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Deflationists Take Note: Bernanke Succeeds In Offsetting Shadow Banking Collapse
The biggest piece of news in Thursday's Z1 statement was not that consumers continue to deleverage, that corporate cash levels are at $1.9 trillion (of which $1 trillion is financial and half of the rest is held offshore: maybe instead of copying Zero Hedge charts, the WSJ could have actually focused on the story behind the headlines) or that the stock market continues to be the only manipulated delta in household net worth (even as wealth in real terms is dropping). A far more relevant and important data highlight has to do with the only thing that actually matters for the reflation of the monetary bubble: namely the fact that the contraction in the shadow banking system is continuing. Or so was the conventional wisdom. As of September 30, Bernanke has successfully stopped the net decline of monetary aggregates even when including the massive shadow banking system.
As we have long claimed, every action by the Fed, every attempt at reflation, every bond purchase directly, and ES purchase indirectly courtesy of Citadel, have had the sole goal of counteracting the impact of the the collapsing shadow banking liabilities. Compared to shadow liabilities, which topped out at $21 trillion in March of 2008, all other monetary aggregates are irrelevant: this includes both their representation in bank balance sheets, such as traditional banking liabilities and the broadest representation of money stock tracked by the Fed, M2 (since as of 2006 M3 is no longer tracked due to the egregious costs of keeping track of this data). And the biggest, and so far most credible, argument that deflationists have had, is that the shadow banking system, and its reconstructed M3 proxy is plunging far faster than Bernanke is reflating other parallel aggregates. Well, that is now over. As of Q3 2009, the sequential change in shadow and traditional bank liabilities was net positive by $3.8 billion: this is the first time this number has posted an increase since December 2008! This fact should send a wedge of terror into the hearts of all those, both deflationists and inflationsts, who realize the significance of this inflection point: it appears that Bernanke has finally succeeded at offsetting the drop in the shadow banking system.
Up until now the one and only defense that those who anticipate continued asset price declines was that on a net basis, the monetary system was still contracting. That is now no longer the case. And now, ironically, all that remains is for a very much cornered Ben Bernanke to convince people that the economy is getting better, resulting in a surge in net borrowings, and a spike in monetary velocity, and... hello Weimar.
But don't shoot the messneger: here are the facts.
Evidence A: total shadow banking system liabilities:
Evidence B: sequential change in actual components to shadow liabilities:
Evidence C: comparison in levels of traditional and shadow bank liabilities.
Evidence D: Overlay of M2 and Shadow Liabilities
Evidence E: most importantly, the sequential change in the combined liabilites represented by both the shadow and traditional banking system. As the arrow indicates, it is now positive to the tune of $3.8 billion: this is probably the most important fact for monetary policy in the past two years.
Of course, all of this is possible only because the state is now the ultimate backstopper of all risk. And now that the monetary inflection point has been reached, and the negative convexity event has passed, we expect that the debasement of the US currency will now start in earnest.
Source: Federal Reserve Flow of Funds and H.6 Statements
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Ignorant question: when we're talking bonds, is there any accounting to corporate bonds?
What child is running loose flagging me? Fucking punks!
ha, ha. you're going to invite junks by reacting. folks will start to enjoy taunting you! "Fucking punks!".
"However, the PM market (especially Asian accounts) will soon make sure Blythe Masters is looking for a job within 3 months as we predicted a few weeks ago."
Tyler, did you already forget? Ms. Blythe is promised a job at the IMF in the Hitler/Dimon video.
...and don't cross off the Ruskies from the list of usual suspects in the reported suiciding of young Madoff. In fact, the whole story from the parrot cheerleaders in the gubmint-media complex could be a phoney cover for his excape to Israel, where he can rejoin their 100 billion FeRNs, less a few billion in protection fees to the parasite class (politicians) and their minion enforcers.
Seems the NYT has finally succombed to lifting the shade a little.
