oh......ho usd is finished, page-25

TssMcGill

Interesting article. Actually, SkipperX might feel somewhat vindicated, looking at those two graphs together. The most obvious interpretation is that the US Fed and Treasury are pumping liquidity like there's no tomorrow, but the banks hoard it all and don't lend, therefore as the "theoretical" money supply increases, the actual amount of money circulating doesn't really increase.

Those graphs show that Bernanke is actually a very good central banker, because as the market-based monetary circulation declined, he's done his best to replace it with official flows.

Only problem is, you need to believe that after the severe crisis ends (ie. the down-trending line turns up), the central banks can and will withdraw the excessive liquidity (the uptrending line). Addiionally, you need to believe that mucking around with liqudity aggregates will actually to the trick.

Well, I fear that we don't have a liquidity crisis - we have a solvency crisis. Central banks can solve liquidity crises, but Treasuries (and governments in general) need to address solvency crises.

Unforntuately, I really fear that the banks, hedge funds and pension funds have made bets which are so big, that even the combined fiscal weight of the world's governments will not be enough to bail us out, without a prolonged period of malaise.