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It's the debt that is going to destroy the dollar, not the quantity of dollars...
I always thought it was going to be cholesterol...
Unsustainable debt is deflationary simply because when it collapses, the number of dollars in the system contracts as well.... That is why debt collapse begets more debt collapse.
That is also the argument that the FED is making. Their argument is that they are simply replacing the amount of debt collapse and not hyper-inflating. What they are forgetting, in my opinion, is that they are also redistributing the wealth in the process which deteriates business fundamentals even further.
In short... In my little opinion, debt collapse is a great thing for the dollar because
A) It wipes malinvestment and restores fundamental business practices.
B) It strengthens the dollar because it reduces the overall money supply.
The problem with the QE replaces shadow banking liability argument is this: you are using new dollars to replace value that was once there, but is no longer. The dollars are not being used to buy value- they are being used to buy toxic debt that will never have a value.
This continues to increase the monetary supply while decreasing the value of the goods it is valued against. The debasement is accelerated. Probably more so as the bankers segue out of dollars and into products that will not be affected by the dollar collapse.
While I agree the redistribution happens as bankers are bailed out and the taxpayer absorbs the responsibility for these debts, it is not the whole story.
This is the evil being perpetrated by the Bernank and the great majority of the people will have no idea, until someone says to the dollar, "no thanks".
Debt = Dollar, they are the same thing, and too much too fast in the wrong places for too long is what has already destroyed it... It's just in it's death throes.
Yup, real recoveries show growth in that blue section at the bottom...and have a declining UE rate as a result.
after 3+ years, can we stop calling it a recession, or "The Great Recession" and give it the rightful name: The Greatest Depression.
Why give it 1 name?
How woudl FOX call it?
2007: Season 1: The House That Kept On Giving
2008: Season 2: The House That Stopped Giving
2009: Season 3: The House That took Revenge
2010: Season 4: The Paperless House
2011: Season 5: ...
...The House We Once Lived In
My guess is that in the next century if you refer to 'the big one' everyone will know wat you are talking about.
The amount of loans being provided by our banking system is a good reflector of the strength of our economy.
The amount of loans being provided by our banking system is a good reflector of the strength of our economy.
So according to that premise, our economy was incredibly strong during the housing boom. Your opening argument is true if and only if those numerous loans are fundamentally sound. If not, well, we all know what happened...
My thoughts exactly.
Debt = economic strength?
In what alternate universe?
What was the method used to adjust the numbers?
the edit method.
I'd like to know the same thing. One cannot remove the "bump" without giving some relevance to the contorted bookkeeping that prompted it. What was the nature of the convoluted accounting?
Is it student loans as outlined below?
since the banks have never really loaned money since 2008 collapse, they should have never bailed them out....we would all be so much better off today
Isn't less debt good?
Pathetic. You call that analysis ?
The jump is clearly in student loans, hence the one time charge and the ongoing "recovery" in consumer loans.
You are correct. There has been a significant pickup in student loans since around that time. Note that at that time, the government took over control of student loans. What does that mean? It means the government decides how many more students are allowed to receive loans and what cost.
I personally have been attending college since fall of 2007. I have noticed a huge increase in the amount of students at my local college starting at around the beginning of 2010. The real question we should ask is, how can all these people afford to go to college? Yeah some parents pay for it, but most kids are taking out loans. With no job prospects after college what is going to happen?
It is scary to think about. BTW, I think it should be illegal to provide loans for students who major in General business degrees. They are the majority of students who come out of college and end up working at walmart for $7.25 an hour. Good luck paying back your $40,000 in loans lol.
BTW, I think it should be illegal to provide loans for students who major in General business degrees.
I received that degree 10 years ago from a state school and I can say that a BBA in GBA = Sales. My class all went into mortgages <dramatic pause>, and, well, you know the rest of the story.
And the $20K in student loans? At 3.25% it's not causing any pain, but it's still debt, which I absolutely hate. Ahh, such is the wisdom of adulthood.
I would offer my opinion and say I think it should be illegal to provide loans for students who major in Keynesian economics. All that equals is a government job or teaching, both an anathema to society....
Triple Curve.. those are the financial aggregates. The monetary aggregates are exploding while the physical economy is declining. This has yeilded inflation and negative real rates of return. Banks are loaded with reserves ready to lend. If it gets to the point wher borrowing dollars to speculate in say gold, silver, stocks or anything, thats when its game over for the US$. Madness begins. Rudolf Havenstein policy.
The author is correct. We have never
been able to recover without adding
more debt through loan growth, but
now debt is so high, it is virtually impossible
to add any more "net" debt. The banksters
are pushing on a string and will NEVER
recover their former debt based glory.
This is also why the bernank has to feed
them every day with stock market gains.
It is a catastrophe...they are still failing.
And now you know the dirty secret
and why the bernank is flim flamming.
It ain't because things are good.
I have a name for this. It's called Debt Saturation.
