View Single Post
 
Old 12-30-2018, 04:53 AM
Danny B Danny B is online now
Platinum Member
 
Join Date: Oct 2012
Location: L.A. Ca.
Posts: 4,281
Fear and liquidity

When we went off the gold standard, banks were able to conjure up near endless liquidity. Exter's Pyramid shows an inverted pyramid with gold at the bottom and, derivatives at the top. Each level in the pyramid had a decreasing level of "moneyness". Each level in the pyramid needed an increasing level of confidence. After we escaped gold, we had increasing liquidity built on increasing confidence. This translated to increased tangible wealth for the non-producers.
Finance is now 40% of the economy and 51% of Americans receive a check from GOV.
There were 21,995,000 employed by federal, state and local government in the United States. As a percentage, this has been falling.
https://img.washingtonpost.com/wp-ap...eak.png&w=1484
They're just getting paid a lot more now.

This constant expansion of liquidity has mostly benefited the banks. Confidence has recently changed for the worse. Liquidity has supplanted money.
"I would posit that some time ago Liquidity completely supplanted the monetary aggregates as the key focal point for market flow analysis. Unfortunately, there is no quantity of “Liquidity” to measure and tabulate. I am not familiar with an adequate definition or even common understanding."
"Liquidity is an amalgam of real financial flows and intangible market perceptions. There is no aggregate that would signal whether Liquidity is either expanding or contracting. "
https://creditbubblebulletin.blogspo...liquidity.html

You can't measure liquidity because you can't measure confidence. The "VIX" is called the "fear gauge" It wobbles around but, is only indicative. Liquidity has collapsed to the lowest on record.
https://www.zerohedge.com/news/2018-...idity-collapse

"What murdered functioning markets is intervention by central banks, in alleged attempts to save those same markets."
The CBs were desperate to rescue the non-producers. Markets had a total panic attack when the original TARP bill was turned down.
"Now Jerome Powell and the Fed he inherited are apparently trying to undo the misery Greenspan, Bernanke and Yellen before him wrought upon the economic system"
Powell and Volker are Goy and, exceptions to the rule. Rubin was the one who got rid of our gold.
" Central banks don’t serve societies, they serve banks. They fool everyone, politicians first of all, into believing that societies automatically do well if only the demands of banks are met first, "
I have frequently shown that the STATE is the entity that forced the CBs to buy GOV bonds. You can blame it on the CBs for sure. BUT,
Wilson approved the creation of the FED. Wilson brought us into WW I. Roosevelt got us into WW II to save England and, hopefully drag us out of Great Depression one.,
Of course, Great Depression one was caused by the FED.

"In physics terms, price discovery, and therefore markets themselves -provided they’re ‘healthy’ and ‘functioning’- delivers negative feedback to the system, i.e. it injects self-correcting measures. Take away price discovery, in other words kill the market, and you get positive feedback, where -simplified- changes tend to lead to ever bigger changes until something breaks."
"You can let interest rates rise, as Powell et al are indicating they want to do, but that will cut off debt growth, and since debt is exclusively what keeps the economy going, it will cut into economic growth as well"
"It’ll be a long time before markets actually function again, and we won’t get there without a world of pain. Which will be felt by those who never participated in the so-called markets to begin with."

"The only parties who have profited from rising home prices are the banks who dole out the mortgages and the zombie economy that relies on them creating the money society runs on that way. We have all come to rely on a bunch of zombies to keep ourselves from debt slavery, and no, zombies are not actually alive. Nor are the financial markets, and the economies, that prop them up."
"Among the first things in 2019 you will see enormous amounts of junk rated debt getting rated ever -and faster- lower , and the pace at which ever more debt that is not yet junk, downgraded to(wards) junk, accelerating."
Sucked into a black hole when the illusion of moneyness turns to smoke.
"It doesn’t look to me that a year from now we’ll see 2019 as a particular peaceful year, not at all like 2018. I called it from Chaos to Mayhem earlier, and I’m sticking with that. We’re done borrowing from the future,"
https://www.theautomaticearth.com/20...fore-the-fall/

"After a brief pause, induced mainly by the threat of an unstoppable collapse in equity prices, the Fed will be forced to continue to raise interest rates to counter price inflation pressures, which will take the rise in the heavily suppressed CPI towards and then through 4%, probably by mid-year. The recent seizure in commercial bond markets and the withdrawal of bank lending for working capital purposes sets in motion a classic unwinding of malinvestments. Unemployment begins to rise sharply, and consumer confidence goes into reverse."

"Equity prices continue to fall, as liquidity is drained from financial markets by worried investors. The US enters a severe recession, which is similar in character to the 1930-33 period. The notable difference is in an unbacked pure fiat dollar, which being comprised of swollen deposits[ii] (currently 67% of GDP versus 36% in 2007), triggers an attempted reversal of deposit accumulation."
"Most of the ECB’s money has been spent on government bonds for a secondary reason, and that is to ensure Eurozone governments remain in the euro-system. Profligate politicians in the Mediterranean nations are soon disabused of their desires to return to their old currencies. Just imagine the interest rates the Italians would have to pay in lira on their €2.85 trillion of government debt, given a private sector GDP tax base of only €840bn, just one third of that government debt."
He's too blind to see that the Italians are just going to default.

"It never takes newly-elected Italian politicians long to understand why they must remain in the euro system, and that the ECB will guarantee to keep interest rates significantly lower than they would otherwise be. Yet the ECB is now giving up its asset purchases, so won’t be buying Italian debt or any other for that matter. "
Stay or go, interest rates will go up. They will do better to go and, default.
"A side effect of the ECB’s asset purchase programme has been the reduction of Eurozone bank lending to the private sector, which has been crowded out by the focus on government debt. This is illustrated in the following chart."
The GOV sucks in all the capital to support the bureaucrats and muizzies. Then, it defaults.
https://www.goldmoney.com/research/g...-credit-crisis

12/29 “Leveraged loans” bite: record-bad year-end for loan mutual funds & ETFs – WS Just wait for next year.
So much money has pulled out of the markets that; a normally low-amplitude movement creates a huge effect,,, volatility.
https://www.marketwatch.com/story/he...art-2018-12-28
12/29 The Malaysia scandal is starting to look dire for Goldman Sachs – Rolling Stone We can only hope.
12/29 Don’t get fooled by Wednesday’s market action – Casey Research
A $64 billion rotation out of bonds and, into stocks created a 900 point move,,, chump change.
__________________
 
Reply With Quote