And competent regulators would have forced progressively larger haircuts on the private banking sector as collective exposure to foreign markets grew. But that would have required the BuBa to pay attention and police creditors instead of waxing lyrical on the moral responsibilities of debtors to fulfil mathematically impossible obligations.

The more I think about it, the more a central bank guarantee of a lower bound on the exchange rate strikes me as turning idiosyncratic risk into systemic risk. Or, if you will, socialising the cost of buying currency swaps to hedge against sudden currency movements by replacing it with restrictions on fiscal and interest rate policy.

- Jake

If you only spend 20 minutes of the rest of your life on economics, go spend them here.