The National Bank of Hungary's decision to arm itself with actual weapons demonstrates that tough times breed bizarre and extreme responses.

Citing a host of fears, from bombs, to migrants, to terror, central bank Governor Gyorgy Matolcsy explained to Parliament the bank's decision to buy 112 handguns and 200,000 bullets.

And you thought the zero lower bound left central banks without ammunition.

It shouldn't be too much of a surprise: the same global conditions that produced Donald Trump, a legitimate U.S. presidential candidate, also gave rise to a central bank of a European Union member preparing itself for what sounds like a seige.

To be fair, other central banks, notably the Federal Reserve, have police forces, both to safeguard their premises and persons and also cash and other valuables.

Yet Matolcsy's citing of the risks of migrants is suggestive of a mental map not usually seen in developed market central bankers.

The issue of physical security from migrants has never before been raised, even obliquely, in any discussion of the ways and means of central banking as far as I know.

One wonders exactly how many bullets might be needed to hold the terrorists or migrants off until other, better armed, Hungarian authorities can come to the bank's aid. The mind boggles.

Hungarian Prime Minister Viktor Orban, to whom Matolcsy is closely allied, has pursued a highly restrictive and heavy-handed policy on Syrian and other refugees and migrants, attracting international criticism, so citing migration should be seen in this context.

So call it the Paranoid Style of Central Banking, if you like, recalling historian Richard Hofstadter's famous 1964 work putting the rise of Barry Goldwater into the historical context of exaggerated U.S. fears of, among others, foreigners and Catholics: "extremism in the defense of liberty is no vice."

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