Two Fascinating Reads

When Niall Ferguson talks, you had better listen. In this column he points out that empires sometimes evaporate overnight, often due to financial crises. Sound familiar? He also makes this important point, and one that has worried me ever since Mr. Bush decided to enter Afghanistan, graveyard of empires since before Alexander the Great:

Ask Russia too. Fighting a losing battle in the mountains of the Hindu Kush has long been a harbinger of imperial fall. What happened 20 years ago is a reminder that empires do not in fact appear, rise, reign, decline and fall according to some recurrent and predictable life cycle. It is historians who retrospectively portray the process of imperial dissolution as slow-acting. Rather, empires behave like all complex adaptive systems. They function in apparent equilibrium for some unknowable period. And then, quite abruptly, they collapse.

Then this frightening link at Zero Hedge in which someone compares the US with the Weimar Republic in Germany (think inflation of more than one million percent). Very eerie similarities.

Believe it or not, a school of economic thought that was prominent in Weimar Germany during the hyperinflation and particularly at the Reichsbank as it was aggressively monetising the government deficit held that the escalating money supply had nothing to do with the exploding rate of inflation! More on that later.

Believe it or not, there is a school of economics that says, when your economy is slowing down the government should spend more money to prop it up, and if it slows down some more, then the government should spend even more money, and if it doesn't speed up? You didn't spend enough. Madness.