A Secretive Banking Elite Rules Trading in Derivatives
By LOUISE STORY
Published: December 11, 2010http://www.nytimes.com/2010/12/12/business/12advantage.html?_r=1A Secretive Banking Elite Rules Trading in Derivatives
By LOUISE STORY
Published: December 11, 2010 On the third Wednesday of every month, the nine members of an elite Wall Street society gather in Midtown Manhattan. Fred R. Conrad/The New York TimesPROTECTING THE CUSTOMER Daniel Singer runs a heating oil company in Elmsford, N.Y., and is a derivatives customer. In order to offer homeowners fixed-rate oil plans, he buys derivatives contracts. But since the trading system is not transparent, he can’t tell whether the prices he gets are fair or not.
House AdvantageWriting the Rules
This series examines how Wall Street tries to gain an upper hand.
Previous Articles in the Series »
A COST TO EVERYONE Gary Gensler of the Commodity Futures Trading Commission says the current system “adds up to higher costs to all Americans.”
Read All Comments (189) »The men share a common goal: to protect the interests of big banks in the vast market for derivatives, one of the most profitable — and controversial — fields in finance. They also share a common secret: The details of their meetings, even their identities, have been strictly confidential.
Drawn from giants like JPMorgan Chase, Goldman Sachs and Morgan Stanley, the bankers form a powerful committee that helps oversee trading in derivatives, instruments which, like insurance, are used to hedge risk.
In theory, this group exists to safeguard the integrity of the multitrillion-dollar market. In practice, it also defends the dominance of the big banks.
The banks in this group, which is affiliated with a new derivatives clearinghouse, have fought to block other banks from entering the market, and they are also trying to thwart efforts to make full information on prices and fees freely available.
Banks’ influence over this market, and over clearinghouses like the one this select group advises, has costly implications for businesses large and small, like Dan Singer’s home heating-oil company in Westchester County, north of New York City.
This fall, many of Mr. Singer’s customers purchased fixed-rate plans to lock in winter heating oil at around $3 a gallon. While that price was above the prevailing $2.80 a gallon then, the contracts will protect homeowners if bitterly cold weather pushes the price higher.
But Mr. Singer wonders if his company, Robison Oil, should be getting a better deal. He uses derivatives like swaps and options to create his fixed plans. But he has no idea how much lower his prices — and his customers’ prices — could be, he says, because banks don’t disclose fees associated with the derivatives.
“At the end of the day, I don’t know if I got a fair price, or what they’re charging me,” Mr. Singer said. '' .....
..
comment: inflation through the non economic means of being rolled.
systemic thuggery. this is looting the poor to freeze them to death for
profit.
There is another possible outcome of the loss of a trusted world medium of exchange. Assuming the dollar continues to decline and there is no substitute the world could easily slip into a situation where international trade declines rapidly. The beggar thy neighbor world economy would become the hunker down economy and local currencies and barter would rule.
300+
Isn't everything Mr 100% is doing purely to provide cover for his new best friends to slip their 'own' money out from under the collapsing balloon? If you think any of these bankers care a whit about their companies, better read again your recent history on Gutfreund and Salomon Brothers.
The real money will be long gone by the time Ben is finished.
Pitty it isn't only about the shadow banking debt. It's about sovereign debt now.
If shadow banking stopped deflating in September than with the buy silver destroy JPM push it should go off like a russian rocket in a few more months.
The shadow banking system or the shadow financial system consists of non-depository banks and other financial entities (e.g., investment banks, hedge funds, and money market funds) that grew in size dramatically after the year 2000 and play an increasingly critical role in lending businesses the money necessary to operate. By June 2008, the U.S. shadow banking system was approximately the same size as the U.S. traditional depository banking system. The equivalent of a bank run occurred within the shadow banking system during 2007-2008, when investors stopped providing funds to (or through) many entities in the system. Disruption in the shadow banking system is a key component of the ongoing .
Noob here, but is it possible that the legal mess that stalled the foreclosure process (and presumably the rate of credit destruction in the shadow banking inventory) is the bigger issue here? Would Bernanke's interventions still be net negative if the mortagage markets weren't completely FUBARed?
what are the odds that "they" (or should I say the market forces them) raise rates at the upcoming FOMC meeting???
