gnome
12-11-2010, 11:55 PM
Deflationists Take Note: Bernanke Succeeds In Offsetting Shadow Banking Collapse
Submitted by Tyler Durden on 12/11/2010 16:29 -0500
Ben Bernanke Citadel Convexity Federal Reserve M2 M3 Monetary Aggregates Monetary Policy Negative Convexity Shadow Banking
The biggest piece of news in Thursday's Z1 statement was not that consumers continue to deleverage, that corporate cash levels are at $1.9 trillion (of which $1 trillion is financial and half of the rest is held offshore: maybe instead of copying Zero Hedge charts, the WSJ could have actually focused on the story behind the headlines) or that the stock market continues to be the only manipulated delta in household net worth (even as wealth in real terms is dropping). A far more relevant and important data highlight has to do with the only thing that actually matters for the reflation of the monetary bubble: namely the fact that the contraction in the shadow banking system is continuing. Or so was the conventional wisdom. As of September 30, Bernanke has successfully stopped the net decline of monetary aggregates even when including the massive shadow banking system.
And the biggest, and so far most credible, argument that deflationists have had, is that the shadow banking system, and its reconstructed M3 proxy is plunging far faster than Bernanke is reflating other parallel aggregates. Well, that is now over. As of Q3 2009, the sequential change in shadow and traditional bank liabilities was net positive by $3.8 billion: this is the first time this number has posted an increase since December 2008!
Charts & everything:
http://www.zerohedge.com/article/deflationists-take-note-bernanke-succeeds-offsetting-shadow-banking-collapse
Submitted by Tyler Durden on 12/11/2010 16:29 -0500
Ben Bernanke Citadel Convexity Federal Reserve M2 M3 Monetary Aggregates Monetary Policy Negative Convexity Shadow Banking
The biggest piece of news in Thursday's Z1 statement was not that consumers continue to deleverage, that corporate cash levels are at $1.9 trillion (of which $1 trillion is financial and half of the rest is held offshore: maybe instead of copying Zero Hedge charts, the WSJ could have actually focused on the story behind the headlines) or that the stock market continues to be the only manipulated delta in household net worth (even as wealth in real terms is dropping). A far more relevant and important data highlight has to do with the only thing that actually matters for the reflation of the monetary bubble: namely the fact that the contraction in the shadow banking system is continuing. Or so was the conventional wisdom. As of September 30, Bernanke has successfully stopped the net decline of monetary aggregates even when including the massive shadow banking system.
And the biggest, and so far most credible, argument that deflationists have had, is that the shadow banking system, and its reconstructed M3 proxy is plunging far faster than Bernanke is reflating other parallel aggregates. Well, that is now over. As of Q3 2009, the sequential change in shadow and traditional bank liabilities was net positive by $3.8 billion: this is the first time this number has posted an increase since December 2008!
Charts & everything:
http://www.zerohedge.com/article/deflationists-take-note-bernanke-succeeds-offsetting-shadow-banking-collapse