Trying to regenerate high growth through stimulus, rather than patiently waiting for a market realignment, leads to rising inflation rates. When inflation sparks panic, rapid tightening becomes inevitable. And that triggers another crisis. I’m afraid this is exactly what’s in store for 2012.

Why is liberty always on trial? Why does the burden of proof rest with freedom, private property, and voluntary exchange rather than coercion, socialized property, and compulsory exchange? Why is the assumption or assertion that some people should govern others almost always implicit in the discussion?

Congress and the fed are doing their best to not learn the lessons of the mortgage crisis. Ergo, all of the failings that led to the crisis were things that politicians wanted to occur. When congress demands that unworthy securities should be rated AAA, obviously one should doubt that such securities actual deserve the rating, but it also signals that congress might intervene to subsidize them.

The pragmatist looks for areas where the economy and society fall short of the Garden of Eden, and these, of course, abound. Poverty, unemployment, old people with scurvy, young people with cavities — the list is indeed endless. And as each problem multiplies under the care of his eager research, the pragmatist calls ever more stridently for government to do something — quickly — to solve the problem. Only hard-headed, deductive, a prioristic economic theory can teach him about ends and means, allocation of resources, opportunity cost, and the other rigors of the economic discipline.

Both these actions suggest spectacular inflation may not be far away. Although the ECB statement says the purchases will be sterilized, meaning they won’t increase the overall money supply in the system, one wonders how long this will go on. A sterilization of the money printing would mean that money would be drained out of other sectors of the EU economy to be given to the governments of the PIIGS, who are proven irresponsibles with money. Draining from the potentially productive sectors of the EU economy to give to the PIIGS is almost as insane as printing the money without sterilization. That no objection to this madness has come from any finance minister or central banker signals how far down the road we are from any real concern about inflation or the taking away from the productive sectors of the economy. Indeed some of the the statements coming out of the emergency meeting of EU finance ministers are simply absurd.