I don't know Vince - nothing is as it should be. So, you're opinion is as well informed / misinformed / malformed as any.
So many questions and so little info. Not likely we have someone from the "insiders network" with us whom sits in the room w/ the FOMC and knows ahead and wants to tell us. That's why we pay GS to tell us the opposite but we know it's the opposite and invest as such.
What are the odds that 6 months from now we'll have much bigger concerns than interest rates?
There are two things you have to bear in mind here. First, it is the elementary truth of the monetary system that virtually no new money can be created unless it is owed back into the banking system. There has to be a borrower and a lender. This is why the "pushing on a string" phenomenon is real; it is another way of saying that systemically, debt limits have been reached. The borrowing and lending process has reached it's systemic end.
In fact, this is what the subprime "crisis" indicated, and why it was so scary. The system had run out of qualified borrowers, so it began lending to unqualified borrowers. We are still confronting this problem.
The "solution" to the problem is that there is a borrower of last resort: the US government. Notice, not state or municipal governments, but the US government only.
So what has taken place since the canary in the coal mine of the subprime debacle? The US government has borrowed and is borrowing massively. Washington DC is in another boom, Wall Street has not really suffered, and for the most part the rest of the country is clueless.
That federal government borrowing, and that alone, is why some of the data has eased away from a clear deflationary spiral. But the federal government running up massive debt creates problems of its own. The consequences of the same phenomenon are now being seen in Europe (Greece, Spain, Ireland) and will eventually be seen here.
Since this is unprecedented, it's very difficult to see how this will all pan out, but precious metals have probably been doing well because the implications of all this is that the monetary system is in the process of breaking down.
See the discussion about "money" here: http://strikelawyer.wordpress.com
Yeah, what JM said.
nice comment and link. thanks. i will have to use this link, the nash
thing is great. let me move it in here!
.
"
Money (II)You have to give the devil his due. The world economy, to the extent there is such a thing, was not designed by morons.
I have previously alluded to the odd fact that Nobel Prizes in Economics have been awarded to mathematicians. Apparently I’m not the only one who thinks it is odd. A British woman named Hazel Henderson has written about the same thing in unflattering terms, getting right to the heart of the matter.
It is remarkable that a major motion picture was made about one such award recipient, John Nash, winning four academy awards including best picture and best director, without generating any serious discussion about the underlying controversial nature of the Nobel Prize in Economics itself. Yet the story and the film are very revealing, albeit indirectly, about just what underlies our economic system.
It can be summed up in one word: insanity.
Game Theory is a sub-category of mathematics that is used in economics, politics and military planning. Particularly economics. The supposedly great contribution of John Nash that earned him the Nobel Prize in economics was his description of an “equilibrium”, which was then named for him.
The “Nash Equilibrium” is the idea behind “floating currencies”, which came into their own when the United States put the final nail in the gold standard coffin in 1971. Since then, no major world currency has been “redeemable” in anything other than some other currency or itself.
Such a system also fairly echoes Einstein’s earlier theory of relativity, obviously, since money is “valued”, if you want to call it that, only relative to some other money.
Thus have the disciplines of science and mathematics come to be applied to the social science of economics.
A few observations can be made. First, “equilibrium” in application means stability – even stasis – which is a value of great importance to rulers and the wealthy, but not to those who consider their condition unsatisfactory, for whom the opposite – instability or change – is preferable. Given that, an application of the Nash equilibrium to monetary economics and markets is nothing more than an elaborate and pretentious rationale for preferring the current winners of the game over any future potential winners. This is such an obvious and inherently undesirable result from a social perspective that it seems incredible that anyone should miss it, but miss it we have. And not just our rulers and Nobel Prize winners but each and every one of us, at least in terms of our actual impact on the way the world works, because the world works on Nash’s mind, not ours. That’s why a major motion picture was made about him and not you.