Looks like it is the stagflation monster we will have to fear most, bastard spawn of daddy deflation and that thieving whore inflation
truly the WORSE of all the flations
Ah yes, the good ol' days, when I'd get pre-approved, "sign here" $100K SBA loans from Citi in my business mail, and $300K refi offer checks from Countrywide at my home.
Banks are still not loaning........... how about, "No one wants to borrow !! & no one wants to be involved with banks ever again if they don't have to be !!! " ......... After this fiasco I'd rather drive a junk car & live in an apartment before I ever SIGNED MY NAME ON ANY DOTTED LINE WITH A BANKING INSTITUTION !
Besides, as you get older, I thought the name of the game was to have all your stuff paid off / paid in full so you could retire with minimum expenses . We can't all be debt-slaves our whole lives ......... or can we ? Banks need to be the way they were when I was young ..........a public service / public utility where you simply walked in, added money to your savings account & earned interest on your savings . ........ thank you, ROBERT RUBIN, for your contribution to "banking" , which now has a dirty name attached to it ! ....... I'm sorry, I can't help it ... as my father used to say .......... what a horses ass.
Quite obvious. Loans across the spectrum exploded since 2000. It was called a bubble. Bubbles are supposed to be bad. Pop it. We did. Credit needs and will contract accordingly. But tell the people something else to keep them opptimistic about the economy.
Thanks for helping me see that what should be happening is happening and that the mysterious "recovery to an insane bubble" is only for show.
The Fed specializes in illusions. As does the federal government with it's manipulated numbers. I think it has something to do with creating that subjective thing called confidence. Objective reality though, usually has a way of rearing its ugly head.
Where in that, if anywhere, are loans to hedge funds and other groups speculating in assets(commodities/stocks)?
If it is 'other' have such loans really been flat during the run up in commodity/stock prices?
Could interbank borrowing for such purposes or another big category be excluded from the FED data or the charts above?
all this "illusion" & "confidence" stuff is going to come crashing down on OUR heads ! I do not know how to plant or harvest anything .
Mom who is 90 needed to replace her bathtub with a shower, and some safety features, and we met with the contractor from the local home improvement center. I thought it was way too much, but they promised to do the work in one day (took them 2 1/2) and they offered her a sweetheart loan, two years, and she only pays the minimum monthly and the balance at the finish. She was ready to pay cash. Its not only automakers doing zero APR, its everyone. Its not about selling you product, its about selling your financing. (I said now Mom take the money you need to pay off this bill in two years and buy gold. The value will double and you'll be paying half price, and if the price of everything goes up, double good. The sweetheart consumer loan will look pretty good.
Just remember...all recoveries of the
last 30 years have been accomplished
by growing private debt. Goobermint
took up the slack by adding public debt for
the last two years and lining the bankster
pockets with the QE flim flam. Bernank
can't inflate his way out beyond a
smallish degree because inflation ultimately kills
the banking franchise, and who does
bernank work for? The banking franchise.
So what's the alternative? Stasis...
featuring low growth and high unemployment
as far as the eye can see. It's OVER.....
they just won't tell you and never will.
And under a decade long stasis like
Japan, stocks aren't worth 50% of
what they're selling for. Let the
banksters keep them....they have no
one to sell to.
You can edit your own comments just so long as they have not had a reply.
Might save you some of that multi-post work.
markets that go up on no volume present this problem don't they? And companies buying their own stock, elevates the price, until one day you own all your public shares and they are hugely overvalued. ooops. government backstopping the stock market only creates more distortions. eventually you're right, there is no one to sell to except Uncle Ben, and then they monetize the speculators profits by loading their crappy paper off on the taxpayer?? wait a minute, its not supposed to happen that way.
duh.... it's all fake. 90% of us are broke as hell. Of that 90% dag gone 30% of us aints got no job. I am sure that The bernack is try'n to kill us.
But the sheep still love their mortgages, eh?
Real estate still has a loooong way down to go....
Since when is debt a sign of strength?
That chart looks like someone dying of a fever, the fever broke at the end of the chart, but it has a long way to go down before the patient is healthy.
Honestly - we all know that the banks are not lending as they were - but that is not necessarily a bad thing. They have demonstrated really special skills at choosing good loans to make (thank you Fair Isaac the unsung accomplice to the moron ratings firms). The problem is that they are "investing" instead - in oil, food commodities, etc. They love these things - they promise profits - they are liquid and they will break our society. But, no speculation has no impact...uh huh...
I'm afraid Bud got a bit confused and spent his time dismissing a myth that nobody believed in.
The data he is presenting is not total lending, only total bank lending, excluding off-balance-sheet securitized loans. The Fed indeed revised its counting and reclassified more than $300b of credit card debt as bank lending, which had been considered off-balance-sheet. The Fed explains this itself in its notes to H.8. Nobody ever said that this $300b increase in bank lending was an increase in total lending. Everybody who follows this stuff knows that it was merely a reclassification from "shadow banking" to banking.
The real myth is that consumer loans have started to slightly recover recently, which is true only if one counts student loans as consumer loans and excludes mortgage loans and equity loans. If you exclude housing/equity, then student loans are growing faster than other kinds of consumer loans are shrinking.
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