The idea is simple: the central bank buys from commercial banks other people's debts. Who are these 'other people'? They can be families that owe mortgages to the bank, corporations, or even a government that has sold bonds to the bank. In exchange for these debts and the stream of income they produce, the central bank deposits dollars or euros in an account the commercial bank keeps at the central bank. Where does the central bank find the money? From thin air, is the answer: they are just numbers that the central bank conjures up and adds to the commercial bank's account. Why do this? In the hopes that the commercial bank will use this money by lending it to businesses wishing to invest and to families wanting to buy houses, cars, gadgets and so on. If this happens, economic activity will rise again as liquidity sets in. [...]

[...]

To cut a long story short, a great deal of believing must occur before QE delivers on its promise to boost the real economy. [...] banks tend to lend the money conjured up by the central bank not to other banks or to Jack and Jill but to companies. Except that these companies do not invest the borrowed money in machinery and workers, fearful that the demand will not be there for extra output produced. What they do is to buy back their own shares in the stock market in order to increase their price and collect a nice bonus for having 'added value to the company'. While this process does boost, to some extent, upmarket house prices and demand for luxuries, the only genuine beneficiary is gross inequality.

[...] a federation replaces sovereignty forfeited at the national or state level with sovereignty at the unitary, federal level, centralizing power within an alliance of states is, by definition, illegitimate, for there is no body politic that can legitimize it.

[...] The essence of that sorry treaty was not so much that it crushed Germany economically and caused Germans untold collective pain, but that, in the end, it was an own goal: a terrible deal even for the victors--a self-defeating punitive act that John Maynard Keynes understood early on and the rest of the world came to recognize as such in the 1930s, when it was too late.

Instead of asking 'How should we deal with this crisis?' the powers that be asked an almost religious question: 'How should we bail out Greece, Ireland and the others without seeming to violate the no-bailout dogma?' It only takes a second's thought to realize that by posing the second question rather than the first Europe was bound to go astray.

[...] Bewildered Europeans caught in a permanent downward spiral and devoid of democratic control over those whose decisions determine their lives are turning inward and blaming themselves. Back in the Middle Ages, when the Black Death hit Europe, most Europeans genuinely believed that the plague was caused by sinful living and could be exorcized through self-flagellation. They were of course wrong, but something similar is happening today.

Leonard Schapiro, writing on Stalinism, warned us that 'the true object of propaganda is neither to convince nor even to persuade. But to produce a uniform pattern of public utterances in which the first trace of unorthodox thought reveals itself as a jarring dissonance.' [...]

The differences between Greece and Ireland are instructive. Ireland had a tiny debt before 2008. Greece had a large one. The reason is simple: capital flow from the surplus countries was directed into the Greek state, which in turn passed it on to developers--those who built highways, 2004 Olympic sites, etc. In Ireland the same capital flow went directly into the banks, which then passed it on to the developers, bypassing the state. Thus, Irish public debt was tiny while private debt was gargantuan--the opposite case to that of Greece--but when the crisis hit, the result was the same: the Irish state took on the burden of private debt and collapsed. The Greek state just collapsed.