But there’s something else truly astounding yet terribly obvious about all this, and that is that Nash was not only insane, but he was insane precisely in that peculiar form of schizophrenia where the afflicted person hears voices and see things that are not there. In other words, Nash was unable to distinguish between things that were only in his mind and things that actually existed. He was unable to perceive reality himself, yet seemingly for this very reason the product of his mind formed the basis for the macro-economic reality of the other 6 billion people on the planet.
And these people really do exist.
So we come again to a very fundamental question: is there such a thing as reality, or is reality a construct of our minds? If the former, we must conform our minds and our wills to something outside ourselves. If the latter, the most forceful will, the most “beautiful mind” makes and defines reality for itself, and through “policy”, for others.
Does this sound like a question you should ask a judge, or a potential juror? If your life or freedom are in their hands, and their opinions fall into the latter category, how do you think that would affect the way they decided the case or cases with which they were presented?
See, economics segues into other things, unfortunately. We’re all part of John Nash’s nightmare now. "
I agree with much of what you wrote, JM.
But I have to say that I'm seeing more of the formerly 'clueless' actually wake up - at least to the notion something very bad is happening economically, even if they can't specify it with great precision, and that it's a different and of a more permament change.
I see a loss of confidence out in the real world, even among former sheeple, in their government institutions, like never before.
I also see a loss of confidence to spend money more so than at any past time.
While the area in NYC supported by Wall Street and investment banking, as well as Washington D.C. (and Virginia) seem to be in their own world, where residents, policy makers and politicians may suffer from a bad case of myopia due to the fact that government policies are picking artificial winners in banking and government employment, at least for now, in much of the rest of the country, people are scaling back a lot of significant purchases and investments.
Double-entry bookkeeping records both sides of a bank ledger. One is a debit and the other a credit so that assets & liabilities rise or fall at the same time.
Yes alot of cash but look at the debt too
Posted By Peter Boockvar On December 10, 2010 @ 12:34 pm In MacroNotes | 12 Comments
As evidenced by the front page of today’s WSJ, a big bull case for the economy and also for stocks is all the cash on company balance sheets. We hear it all the time. But, in order to fairly analyze this argument one must look at the entire balance sheet, not just the asset side where cash sits. In the Q3 Fed flow of funds statement out yesterday where $1.93T of cash is cited on corporate America’s balance sheet, the liability side has corporate debt at an all time record high of $7.3T. Cash as a % of this debt is thus at 26.4%. It is at a high level but not much different than where it was in ’05 and ’06 when it was 27.3% and 25.5% respectively and not far from 25.2% at year end 2009
Looking just 5 years into the future - i would guess the odds of survival for the Federal Reserve are less than 20% -
Most pundits, even here, seem to think it is a foregone conclusion that the Fed is a permanent fixture. Now that the Fed is useless (and can no longer generate positive inflation and economic growth) it can't be protected politically -
Not true,
Fed is very useful in allowing congress to borrow money for free to pay for programs rather than raise taxes. Politicians are glad to protect this bene.
Hope you are right about the Fed DOA...those I also wonder what if the alternative turns out worse, will we pine for the days of the Fed?
Written by Rusty Shackleford in zero hedge forum. A blast from the past
1. Hear no evil, see no evil, speak no evil. Regardless of what you know, don’t discuss it — especially if you are a public figure, news anchor, etc. If it’s not reported, it didn’t happen, and you never have to deal with the issues.
2. Become incredulous and indignant. Avoid discussing key issues and instead focus on side issues which can be used show the topic as being critical of some otherwise sacrosanct group or theme. This is also known as the ‘How dare you!’ (or Bizarre!) gambit.
3. Create rumor mongers. Avoid discussing issues by describing all charges, regardless of venue or evidence, as mere rumors and wild (bizarre) accusations. Other derogatory terms mutually exclusive of truth may work as well. This method which works especially well with a silent press, because the only way the public can learn of the facts are through such ‘arguable rumors’. If you can associate the material with the Internet, use this fact to certify it a ‘wild rumor’ from a ‘bunch of kids on the Internet’ which can have no basis in fact.
