At least the ECB has some sense

Witness the following comments from European Central Bank council member Christian Noyer at a conference in Frankfurt (as quoted by Bloomberg):

"We might be facing a permanent increase in the demand for money and of course this shift may impact on measures for excess liquidity ... Consistent with this hypothesis is the fact that money holdings of corporate and financial institutions have grown much faster in recent years."

Exactly what I said below. And here's the "money" quote, if you'll pardon the pun:

"When financial imbalances build up in the economy which are fueled by excess money or liquidity growth, unwinding of those imbalances can be brutal and discontinuous" and "very destabilizing."

He also added that surging money and credit growth promotes asset booms -- exactly what we've seen in spread product, commercial R.E. ... aw, heck ... you know the score. No need to repeat myself.