How Can We Have Record Bad Loans And Record Excess Liquidity At The Same Time?


Home Forums The Automatic Earth Forum How Can We Have Record Bad Loans And Record Excess Liquidity At The Same Time?

Viewing 10 posts - 1 through 10 (of 10 total)
  • Author
  • #9070

    Dorothea Lange Trunk Show February 1936 “Dust Bowl drought refugees in California”We can read these days that Spain has come out of its recession. The
    [See the full post at: How Can We Have Record Bad Loans And Record Excess Liquidity At The Same Time?]

    Golden Oxen

    Water Water everywhere but not a drop to drink.

    Money Money everywhere but not a dime for me.

    Perhaps someone is going to whisper in the dear Banksters ears; lend it out the back door, OR ELSE! ??????


    We knew Bernanke was lying when he said the latest QE round is supposed to help the jobs economy. That was almost a year ago and it is now fully mainstream that QE doesn’t do that. However nobody in the mainstream says he was and is lying, the never do when a persons job demands they lie and really everyone with a good executive position job in the world has to lie.

    Everyone has to speak the company line, the Party line, the government line. Not doing so is the essence of a whistle blower. The stupendous majority of people climbing the rungs of any organization have internalized this. They accept it and celebrate it. They hold loyalty to the organization as the highest standard. They self select.

    Everyone expects these persons to lie. So they lie even though they know we know they are lying. It’s their job after all. I always like to go back to the famous tobacco executive hearing. Everyone remembers this.

    Note the congressman asks “if they believe nicotine is addictive”. He probably didn’t quite know it but by asking the question that way, instead of just asking as a point of fact if it is he was giving them permission to lie. Once ‘belief’ is made part of it then no lie can ever be proven. Still, we knew they were lying but could not be convicted of it.

    At any rate most probably don’t remember that they knew the executives were lying because they had to lie as part of their job. And some part of everyone understood this and forgave it. It’s just how the world works.

    Now around places like this, dusty corners of the internet, where non company, non party, non government people roam and protecting their organization and thus themselves is not part of the equation ideas run free. However they carry no weight. If anyone here would by chance enter into an organization with a mind to advance, oblivious to the necessities of being a ‘company’ man they will soon be weeded out.

    I’m not sure why Bernake lied about the reason for QE. It doesn’t really matter.


    Remember the punch line to that old joke, “ya can’t get there from here.”

    We have gotten ourselves onto that dead end road when we were burdened with a debt-money monetary system back in 1913… I needn’t go into any further detail about that with this audience.

    And even though I’ve seen increasing references to the pyramid scheme that is our money system, never have I seen enumerated the consequences of such a system… nor will I list them here, ya’ll are surely aware of them.

    This knowledge should clarify the actions of our political and monetary authorities. Where there is no solution the law of survival takes over. Those with the ability to steal and the knowledge of our impending collapse are gathering for themselves all they can. Nothing makes sense if you’re still under the delusion that anyone is trying to solve our many problems… they’re not.

    It’s every man for himself. Bunkers are being built, redoubts being stocked, armies aligned. Should be quite a show, too bad we’ll be in the middle of it.


    …and when that tsunami of liquidity finally hit’s the streets, these articles will be about the masses being forced to eat dog food because that’s all their food stamps will afford. There will be shortages of everything when it happens, even labor, as the astute buy forward, cleaning out the shelves, and re-suppliers hire in a futile attempt to meet demand and keep supply chains open.

    By the time the “inflation” word is mainstream, the Crack Up boom will be in full swing, destroying the currency. And that’s also when the above photo will be transposed onto the present day. Blue Chinese tarps replace white canvas, SUV’s substitute for ’29 Fords and Chryslers. Tar Paper will again come into vogue.

    And the good that will be derived is “The long run” will have finally arrived and the Keynesian dream will be dead.

    When? Could start tomorrow or in 5 years.


    People will go to great lengths trying to squeeze inflation into their story. It’s the bogeyman.

    Viscount St. Albans

    Growth stopped but only the poor have been forced to pay.

    The rich must pay as well.

    That’s when it gets interesting — when the 0.01% begins to cannibalize the 0.1%. Gloves off.

    Turtles all the way down.


    RE 8195 “and when that tsunami of liquidity finally hit’s the streets, “

    There appears to me no way for those bank deposits to ‘hit the street’. Unless people go on a borrowing binge and that isn’t going to happen.

    Let’s follow the money. The Fed buys Treasury paper and MBS from those that have them. The sellers in turn buy mostly other financial assets from those who have them and so on and so forth and the money is every step along the way is a bank deposit. So note that for the most part it is assets which inflate and the money stays in the financial economy.

    Now some of the money is being put closer to the real jobs economy via increased mortgage lending but there again the main effect is the increase in prices of real estate and we can be almost certain the sellers are plowing the sale proceeds back into RE.

    The level of government borrowing is no effected by QE, only their cost of borrowing. Government borrowing and the previously gigantic but now shrinking deficits were a way for the Feds purchases to be intermediated, ie. put out into the real people real jobs economy. The deficit shrunk more than 40% last year.

    I’m open to suggestions on how Fed ‘printed money’ is going to find it’s way into the non financial economy because I don’t see it now.

    As a side note if the prices of the assets inflated by Fed ‘printed money’ falls then the ‘money’ would disappear, as the assets deflated.


    Looking at the numbers, all I see are declining money and credit, in the form of eurozone-wide bank loans outstanding. The current deflation rate: 7% year over year.

    My guess is that if loans were actually marked to market and/or processed through foreclosure as they should be, the deflation would be dramatically higher.

    I’m not sure how people get inflation out of declining money & credit, but there you go. As someone who is strictly data driven, its tough for me to see general monetary inflation anywhere. But believe me, when it appears, I’ll see it. With all due respect to Professor Hyperinflation, the data will tell me.

    Attached files

Viewing 10 posts - 1 through 10 (of 10 total)
  • You must be logged in to reply to this topic.

Sorry, the comment form is closed at this time.