This time, as a result of the encouragement of a prolific expansion of the global money supply, most of the rise in prices this last five years has occurred in assets. Moreover, the stock Bubble itself has been of inordinate assistance in the US, for one, with the unprecedented levels of stock turnover catching a greater proportion of the notional profits in the capital gains trap. Other exchequers have gratefully gathered in extra stamp duty monies, a Tobin tax on you and me, rather than Soros and Robertson. Finally, European government has become rapacious with its extortion racket over UMTS phone licences. Morgenstern and von Neumann proud has extracted untold bounties from this multi-billion winner's curse.
Confiscation is what government is about, after all.
None of this would have been possible, however, without the inflation-driven New Era hunger for the equities in the first place. None of it would have been possible without the inflation- driven availability of credit, enabling vast bond issues and even more vast syndicated lending to finance this high bandwidth Canal Boom. Now, however, with Telco stocks leading the declines in most indices, with their bonds becoming tainted with toxicity, the regulators are looking askance at the exposure of the banking sector to this welter of potential malinvestment. But then Austrians know that business depressions result from the banking authorities deciding to forestall the potential hyperinflation, whose seeds they alone have sown, by belatedly withdrawing the oxygen of easy money, thus asphyxiating the boom and precipitating a crash instead. The FT says the financial stability chiefs have 'launched inquiries' into Telco lending, saying variously that matters are 'of great concern' because of the risks the banks are taking with one sector.