…in today’s world, the crucial credibility central banks need involves, not willingness to take away the punch bowl, but willingness to keep pushing liquor on an abstemious crowd…
So right, on so many levels. My assumption here is that when he talks about central banks taking away the punch bowl, he is referring to a rate hike, or selling of assets. And by pushing liquor, he is referring to more QE, at this point, since rates are pretty low.
What happens when you push liquor into people (whether they want it or not) for an extended period of time?
- The party. Irrational exuberance. Beer goggles.
- Inebriation. Fighting. Falling down drunk, or instability (of many kinds, including instability of markets, civil institutions, outright war). Volatility. Horrible, horrible ideas which are immediately executed.
- The limits of partying. Every human has a limit to how much liquor his/her body can tolerate, and how much it can process. Not a hard limit, and not the same for every person or circumstance, but certainly things will, at some point, take a turn. I would say that the history shows the same is true for economies/governments and debt (look at the graphs in that one, which support the general concept while they refute the idea of a hard limit)/money printing.
- The immediate aftermath. This might include jail time (well, for the little people). Also lots of property destroyed. And people harmed.
- The hangover. The harder the party, the longer the hangover. And it can last FAR longer than the party did.
- Long term consequences. If you continue this, some of the people will become alcoholics. Which sucks for everyone, not the least of which is the alcoholic person. And you can’t take that back. Ever.
Pushing liquor on people is a questionable idea, at best. Everyone knows that. But pushing it on those who specifically do not want it is downright immoral. Not sure how that could ever be transformed into credibility.