 I'm going to talk about Draghi and friends. He doesn't have many friends, but he has many people who observe him very closely. So I'm going to make four points. First, I'm going to say something very quick about where we stand today. I'm going to talk a little bit about how we got to the current situation in terms of power game in the central bank, a look at the future, and just leave some open questions for discussion. My main point is that we have been talking as libertarians about government, state, lawmakers, and politicians. The danger ahead of us, in my view, is not so much the presence or the activity carried out by politicians, but rather what this new breed of self-appointed technocrats are doing. Politicians, in my view, are going slowly into the background, and power is being concentrated in the hands of people like Draghi. Technocrats that apparently operate, as usual, in the name of the common good, but that in contrast with many politicians, especially according to the democratic image, these guys are totally unaccountable. And Draghi is epitomizes this lack of accountability, which is, unfortunately, gaining currency throughout Western Europe and my extent to the US. I'm going to concentrate in Western Europe, though. So first, where do we stand? Well, the power of Draghi and his friends, who are not really friends, they're just, say, servants, perhaps, or grateful correspondents, his power comes from the fact that he can do whatever he likes with the money supply and whatever the European money supply. And what that has implied is basically the following. He has first bailed out governments and bailed out banks. Now he calls the shots for the future. Why has he bailed out governments and why has he bailed out banks, basically for the same reason? He is part of some kind of revolving door agreement. Remember where Draghi comes from? He comes from the Italian top bureaucracy. He was the general manager of the Ministry of Economics. Then he became minister for economics. He was a director at Goldman Sachs. So he went in and out, and this is a standard practice in that the way these guys operate is that, especially when you have countries that are deep into debt, the big business for them is to enter negotiations with investment banks in order to allocate treasury bills. So basically what these guys do when they are at the ministry is they call Goldman Sachs or other banks. And they say, look, I have, say, 50 billion euros to sell tomorrow morning in order to finance the deficit or to finance the debt. I cannot risk not to sell this debt. How much do you want in order to guarantee these purchases, which basically means how much do you want in order to transfer my treasury bills from my printing machine to the portfolios of your clients? And they quote a tariff. They quote a price. And since the price is paid by the Italian taxpayers or by taxpayers throughout Europe, why not? You quote your price, somebody else pays. I accept the deal. And regrettably, these guys, the seller, ends up on the board of directors or as being a director or executive manager in the investment bank once he decides to leave his ministerial job. Then they go back to the bank and, well, they go back to politics. They get appointed, in this case, to the central bank and guess what he's going to do? He's going to rescue the banks. So Draghi probably does not care too much about government debts, but he cares a lot about investment banks and commercial banks, which, in the past, have been buying treasury bills from most European countries. So basically, my point is that what Draghi is doing, what Draghi has been doing by printing euros through these seven, eight years now, has been bailing out the banks to which he was understandably grateful and who contributed to his various appointments. So this is kind of the, say, hidden agreement, which is not that hidden because it's public. I mean, it's public. His career is known. And it is known that the main beneficiaries have not been governments but have been the banks. Now the point is, so this is nothing new, the point is how did we come to this point in which this, say, technocrats, thanks to revolving door agreements, thanks to acquaintances, thanks to doubtful careers from the moral standpoint. How come that our societies are almost admiring this category of people? Well, my explanation goes back to rent seeking. I think Hans yesterday was mentioning the public choice story. And rent seeking is what Bastia, Ferrara, and more recently Talak spoke about. And it is about privileges. We have been going through, in my view, through three periods, through three pictures regarding rent seeking. The first period, we can call it the Bismarckian story. And it came to the surface in the 19th century. And basically it was a deal between big business and government. The idea was, I'm just summarizing, and you'll forgive me for that, the state government takes care of you. It engages in pursuing the common interest. It diffuses social tensions. It keeps large corporations in check so that people are happy. And as a counterweight, it helps corporation by giving them privileges, by restricting competition, and by giving them all kinds of subsidies, and by keeping trade unions in check. So there is this kind of bargain between the public at large that wants to be taken care of and the large corporations. Rent seeking is the distribution of privileges and low makers where by and large controlled by these large corporations who call the shots. Things changed during the 20th century, once again, I'm not precise, but the important thing is the basic notion behind it. The 20th century was characterized by the expansion of the welfare state and by this expansion of the state bureaucracy. That means, especially in Europe, that a new coalition, a new interest group comes to the surface, emerges. And this interest group is the bureaucracy. Now, the difference between this period and the previous period is that whereas in the so-called Bismarckian period, the low making class is legitimized and supported by large corporations, in the second period, the low makers, an interest group by itself, actually creates its own support. So the deal is no longer between business and low makers, it's between bureaucracy and low makers. And the low makers turn into the dispenser, the distributors of privileges. So the ranking between business and low makers starts to