re:["Slider:"And now you & Hussman want me to believe that
Fiat Central Bankers are fixing a liquidity crisis in the
financial markets - by NOT adding liquidity - but, by
actually withdrawing it? ..I don't think so."]
The Fed has sacrificed 1/2 their balance sheet, opened the
discount window, and created an alphabet soup of lending
facilities to solve the liquidity crisis.
It's no longer a liquidity crisis - it's a solvency crisis.
The banks can access all the liquidity they want. The
problem is that they're worried about lending to each
other because they're worried about their counter-parties
going broke, because there is still so much bad paper held
off balance sheet, and so many losses to still write down.
Before it's done, potentially a $2 Trillion dollar
vaporization.
As far as all the money supply charts, I appreciate
everyone's points. We all know why the Fed stopped
publishing M3, and we all love quoting John Williams
double-digit M3 "shadow stats."
But, the banks are no longer creating hyper-leveraged
mountains of credit money. Quite the opposite.
I don't care about the longterm trendlines in M1, M2, or
reconstructed M3, and neither do the gold, currency, or
stock markets.
Those huge longterm explosions in money supply are
there for everyone to see. But, that's already baked
in the cake.
Commodities exploded from January to March, and the
Dollar accelerated it's collapse.
The Fed put the brakes on M-2 in mid-March, and nearly
to the day - gold topped, and the dollar bottomed,
and that reality is clearly shown in these chart below.
The Fed was expanding money supply up through March,
but they've put the brakes on.
Since the mid-March top in gold; gold is down, the Euro
is down, the Yen is down, the Swiss Franc is down, and
only the US Dollar is up.
The Fed knows it must stop the carnage in the dollar,
and so far they have.
Don't underestimate their tools, or their creativity.
They hear gold loud and clear every day, and every
night Larry Kudlow reminds them about "King Dollar."
They may be a lot of things, but deaf isn't one of them.
Start looking at what the Fed's been doing since March,
that's what driving the markets today.
I've been as guilty as anyone for focusing too long,
on the longterm M1, 2, and 3 charts. What the Fed
did pre-March is already baked in the cake.
Pay attention to what they've been doing since, and
what they do going forward.
And take another look at this Japanese deflation chart
before you get too locked in, on how you'll trade deflation.
I hope that clarifies things,
SOTB |