4. Use a straw man. Find or create a seeming element of your opponent’s argument which you can easily knock down to make yourself look good and the opponent to look bad. Either make up an issue you may safely imply exists based on your interpretation of the opponent/opponent arguments/situation, or select the weakest aspect of the weakest charges. Amplify their significance and destroy them in a way which appears to debunk all the charges, real and fabricated alike, while actually avoiding discussion of the real issues.
5. Sidetrack opponents with name calling and ridicule. This is also known as the primary ‘attack the messenger’ ploy, though other methods qualify as variants of that approach. Associate opponents with unpopular titles such as ‘kooks’, ‘extremists’, ‘right-wing’, ‘liberal’, ‘left-wing’, ‘terrorists’, ‘conspiracy buffs’, ‘radicals’, ‘militia’, ‘racists’, ‘religious fanatics’, ’sexual deviates’, and so forth. This makes others shrink from support out of fear of gaining the same label, and you avoid dealing with issues.
6. Hit and Run. In any public forum, make a brief attack of your opponent or the opponent position and then scamper off before an answer can be fielded, or simply ignore any answer. This works extremely well in Internet and letters-to-the-editor environments where a steady stream of new identities can be called upon without having to explain criticism, reasoning — simply make an accusation or other attack, never discussing issues, and never answering any subsequent response, for that would dignify the opponent’s viewpoint.
7. Question motives. Twist or amplify any fact which could be taken to imply that the opponent operates out of a hidden personal agenda or other bias. This avoids discussing issues and forces the accuser on the defensive.
8. Invoke authority. Claim for yourself or associate yourself with authority and present your argument with enough ‘jargon’ and ‘minutia’ to illustrate you are ‘one who knows’, and simply say it isn’t so without discussing issues or demonstrating concretely why or citing sources.
9. Play Dumb. No matter what evidence or logical argument is offered, avoid discussing issues except with denials they have any credibility, make any sense, provide any proof, contain or make a point, have logic, or support a conclusion. Mix well for maximum effect.
10. Associate opponent charges with old news. A derivative of the straw man — usually, in any large-scale matter of high visibility, someone will make charges early on which can be or were already easily dealt with – a kind of investment for the future should the matter not be so easily contained.) Where it can be foreseen, have your own side raise a straw man issue and have it dealt with early on as part of the initial contingency plans. Subsequent charges, regardless of validity or new ground uncovered, can usually then be associated with the original charge and dismissed as simply being a rehash without need to address current issues — so much the better where the opponent is or was involved with the original source.
11. Establish and rely upon fall-back positions. Using a minor matter or element of the facts, take the ‘high road’ and ‘confess’ with candor that some innocent mistake, in hindsight, was made — but that opponents have seized on the opportunity to blow it all out of proportion and imply greater criminalities which, ‘just isn’t so.’ Others can reinforce this on your behalf, later, and even publicly ‘call for an end to the nonsense’ because you have already ‘done the right thing.’ Done properly, this can garner sympathy and respect for ‘coming clean’ and ‘owning up’ to your mistakes without addressing more serious issues.
12. Enigmas have no solution. Drawing upon the overall umbrella of events surrounding the crime and the multitude of players and events, paint the entire affair as too complex to solve. This causes those otherwise following the matter to begin to lose interest more quickly without having to address the actual issues.
13. Alice in Wonderland Logic. Avoid discussion of the issues by reasoning backwards or with an apparent deductive logic
which forbears any actual material fact.
14. Demand complete solutions. Avoid the issues by requiring opponents to solve the crime at hand completely, a ploy which works best with issues qualifying for rule 10.
15. Fit the facts to alternate conclusions. This requires creative thinking unless the crime was planned with contingency conclusions in place.