change thanks to this new actor. And the new actor is the bureaucracy. They don't need support from economic actors anymore. They find support in their own creatures. And this is the beginning of, say, modern cronism, so to speak. You need cronism in order to build your own support from within thanks to the bureaucracy that you have appointed, that you have created, and that you have subsidized, and that you have protected. So cronism turns into the essence of rent seeking. That is, as a low maker, you do not get power and you do not make money out of big business because big business allows you to do so. You do it through the bureaucracy and through the companies that you control through government. So it is, you reap the rents through the creation of a large government sector. You don't have to go outside to satisfy your vanity or to satisfy your greed. You create the opportunity, and then you extract the rent. How do you make sure that you extract the rent once you have created the opportunity? You appoint cronists. So cronists in this second period becomes the essence of the rent seeking story. What is the problem with this? Or what is the next step? Next step is that these cronists end up breaking loose. Once these cronists understand that they have the power to interact with the lawmakers in order to allow them to extract the rents that they are creating, they start asking themselves, why do we need the lawmakers? Why don't we self-perpetuate ourselves? Why don't we carry out our own lawmaking giving, say, some secondhand privileges or something like that to the lawmakers? And this is actually what happened. During, say, the last 50 years until recently, the system has been run by the bureaucrats who have used for example, regulation in order to expropriate the lawmakers. I'm not saying that the lawmakers are victims. I'm not saying that they're innocent. But what I'm saying is that they're too dumb not to stop the bureaucrats. And they are too incompetent not to stop the bureaucrats. So eventually, the bureaucrats have taken over. And you see it, well, I come from Italy, and I can tell you about Italy. But it happens in most Western European countries. It doesn't really make much of a difference whether, say, Berlusconi, Renzi, or somebody else is in power, because the shots are called by the top bureaucrats. The ministers hardly see the documents. They just sign them. And the scandals come to the surface when they find out, which is not very frequent, and when they speak up, which is even less frequent. What happened in Italy recently, and I'm sure it happened elsewhere, is that some ministers woke up one morning and said, oh, how come that now we have this regulation? And they got a fax or an email the next day by the bureaucrats, saying, I sent it to you a week ago, and you signed it. And they never knew. So the question is, the bureaucrats, the top bureaucrats have actually, say, moved aside, pushed aside the lawmakers. And they've taken control. How does this new class of former cronies, because now they have a life of their own? How do they justify themselves? And what do they do? Well, the new, say, mantra is merit. What does merit mean? That means, in their view, technocratic abilities, technocratic skills, does not really mean that they're doing the right things. It does not mean that they have a vision, but it means that they are so complicated, so convoluted, and so arrogant, they eventually become unaccountable. And this is where banking and central banking comes in. Once these technocrats take power, and Draghi is one of them, and in all regulatory agencies, you have them. So in a way, Draghi's friends are not really the bankers, those are Draghi's servants. Draghi's friends are the head of the various regulatory agencies you have throughout Europe, and in Brussels, the European Union, those are his counterparts. Those are part of the same class of people, and of course, the collude. Now, how does this relationship between, say, this central technocrats and the world of banking emerged? Well, a key word is regulation and supervision. Central bankers can blackmail bankers by making hard very, I'm not justifying bankers, period. However, what I'm trying to explain is what kind of relationship you have between a central banker, a traditional central banker, Draghi being one of those, and a private bank, or semi-private bank. And the relationship is blackmail. If I'm a central banker, I have supervisory power because the law gives me the power to come to your bank and to make life very difficult for you, and to slap fines of all kinds. So if you're a banker, you have to play my game. Otherwise, I'm going to kill you, professionally. So on the one hand, you have blackmailing by the central bank. What do you have to do as a banker in order to meet the central bankers' requests? Well, by and large, what Western central bankers had to do is to buy treasury bills. So take deposits, transform those deposits into public debt, and you'll have a happy life. Incidentally, it's also easy because it's easy to take money from depositors. It's also easy. It's a click to buy treasury bills, and it's even nicer and easier to pocket a bonus at the end of the year. You pay nothing to depositors. You used to pay to get a lot of money from interest, the rate of interest paid on public debts. If you bought Greek public debt, Spanish public debt, Italian public debt until recently, you would make huge amounts of profits, totally safe because you had a guarantee. And even if the guarantee was not credible, who cares? You don't pay the price if you go down. The politicians, if anything, will pay the price. So the deal was easy. I force you, as a central banker, to buy treasury bills. If you have some morality or some principles, I can make life very difficult for you so that in the end, your shareholders will kick you out. What is the, let's say, the advantage or the benefit for the central banker? Well, of course, they want to promote their own career. These guys, especially when they're relatively young, and Draghi was still relatively young, but was even younger when he was appointed. He was even younger when he was appointed minister or general manager of the ministry. So they want to make a name. They want to make headlines. And they want to have a political career afterwards. For example, Draghi is currently candidate number one to become president of the Italian