My latest at Mises CA. The conclusion:
Despite the minor mistakes in his presentation–which again was from a speech to a live audience–Rand Paul has put his finger on a very serious issue. Central banks around the world have loaded up on assets, particularly central government debt, in an unprecedented fashion. If and when they decide to raise interest rates, among other things such action could instantly render the major central banks insolvent. Not only would this possibly cause a worldwide financial crash, but it would also limit the central banks’ ability to reduce the quantities of fiat money. No doubt they would continue to operate, much as the banker in the board game Monopoly when he runs out of money, but that still doesn’t justify the situation economically. There’s a reason bankrupt firms stop operating in a genuine market economy.