16. Vanish evidence and witnesses. If it does not exist, it is not fact, and you won’t have to address the issue.
17. Change the subject. Usually in connection with one of the other ploys listed here, find a way to side-track the discussion with abrasive or controversial comments in hopes of turning attention to a new, more manageable topic. This works especially well with companions who can ‘argue’ with you over the new topic and polarize the discussion arena in order to avoid discussing more key issues.
18. Emotionalize, Antagonize, and Goad Opponents. If you can’t do anything else, chide and taunt your opponents and draw them into emotional responses which will tend to make them look foolish and overly motivated, and generally render their material somewhat less coherent. Not only will you avoid discussing the issues in the first instance, but even if their emotional response addresses the issue, you can further avoid the issues by then focusing on how ’sensitive they are to criticism.’
19. Ignore proof presented, demand impossible proofs. This is perhaps a variant of the ‘play dumb’ rule. Regardless of what material may be presented by an opponent in public forums, claim the material irrelevant and demand proof that is impossible for the opponent to come by (it may exist, but not be at his disposal, or it may be something which is known to be safely destroyed or withheld, such as a murder weapon.) In order to completely avoid discussing issues, it may be required that you to categorically deny and be critical of media or books as valid sources, deny that witnesses are acceptable, or even deny that statements made by government or other authorities have any meaning or relevance.
20. False evidence. Whenever possible, introduce new facts or clues designed and manufactured to conflict with opponent presentations — as useful tools to neutralize sensitive issues or impede resolution. This works best when the crime was designed
with contingencies for the purpose, and the facts cannot be easily separated from the fabrications.
21. Call a Grand Jury, Special Prosecutor, or other empowered investigative body. Subvert the (process) to your benefit and effectively neutralize all sensitive issues without open discussion. Once convened, the evidence and testimony are required to be secret when properly handled. For instance, if you own the prosecuting attorney, it can insure a Grand Jury hears no useful evidence and that the evidence is sealed and unavailable to subsequent investigators. Once a favorable verdict is achieved, the matter can be considered officially closed. Usually, this technique is applied to find the guilty innocent, but it can also be used to obtain charges when seeking to frame a victim.
22. Manufacture a new truth. Create your own expert(s), group(s), author(s), leader(s) or influence existing ones willing to forge new ground via scientific, investigative, or social research or testimony which concludes favorably. In this way, if you must actually address issues, you can do so authoritatively.
23. Create bigger distractions. If the above does not seem to be working to distract from sensitive issues, or to prevent unwanted media coverage of unstoppable events such as trials, create bigger news stories (or treat them as such) to distract the multitudes.
24. Silence critics. If the above methods do not prevail, consider removing opponents from circulation by some definitive solution so that the need to address issues is removed entirely. This can be by their death, arrest and detention, blackmail or destruction of their character by release of blackmail information, or merely by destroying them financially, emotionally, or severely damaging their health.
25. Vanish. If you are a key holder of secrets or otherwise overly illuminated and you think the heat is getting too hot, to avoid the issues, vacate the kitchen. .
Sounds like US Government politics ?
http://www.zerohedge.com/article/bar…es-fo#comments
Shortly in 3,2,1.. Insurance & Banking cables release. The mission is not to destroy the US, rather restore the integrity and remove the fraud and corruption at upper levels. Cancer is within the system. The enablers will be surgically removed by cable exposure.
The state department has been attacked before, the internet didn't exist back then.
McCarthy Communist Hearings
http://www.youtube.com/watch?v=nkHrSXuNDIw
Wash, rinse and repeat
I think it's obvious to everybody that some kind of important inflection point towards inflation occurred during the QE2 prodrome, from mid-August to mid-November. Things have cooled down somewhat now that QE2 has actually started, in part because of the Ireland crisis and in part because all the pre-QE2 positioning was a bit overdone.
It's nice to see a blogger putting out this kind of technical monetary information to a general audience. But Tyler's stab at a "M2 + shadow banking" aggregate makes no sense. It is mostly an aggregate of instruments, but also includes some issuers (such as funding corporations). A sensible aggregate has to be either all instruments or all issuers. Some major instruments were left out for reasons not clear to me, such as corporate bonds.
