Skip to comments."Bagehot Was A Shadow Banker" - A Monetary System That Is Only As Good As Its First Broken Promise
Posted on 07/28/2013 8:28:39 AM PDT by Errant
Over two years ago, in March of 2012, when it was taboo to even suggest the Fed may be forced to admit failure once again with its then "final" monetary intervention Operation Twist (following similar failures with QE1 and QE2), we explained clearly "Why The Fed Will Have To Do At Least Another $3.6 Trillion In Quantitative Easing." The premise was simple: while the Fed had succeeded in raising the notional amount of traditional bank liabilities, primarily deposits (through a matched reserve expansion) courtesy of unsterilized QE, it was failing to expand the universe of money-equivalent collateral in the shadow banking system. In fact, as the following chart shows, the deleveraging in shadow banking has continued, and aside for a tiny bounce in Q4 2012, resumed its downward path in Q1 2013, recording 19 of 20 consecutive quarterly drops (primarily on the back of nearly $3 trillion in ABS deleveraging and $1.2 trillion in repos).
Regardless, we were right, and as of last Friday, the Fed's balance sheet was $750 billion higher, and rising at $85 billion each month, confirming that the true underlying economy is now worse than ever before, and to all those claiming the US is recovering we have a simply thought experiment (because it will never become an actuality) - have the Fed halt and undo its monetary interventions. Yeah... That's what we thought.
(Excerpt) Read more at zerohedge.com ...
In short: a system based on faith.
In even shorter: a religion.
Any stop to such "money creation" and the false idol of monetary voodoonomics falls.
"Tyler, that previous article was one of the best articles I ever read on zero hedge. I read it like three times and still don't understand"
In short also, COMEX.
Link to the latest euro economy happenings:
It kind of helps explain a few things, and how hard it will be to fight off those at the bottom who are pushing for socialism. It has been seen by almost 7 million people.
The rich do get richer...