the reality of printing money, page-2

Ctindale

There is a lot of great data in your post, but I am not sure what your point is.

The title of you post is “The Reality of Printing Money” (so far so good). You then post data that indicated the opposite – the contraction of money supply.

Are you trying to say that the ECB will have to print money? I would agree with you on that.

Can you clarify your post for those of us who can’t read minds. I suspect that we are on the same page, but I would like to be sure.

I would make one observation: Falling monetary measures doesn’t necessarily mean that banks are deleveraging! Bank capital isn’t an absolute number. In broad terms it is the net of the value of bank assets and deposits. If the rate of contraction of the value of bank assets is greater than the rate of reduction in deposits, it is possible that a bank’s leverage could be increasing as its balance sheet shrinks.

It's a scary thought.

My own opinion is that most of the US QE money has gone into that gap in regulatory capital in the US banks, which go some way to explaining why printing money has had little stimulatory or inflationary impact until now.

Cheers