Also, you just can't put too much faith in these kinds of aggregates, for a few reasons. They are sloppy estimates based on incomplete data. The Flow of Funds doesn't include some kinds of instruments and issuers, such as Eurodollars linked by sweeps to corporate accounts at US banks, or hedge funds.
Most importantly, not all kinds of credit and money are equal. Different kinds of credit and money impact different sectors and activities differently. If you add up all the varieties of money and credit, and that tells you that overall we're in an inflationary climate (as I think we obviously are), that does not mean that everything will inflate. Among assets, precious metals will probably continue to inflate most while land prices (and thus housing) will continue to deflate. Among consumer items, medical services and energy and energy-intensive goods such as food and cotton will continue to inflate while tech-intensive goods will continue deflating as they always do.
all professional fields with barriers to entry will inflate too. Young people find yourself a career in a protected area. For example cryptographer with the ability to obtain secret and top secret clearance. This rules out most foreign born, so that Chinese computer whiz who will work for twenty bucks an hour can't apply. Anyone with any kind of criminal record can't apply either. Stay away from programming in general. That is slave labor. Find a field that has to have a license and requires personal contact and that is protected by the bureaucracy. Better yet, paid by the bureaucracy.
wow amazing repost atomizer. Everyone should read this and make a copy. We may all need to obfuscate, deny, delay, ignore, etc at some point in our lives. This should be required reading for anyone in a management position.
everybody needs to read atomizer's post. One thing he forgot at the end. Dick Morris once said "if you think you are in trouble, just play dumb and keep moving." That's another way to deal with the heat if you think it is getting too close. Most of the time you are wrong and just being paranoid. Also if you are right and they are on to you most of the time they don't have the time or the money to get everyone so if you don't run or act guilty then they may overlook you. Predators chase those that flee. Make yourself un-noteworthy and hide in the crowd and the predator will probably get someone else. There is only so much they can digest at one time.
Do we know how M2 is increasing? Since July it appears that M1 has contributed ~40% of the M2 increase. The rest of the M2 increase could be a result of IRA withdrawals. The mutual fund outflows chart supports this possibility.
The rate at which M1 is increasing is a concern. Do we know how M1 is increasing? Is it because of govt spending? That is the only way I can see that the printed money is getting into the hands of the people.
Linear extrapolation is a dangerous game. We know that govt spending cannot persist at these levels for more than a couple years. The question is whether they can continue it long enough to offset the decline in shadow banking liabilities.
The $144B in coming bankster "bonuses" represents 8% of M1, fwiw. Would those be the right hands?
That isn't represented in the latest data though, we should see that in the next quarter's data right? I don't see how this recent Flow of Funds Report translates into inflation just yet. The data I see suggests that govt spending is counter-acting private sector deflation.
Can the govt keep it going, or will people finally balk at our debt to GDP ratio exploding. The recent election suggested that people are unhappy with govt largesse, and the huge backlash against QE2 suggests that further easing is unlikely, unless we get a huge downdraft in the markets.
TYLER, can you move the right margin for the comment area further right?
When comments get a few levels deep they start crowding up against the right margin making reading difficult.
While you're at it, how bout moving the left margin further left. After the intitial stuff in the left and right areas of the page, there's all this free white space on the left and right the comment area could be expanded into.
I spent four years volunteering for suicide prevention, Saturday night shift. People don't kill themselves when their two year old is sleeping in the next room and the mom is in Florida.
This is not hyperinflation. It is one final attempt to inflate our way out of forty years of hyperinflation. It is not working. It is not hyperinflation. It is hyperspeculation. The money supply is growing through the act of pilferage and it is NOT sustainable. You have to understand how the money supply is growing NOT that the money supply is growing to understand what I just said. I wrote those very words on my blog years before the collapse in 2008 and I am telling you that the system will collapse again. Not upward with hyperinflation but downward when the world reveals itself. Quit thinking with your eyes and the truth will be revealed.