The European Central Bank faces a mutiny.
For the first time since the launch of monetary union, an ECB board member has dared to confront the hegemonic Bundesbank bloc in public.
For those of who think the ECB has gravely misread this global crisis and risks repeating the errors of 1930s - and that is the opinion of a few Nobel laureates who have spoken to the subject - this is a glorious moment.
Athanasios Orphanides, the Cyprus governor, has thrown down the gauntlet. His latest speech in Larnaca - only in Greek unfortunately - rebuts the ECB obscurantism that has so shocked economists, and so dismayed those who fear that the ECB's Brüning-Luther drift into debt deflation will reduce Europe to a bonfire of riots and a splintered bedlam of neo-fascists, marxists, and assorted tribal reactionaries.
Who cares about the Cyprus governor? Well, Orphanides is a 17-year veteran of the US Federal Reserve and just about the only member of the ECB council who has published scholarship of world renown.
In other words, he is more than a match for the haughty duo from the Bundesbank - Axel Weber and Jürgen Stark - and everybody in the tight-knit fraternity of central banking knows it. His speech is finally to say to the Old Guard: enough, we have endured your view of the world for long enough, step down, make way.
Yes, Buba was a great bank once. It was a bulwark against the "crass Keynesianism" of the 1970s, but we are not in the 1970s now. We are in a world where an oil shock briefly obscured a immensely powerful debt deflation as the excesses of a 30-year credit addiction finally implode under their own force.
The Bundesbank/ECB misread this. They were distracted by the trivial, and neglected the essential. It led them to commit a shocking blunder by raising rates into the storm in July. The harsh truth is that every generation has to earn respect afresh. No institution can claim hereditary prestige, whether it is Oxford University, the US Supreme Court, or Buba. The current crew in Frankfurt have quite simply blown it.
Yes, the Greenspan easy-money experiment was worse in its deeper effects. (This is not a defence of Anglo-Saxon stupidities). But then Buba/ECB did a 'Greenspan-lite' themselves from 2002 to 2006, fueling the Club Med and East Europe property bubbles.
Hard-money men? Give me a break. They were too loose in the bubble, and have been too tight since this bust began. This is plain error. No amount of ideological bluster can disguise that.
But I digress. The Buba bloc laid out its doctrine and the end of last month. To be precise, it was delivered by Lorenzo Bini-Smaghi from the ECB's executive council, but encapsulates the Bundesbank view.
He said - or implied - that it would be dangerous for the ECB to follow the lead of the Fed (and now the Canadian, British, Swedish, and Swiss central banks) in embarking on radical stimulus.
"There is a risk that policy makers run out of ammunition too early and remain without a means of escape." He likened it to a spaghetti western. The good guys in the cavalry lose if they empty their revolvers too early, and are then surrounded.
This caused consternation. There were audible groans across the City. "Central banks don't run of ammunition. They have a nuclear arsenal," said Erik Nielsen, Europe economist at Goldman Sachs.
Undaunted, Weber and Stark have since been on the circuit promoting this preposterous metaphor. Weber warned against letting interest rates fall below inflation, which sets an effective floor near 2pc right now (no matter that the time-lag effect on inflation is so long as to make it utterly useless as a guide in this fast-moving crisis... but these guys are frankly robots).
They have also been up to their old tricks of trying to tie the hands of the ECB's governing council in advance, signalling to the markets that there will be no January rate cut. This becomes self-fulfilling. The bank cannot then disappoint the market.
Except that this time Orphanides has dropped a neutron bomb on their heads.
"I would like to stress that the view that monetary policy becomes ineffective and cannot contribute further to credit growth when the short-term rate reaches zero, or very low levels, is a fallacy."
"Zero short-term rates are not an obstacle for the further boost of monetary expansion if this is judged to be necessary. Of course, monetary policy is more complicated and difficult in cases where short-term rates are already at low levels. However, this fact does not restrain the effectiveness of monetary policy."
He politely advised the Bundesbankers to stop messing around.
"We're in the middle of an extremely crucial economic phase where economic activity rates are slowing down, financial values are fluctuating and the uncertainty in the financial markets is continuing. It is alarming that, unfortunately, a vicious cycle has been created between the financial system crisis and the slowdown of economic activity in the real economy. This development imposes determined decisions of macroeconomic policy."
The mutiny is gaining shape. Portugal's Vitor Constancio picked up his dagger on Friday, warning of a "significant recession" that will kill inflation.
He said central banks most certainly can cut to zero, and try 'quantitative easing', if need be. "Besides interest rates, central banks have other instruments that are still available and, in this context."
More surprising, Nout Wellink from the Netherlands has inched into the rebel camp. "There are more degrees of freedom for the ECB to react further to what's happening in the economy."
'I myself am more pessimistic with respect to 2010 - or perhaps it's better to say more realistic - than most international organizations. Most start with the assumption that world trade will pick up in the second half of 2009. If you analyze the figures then you see that this is highly unlikely on the basis of the present data for Europe," he said.
So too has Malta's Michael Bonello. "Of course we continue to review the whole range of instruments we have at our disposal. Direct intervention in the credit markets in the shape of quantitative easing could be considered."
So what matters? One many, one vote in the ECB council. Or the unwritten law that the Bundesbank cannot be overruled in EMU because the euro derives its status from the D-Mark legacy? We will soon find out.
In the Orwellian language of the ECB this yawning rift is described by Jean-Claude Trichet as "consensus". The term is "unanimity" when disputes are kept to level where nobody feels strongly enough to oppose a vote.
Isn't it beautiful?