Insanity.Near Bankrupt Ireland Can’t Print Money So Goes For “Quantative Cheesing” (And Palin is Ridiculed calling For Common Sense?)”

  1. Joy said

    At first, I thought you were writing a satire – a parody column: The names were funny, and, of course, the cheese quotient was even sillier. But then, I realized you weren’t making this up! And although painful for the Irish, I just had to laugh at the idea of Cheddar cheese from Europe swamping the Emerald Isle! I can just see it now as a new staple in all the pubs, offered as a “treat?” with Irish soda bread, but washed down with wine instead of Guinness? The mind boggles…

    Just don’t dump your noodles in OUR backyard, China!!

    BTW, you gave one of the best thumbnail description of what’s been happening to all that money thrown at every major banking institution that I’ve read on the subject! Of course, with interest rates at practically zero percent, why take even the risk on small businesses or home mortgages when an institution can realize REAL earnings by just parking all that taxpayer loot overseas? DUH!! And your solution (echoed by other commonsense types at the time, of course) to the banking crises of 2008 was simple (albeit painful) – and would have been efficient in the puriest market sense: Let ’em fail! And then let new grass grow and new blood lead the way toward recovery. The old banks/old blood were and still are riddled with corruption, greed and disdain for the poor schmuck, Joe Q. Citizen. Indeed, It would have been very good riddance to very bad rubbish!

    Please, God, let us learn our lesson for the next time around!

    • Thanks Joy-it is of course perfectly understandable that you might think the article was a satire-the situation is bordering on insanity sadly. Also, I see the links don’t seem to go through. That is annoying as they are an integral part of the post and have much interesting, and frankly disturbing facts as well as Mr. Walayat’s delightful irony. I am trying to get this sorted out but in the mean time please check out my blog at recovering liberal where the links are active-I am sure you will enjoy them.
      Cordial regards

      Mike

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