Perils of Liquidity Addiction

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK ( TheStreet) -- It is pathetic when we observe a hopelessly addicted junkie attempt to "justify" his her addictive behavior. However, when that junkie wears very expensive suits and presides over one of the world's most prestigious institutions such behavior becomes both deplorable and intolerable.

Who could warrant such an ignominious introduction? In a 21st century economy nearly decimated with the monetary depravity of Western bankers there is a long list of candidates. However, in this case I'm referring to the Bank of England's Chief Liquidity-Junkie, Mervyn King.
Mervyn King, governor of the Bank of England

The actions of an addict are uniform and predictable.

When an addict has used up his latest "fix" and begins to get the inevitable craving for more "junk" to feed the addiction, the addict never, ever acknowledges that his drug-use is the cause of the problem. Rather, the addict fixates on only a single thought: that getting another "fix" will temporary stop the withdrawal pains caused by that addiction.

During the addict's desperate quest for his next fix, the addict loses the capacity for rational thought. To the addict, "the future of the world" hinges on him getting more of his drug.

Lastly, the addict lives his life in perpetual denial. The addict never acknowledges that obtaining another fix never solves anything, but only makes the addiction worse. Most importantly, the addict absolutely refuses to ever consider the truth: that the only way to ever solve his problem is through weaning himself off of his drug.

Viewed through this prism, King's words and deeds are nothing more than the rationalizations of a hopelessly-addicted junkie. What was King's justification after injecting himself and the global economy with another $110 billion of money-printing?

"This is the most serious financial crisis we've seen, at least since the 1930's, if not ever. We're having to deal with very unusual circumstances, but to act calmly to this and to do the right thing."

Let's concede King's point that this is "the most serious financial crisis...ever," since it is something which I fully believe myself. The remarks in themselves are proof of King's addictive mentality. First of all, King, like all addicts, refuses to acknowledge that it was excessive liquidity and debt which has caused all of the current financial problems. It is the most trite of tautologies that you "cannot put out a fire with gasoline."

This brings us to the second, glaring deficiency in King's pseudo-logic: the complete absence of any "end game." While he is absolutely adamant that injecting himself with another fix was "the right thing" to do, he is utterly unable to identify a single way in which another fix will help to solve the problem in any way.

The "financial crisis" about which this monetary Chicken Little is wailing is the existence of gigantic, teetering, mountains of debt --- leveraged to the hilt by the worst gambling fanatics in the history of the world: Western big-banks. The entire "goal" of this money-printing handed to the same big-banks is to "increase their lending to businesses and individuals" -- i.e. make the teetering mountains of debt even larger and more unstable. And this improves things how?

In other words, in the anti-rational world of the addict simply feeding the addiction is itself the sole "goal." This epitomizes the words and actions of not only Mervyn King, but also Federal Reserve Chairman B.S. Bernanke and the dozens of other liquidity-junkies which have infested the Western monetary system.

None of these addicts ever acknowledge that it was their addiction which is the direct cause of all of these problems. None of these addicts ever acknowledges that weaning themselves off of their addiction is the only solution to their collective problems -- rather than ever more and larger "fixes" of liquidity.

What does Mr. King claim that he is "saving us" from? The horrors of a recession (i.e. deflation). In a non-addiction metaphor, we could characterize the Western "gorging" on liquidity and debt over the past two decades as equating to the "over-indulgence"of which many of us are guilty over the Christmas holidays. In this metaphor, the "solution" to that excessive behavior is obvious: we need to go on a "diet."

While such "tough love" is not something which any of us enjoys, as responsible adults we acknowledge that if we are going to temporarily over-indulge ourselves then we must be prepared to tighten our belts afterward as a consequence. However, by definition the junkie is never rational or responsible. The junkie lacks the rationality to even acknowledge his drug use is the source of his "problems." And when it comes to actually acting responsibly, the addict is nothing but a shameless coward.

However, not only are these junkies cowards but they are also hypocrites of the worst variety. While the banker-liquidity addicts continue their orgies of debt and money-printing, they tell us that we should tighten our belts so that they can continue to indulge their reckless addictions in an even more extravagant manner. Hence the oppressed people in the UK get ever harsher "austerity" while UK bankers give themselves ever larger injections.

In the case of Europe's liquidity-junkies, they are now having a great deal of difficulty in even pretending there is a purpose for their ever more frequent injections. Previously, the mantra of these deceitful addicts was that their injections were necessary to "prevent Greek default."

Now that even the addicts are acknowledging that Greece's default is inevitable, their attempts at justification have descended to the pretense that they are "lessening the impact" of that default.

If we translate this from the economic realm to the medical realm, the analogy is obvious. Greece's default is identical to "death by overdose." The justification of the bankster addicts then becomes that these new injections are to make that death "less painful." This has now descended into an exercise in assisted suicide (by liquidity overdose). The actions of these addicts have gone from being 'merely' reckless to blatantly suicidal.

In short, what has been demonstrated in utterly unequivocal terms is that none of these esteemed officials is even remotely competent to conduct their duties and must be immediately replaced by non-addict.

Mervyn King is merely the "poster boy" for a global economy whose fate now rests in the hands of a group of hopelessly-addicted junkies, whose minds have literally been unhinged by the severity of their cravings for more liquidity. It is long past time for an "intervention" for these addicts.

This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

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