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The stock markets are not so much a roller-coaster ride as a series of sleeping-policemen bumps. Each jolt makes us ask ‘is this the big one?’; each retreat reminds us that there are some worrying waves around even if they do not amount to a tsunami. What are the forces at work and how will they play out in the coming months?

As I mentioned yesterday in Productive and unproductive investment, productive money has moved from government control to company control and with it some of the power to make things happen. However, elected governments are still in overall control, aren’t they? You might try asking the UK culture secretary, Jeremy Hunt, as he defends his relationship with Murdoch’s BSkyB shares deal.

There are plenty of other examples of how highly valued companies increasingly call the tune in every area from building planning consents to tax changes. If wealth generation is the sole purpose of life this may not be a bad thing. Those who have made it often know how best to invest it. I question whether wealth generation is the sole purpose of life. Important, yes, but sole purpose? You frequently say no to that.

Loss of government control is not confined to power moving to wealthy companies. What has happened in the Netherlands is but a curtain-raiser to the events about to erupt in Spain and France. People Power is as contagious as any disease and entitlement is so deeply entrenched , especially in European cultures, that it will be surrendered reluctantly – or, in other words, only after a riot.

A government keeps control only by coercion or persuasion. No democratic electorate is going to settle for coercion today. Persuasion now amounts to bribery but bribery requires resource (money) to be effective. There is no money left so the political bribery will have to come from defaulting on debts. The consequence of this is devaluation of the currency involved but how do you devalue the Spanish Euro while keeping the German Euro fully valued? You either have two Euros (or twenty-seven) or abandon the currency altogether.

There is a third way. You issue more money. You call it Quantitative Easing (QE) so nobody really understands what is happening and you pour trillions of whatever into the money funds supporting the banks. As this is released into the economy the rate of inflation starts to grow, slowly at first, much faster later on until you have hyperinflation with more and more money being created to fuel the declining value of the currency.

What happens then? The poor get poorer and the rich barricade their homes.

It is going to be a bumpy ride indeed.