Societe Generale's Dylan Grice hasn't been thrilled by the Federal Reserve's decision to embark on QE3 — an effort to lower interest rates by buying bonds. And many of the world's central banks are pursuing aggressive monetary policy.

In response, Grice has previously said "the defining feature of coming decades will be a Great Disorder".

By this, he means that currency debasement would eventually bring about social disorder.

At today's Big Picture Conference, Grice reiterated this argument when he posted this quote from John Maynard Keynes. Via CapitalismWithoutFailure.com:

"By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some.

The sight of this arbitrary rearrangement of riches strikes not only at security but [also] at confidence in the equity of the existing distribution of wealth. Those to whom the system brings windfalls, beyond their deserts and even beyond their expectations or desires, become "profiteers," who are the object of the hatred of the bourgeoisie, whom the inflationism has impoverished, not less than of the proletariat.

As the inflation proceeds and the real value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery.

Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose."

Grice warned that central banks are playing games they don't understand (via @SamMundi).

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