Germany has been incredibly tolerant of its spendthrift Southern neighbors. The Greeks want to retire when they are 23 having served a 3 day week. The Italians want unlimited deficits and permanent chaos and the Spanish are still in bed, they don’t even know they are in the Euro. Germany pays for all of them.

Patience wears thin in Berlin though. Some five years ago, a group of German taxpayers took the Bundesbank to court about quantitative easing. In essence, their issue was that the European Central Bank was breaching German law through its asset purchases, which were being undertaken by the Bundesbank. European law is complex but the case was broadly that the European Central Bank has one mandate, price stability. Once it steps outside of that it breaches not only its mandate but German law (and that every other country). Their claim was that QE, now at 40% of EU GDP, was completely disproportionate to the task at hand.

The ruling from the Germany’s highest court agreed, they did not hold back:

They gave the ECB three months to come up with why they believe their asset purchase program is proportionate to their goal of price stability (which it very clearly isn’t). If the ECB falls short in its explanation, the Bundesbank will be barred from asset purchases. I cannot wait for that explanation. “Dear Germany, yes we spent 5.2 trillion Euros trying to make prices rise, it didn’t work. Thank you for the cars”

This is Europe though, so it got a lot better. ECB President, Christine ‘Lend to Argentina’ Lagarde replied, saying she was “undeterred” by the ruling and would “do whatever it takes”. She did not elaborate as to what, presumably whatever it takes to simply ignore Germany.Germany remembers hyperinflation though. I keep saying it. There are people alive today In Germany that have lived to tell the tale and it is deeply ingrained in the German psyche. Christine might be doing whatever it takes but pretty soon she will be doing it without German money, and in Europe they are the only show in town. The Euro is finished, it’s death will be slow and painful.

This was a very significant moment in Europe. To paraphrase the German Constitutional Court: it is our money and we are in charge

Speaking of the debt clock. It was a milestone week for the United States last week as its national debt went through $25 trillion. They are currently adding debt at a rate of about $100 billion every 3 days. 250 million adults live in the USA, they are now on the hook for $100,000 each. The average salary in the US is about $50,000 and most people have about $300 in savings (likely less at the moment). That said, bondholders will get paid just with freshly printed money.

To finance the ponzi, the US treasury announced that $3 trillion in US debt would be auctioned in this coming quarter, including the first issuance of 20 year US debt since 1986. The treasury wanted to go to 50 year debt, but the market appetite was “unclear”. Only $20 billion of 20 year bonds will be auctioned, so less than 1% of the quarterly requirement is being auctioned for that long. It will all sell and the US Treasury will announce “huge success”, “5 times over-subscribed”.

It’s all happening on May 20th, so stand by your Bloomberg terminals for some bond market success hyperbole.

If you ever wanted a lesson in debt monetisation, then this was it. Simply issue bonds to the market, then keep buying them in the secondary market to keep interest rates low. As long as the Fed doesn’t start buying them in the auctions themselves, then everything is fine, right?

Thehalving finally arrived on Tuesday at 6am Sydney time. Without a hitch, the bitcoin protocol now rewards miners with 6.25 bitcoins every 10 minutes, not 12.5.

It is the apolitical nature of code that makes bitcoin so powerful. No Christine Lagarde here printing money at random, no “the time isn’t right”. It happens, on schedule. No matter what the external conditions bitcoin behaves in a specific way and that’s how we know exactly the money supply at all points in time.

It is impossible to plan an economy, or run a business efficiently when the money supply leaps around all over the place, it is that which causes the loss of confidence.

That was Frederich Hayek in 1984, That same year, Phil Zimmerman was coding PGP including some of the building blocks that would go into bitcoin. Maybe bitcoin is a flash in the pan, but if it is, more than 50 years of combined genius have gone into it.