Tuesday, August 05, 2008

Ah well, it's only money

Thanks to anon for posting a link to this fascinating little chart produced by the St Louis Fed's Research Department...




Anonymous said...

My thoughts, for what they're worth "I don't know how to rationalise it. It looks as though the US dollar economy is being propped up by a US gov promise that it will repay this debt. There isn't any precedent to suggest that it will or can. The closest precedents (70s oil shock and Russian rouble default) are trivial in comparison; so trivial that they hardly show up on the graph.

If the graph says anything, it tells us that we are in massively unprecedented times.

Edo said...

We all know what happens when a country pops financially. IMF, World Bank, International Bank of Settlements and so forth. It all drills back to the same people, think about it folks! All roads lead to Rome, or Israel... whichever camp you're in.

Wolfie said...

Shouldn't that graph be inflation adjusted to have any useful meaning?

Stef said...

I debated that point with the skilled economicians over at Conspiraloon Foundation and, as they are very firmly of the opinion that inflation is the direct product of banks making up money out of thin air through lending, they believe that indexing lending figures in line with inflation would be no fun at all

But that''s by the by

A couple of hundred billion, indexed or unindexed, is a mouse fart compared with all those trillions of derivatives based unpleasantness waiting to implode

What the graph does show IMHO is that the fed has been obliged to intervene on an unprecedented scale - even if the actual scale of the, um, unprecedentedness is debatable

It'd be kind of interesting to see the BoE figures

Shahid said...

FUCK ME!!!!!!!!!

anon 22:41 said...

The graph looks scary indeed.

However Fed lending is short term by nature, and in order to borrow from the Fed(or any central bank), a bank has to come up with securities of at least equal value.

What can give the willies is that the Fed is allowing banks to borrow against potentially dodgy collateral. i.e. the Fed lends money against mortgages.

But again, the Fed lends very short term (sometimes just overnight), so the risk of the bank+all mortgages defaulting at the same time is smaller.

Oh, and the system was designed not by evil greedy joos but by Englishmen like Walter Bagehot, and evil greedy Italians before them (aka the Lombards).
And eventually, the ones making fortunes or building clout out of it are in Dubai or Shanghai.

Something that REALLY scares me though is the recent sudden closure epidemic in the US retail industry. The US economy being extremely reliant on consumer spending, if retail goes down, the first domino falls...

The real economy contracting rapidly

Anonymous said...

"Shouldn't that graph be inflation adjusted to have any useful meaning?"

Not necessarily. If the rate of inflation isn't too huge then the graph can be seen as representing ratios of money of approximately equal value.

Wolfie said...

Not necessarily. If the rate of inflation isn't too huge then the graph can be seen as representing ratios of money of approximately equal value.

Then I'd argue that inflation has been huge and its been that way for a very long time with very few periods of deflation to speak of.

I agree that it was the banks that created monetary inflation in the first case but still it renders the graph missleading.

Another thing is changing politics, they have never been so keen to intervene as now for political reasons. In '29 received wisdom was that they should take their losses "like a man". Now they take it like a socialist collective.

Stef said...

It's early days yet

There's still plenty of time to take us right through the Kama Sutra and back again

Wolfie said...

Have you seen my simulations?

Merkin said...

Hahahahah Wolfie, stole your Shah of Iran nuclear ad.
Was perfect.

Anonymous said...

"the system was designed not by evil greedy joos" - I don't recall anyone saying anything about evil or greedy Jews.

But I'm reassuraed by your confirmation of what you described as Jews, have absolutely nothing to do with anything of it.

Oh those naughty Lombards and that naughty Walter Bagehot! Such rascals.

And the person who said it was is...?

Anonymous said...

"Then I'd argue that inflation has been huge..."

Inflationary events have been the removal of the gold standard, Bretton Woods, and Basle II (1996, off sheet liabilities accounting for banks).

In one sense, inflation has been huge ... remember that one pound was one sovereign.

After having said all of that, I still find it hard to rationalise the graph. Other than saying something extraordinary is happening and it is without precedent. It appears that the US finance economy is based on a US gov promise.

anon 22:41 said...

Heh. I'm still in the middle of reading Hufshmidt and other borderline conspiRacist, and I had a knee-jerk reaction to Edo's post. Maybe am I turning into an evil gatekeeper?

Otherwise, on the fascinating subject of where money goes, all the roads lead to Luxemburg . It ties in nicely with Catherine Austin Fitts' articles on narcodollars. But it's not just narcodollars going into the black box, it's the world economy.

ziz said...

One's first thought on seeing the graph is "What is that on the Richter scale?"

Like serial murder - the first one is the hardest, after that it gets easier.

Having opened the "Discount window" the Wall Street crooks are turning up with all sorts of "assets" , collateral etc., shopping trolleys full of 'em and the Fed is only too happy to oblige.

However that guy who tried giving away 5 pound notes didn't get very far did he ?

Talking about Banks , delight ran round here when we discovered we had (as taxpayers) obtained some shares in Northern Wreck for £3Billion pounds say, one aircraft carrier or 3 days total Government expenditure.

What a bargain !!! That nice Mr Darling says when they sell the company we could all make a BIG profit.

stef from north london said...

Have you seen my simulations?

what simulations would they be?

Wolfie said...

PFE and C-VAR mostly using Monte Carlo simulations. Its what I do for a living.

Anonymous said...

@ anon 22:41

Re: Israyhell & calling those who 'own/control' the worlds economy Jews. Both cases may involve many people may call themselves Jews but that's like calling Bush a Christian, Pol Pot a Bhuddist, or, the MSM version of Tim Osman a Muslim.

Demarcation is important as fudging has many serious consequences, which orgo's like the ADL use to great effect.

The corruption of Jewry should not be afforded any defence at all.

Anonymous said...

Didn't know where to post this, "Surge in repossession orders clogging up the courts".

But,what made me post it was a something in the Comments section,

"They are not, I believe, "repossession orders" the lender has never had possession. They are "possession orders".

David, Southampton, UK

David, Southampton is totally and utterly WRONG. He is utterly ignorant of what constitutes a mortgage. Details of which can be found in Fourmaids Ltd -v- Dudley Marshall (Properties) Ltd [1957] Ch 317. The case explains (for the umpteenth time) that the mortgagor gives his property to the bank; the bank gives the mortgagor money; usually, but not necessarily, there is an agreement saying that you are allowed to live in the bank's property. If you miss a couple of payments they take REpossession.

This is crucial.