The Epic American Credit and Bond Bubble Laboratory Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: austrieconomist who wrote (1653)	11/15/2003 8:20:02 AM
From: russwinter	Read Replies (4) of 110194

Noland explains why money supply as an indicator is giving out a false signal. Read pages 7-14. prudentbear.com For those who find reading this stuff too painful, I think I can summarize it. Borrowers are moving their liabilities out on the maturity scale in droves, and sucking up short term bank deposits (cash is trash) to fund this. And the lenders are just ignoring risk in a desperate attempt to enhance yield (including creating an echo bubble), and this cleans out the cash, bank deposits, money market, CP, etc, that the MZM-M3s measures. So rather than being a indicator that total liquidity is diminishing (just certain liquidity: cash and time deposits are), it's really more a measure of how much additional risk players are willing to take on. Debt holders are now exposed to even greater interest rate and credit risk. Actually if risk aversion returns (a bit of a panic), we could expect to see money supply grow. Risk aversion (now nearly non-extistent) will be the key driver of all markets (commodities, stocks, bonds). A shift in this sentiment is going to be a thing to behold.

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next