Republic once the current president expires. And he was also the first candidate when the former president went out of office. But he declined because he's happy where he is. He can make his name. And he knows that he will be number one anyway. So that is my prediction. Let's see if they point him somewhere else. But he might become president of the Italian Republic, which is the top of rent seeking. I mean, beautiful holidays, nothing to do, great alas, horses, and anything you like. That is great. And we cost, incidentally, I think three times as much as a queen of England in terms of running expenses of the presidency. So you can understand how nice it is to be president. So they want to make a career. They want to satisfy the vanity. And they have a debt towards the investment bankers and the bankers that held them in their career in the past. So save the bank, promote their image, and make bankers and politicians happy. And this is what Draghi has basically done over the years. He has been pumping money, printing money that basically went to the banks. He's also been protecting the banks by fake stress tests. You all know about the stress test story. Every time a stress test comes out, everybody looks nice except for a few, say, non-conforming banks, perhaps. The truth is that the European banking system is rotten. And you cannot hide the rot just by showing some statistics which are complete and criteria that are systematically circumvented. The European Central Bank gives the example. For example, right now, Draghi's main problem is to save the European Central Bank. If Greece repudiates its debt, which is what Hansen everybody with common sense would say, Italy should do the same, Spain should do the same, France is the same situation, if we repudiated our debt, the balance sheet of the European Central Bank would be broke. That is, the European Central Bank has a balance sheet with assets and liability. If we go broke, the assets, which is government debt, is wiped out. And the European Central Bank is wiped out. So basically, printing money right now serves three purposes. Makes politicians happy, makes banks happy because they have easy access to credit. And it makes himself happy because it helps the European Central Bank to survive. So there will be no, say, end to this easy monetary policy unless you have a major shakeup. Greece is not enough. You need a big country to go bust. A big country could be Italy. It could be France. It might be Spain. But I think the prime candidate right now, candidate is Italy. And how could Italy go bust? Well, for example, if interest rate went up, we wouldn't be able to serve our debt, and we should repudiate. So debt servicing would go through the roof, which means that Draghi, once again, is forced to enhance an easy monetary policy in order to keep interest rates down. It does not do it for growth. This is just smoking the eyes. This is not a Keynesian story. This is rent-seeking and cronism, which might be correlated, but it's not exactly the same thing. He's not keeping interest rates down in order to promote growth. He's keeping interest rate down in order to save troubled countries, including Italy, but not only Italy, and in order to save troubled banks, which means 90% of the banks in the European Union. So you can understand why he's holding a key position and why everybody, virtually almost everybody, is supporting him. What is the next step? Well, the next step is that these guys are here to stay. So people like Draghi will multiply, because in every area of policymaking, we are having troubles. And in all areas of policymaking, we believe, well, we believe, or they believe, that technocrats have some kind of magic wand and they can replace politicians. Regrettably, we're heading towards some kind of technocratic oligarchy, which is particularly disgraceful, not so much for the term oligarchy, but because these guys operate behind what we could say a veil of populist democracy. That is, these guys are legitimized by democratic populism. So they're very difficult to attack, because after all, they have some kind of procedural legitimacy, which does not mean substantive legitimacy, but procedural legitimate makes them acceptable. And the idea, according to which, in Draghi's example, by printing money, you make everybody happy at no cost is very difficult to oppose and is very difficult to counteract. So the open question is, what is next? Or why have we, I mean, what are the grand explanations of this announced disaster? Well, there are two theories that I've just mentioned now, and then I come to the conclusion. And the two theories are, one is the ideological change. I mean, we've been swept away by an ideological change, the infatuation with populist democracy that dates back probably to the late 18th century, the French Revolution, the idea that power for everybody, power to everybody, something that even Rousseau was very skeptical about, but they have taken over. And after 200 years, things have gotten worse. So this is the ideological explanation, and I don't think that we are on the verge of a new ideological revolution. So this is the first, say, take, which means, which explains why these technological technocrats are going to say. The second explanation relates to the unintended consequences of an overblown bureaucracy. For example, if you read Neil Ferguson, he's not against. He's against, first he goes, criticizes a heavy state, but he does not criticize the notion of government and the need for a substantial government. And he says, well, the fact that government has led us to unintended consequences should be an incentive to get things right. And that takes us to the technocrats. So the glitch, or if you want the delicate point, is that these people, and most of them, belong to this Ferguson category, believe that government is good, that things can be better, that things can be fixed, and we should get rid of the old political class and have a new class of people appointed to merit. Now, these people appointed to merit, quote, unquote, are these technocratic bureaucrats that are even worse than the standard politicians, but at least the standard politicians were, say, open, not accountable but visible. People like Draghi and his friends and these revolving door agreements are neither open nor accountable. And this is regrettably a recipe for disaster. Thank you very much for your attention.