$What was the root cause of the financial crisis? Greed? Deregulation? No. It was ignorance of financial history. Last week the world's central banks-include-ng the American Federal Reserve-acted in concert to try to prevent history from repeating itself. Their critics on both sides of the Atlantic showed a dangerous ignorance, and not for the first time. Republican presidential wannabe Ron Paul warned that the Fed was "flooding the world with money created out of thin air." Paul's remedy for our financial ills is to go back on the gold standard. More alarmingly, German Chancellor Angela Merkel reiterated her opposition to monetary easing as well as to the creation of common "euro bonds." Her latest proposal is that each European state should set up a national debt-reduction fund. In normal times it would be legitimate to worry about the consequences of money printing and outsize debts. But history tells us these are anything but normal times.
展开▼
