{"id":14666,"date":"2015-11-22T14:06:06","date_gmt":"2015-11-22T19:06:06","guid":{"rendered":"http:\/\/olduvai.ca\/?p=14666"},"modified":"2015-11-22T14:06:06","modified_gmt":"2015-11-22T19:06:06","slug":"weekly-commentary-monetary-fiasco","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=14666","title":{"rendered":"Weekly Commentary: Monetary Fiasco"},"content":{"rendered":"

Weekly Commentary: Monetary Fiasco<\/a><\/h3>\n
All great monetary fiascos are forged upon a foundation of misperceptions and flawed premises. There\u2019s always an underlying disturbance in money and Credit masked by supposed new understandings, technologies, capabilities and superior financial apparatus.<\/p>\n

During the nineties \u201cNew Paradigm\u201d period, exciting new technologies and \u201cglobalization\u201d were seen unleashing a productivity and wealth miracle. The Greenspan Fed believed this afforded the economy an accelerated speed limit. With inflation and federal deficits believed conquered, there was little risk associated with low rates and an \u201casymmetrical\u201d policy approach to support the booming economy and financial markets. The Fed significantly loosened the reins on finance precisely when they needed to be tightened.<\/p>\n

The nineties were phenomenal from a financial perspective. Total system Debt about doubled to $25.4 TN. Remarkably, Financial Sector borrowings surged more than 200% to $8.2 TN. Outstanding Agency (GSE) securities ballooned from $1.267 TN to end the decade at $3.916 TN, for growth of 209%. Securities Broker\/Dealers (liabilities) jumped 212% to $1.73 TN. \u201cFed Fund and Repo\u201d expanded 112% to $1.655 TN. Wall Street \u201cFunding Corps\u201d rose 387% to $1.064 TN. Securities Credit surged 414% to $611 billion.<\/p>\n

And the most incredible aspect of the nineties boom in \u201cWall Street Finance\u201d? Pertinent to today\u2019s backdrop, the 1990\u2019s Bubble unfolded over years with barely a notice. Everyone was mesmerized by the Internet, exciting new technologies and the white-hot IPO market. I was fixated on what I was convinced was evolving into epic financial innovation and a historic Credit Bubble. Yet attempts to explain this backdrop to other financial professionals, academics, economists, journalists and even Fed officials went absolutely nowhere. Repeatedly I heard frustrating variations of \u201cDoug, you don\u2019t understand.\u201d \u201cOnly banks create Credit.\u201d \u201cThe Federal Reserve controls the money supply.\u201d \u201cFannie and Freddie are only financial intermediaries \u2013 they don\u2019t impact system Credit.\u201d \u201cFinancial system borrowings don\u2019t matter. Doug, you\u2019re double-counting debt.\u201d<\/p><\/div>\n

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…click on the above link to read the rest of the article…<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Weekly Commentary: Monetary Fiasco All great monetary fiascos are forged upon a foundation of misperceptions and flawed premises. There\u2019s always an underlying disturbance in money and Credit masked by supposed new understandings, technologies, capabilities and superior financial apparatus. During the nineties \u201cNew Paradigm\u201d period, exciting new technologies and \u201cglobalization\u201d were seen unleashing a productivity and […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[952,175,7756,195,201,303,305,426,534,860],"class_list":["post-14666","post","type-post","status-publish","format-standard","hentry","category-economics","tag-alan-greenspan","tag-credit","tag-credit-bubble-bulletin","tag-debt","tag-deficit","tag-fed","tag-federal-reserve","tag-inflation","tag-monetary-policy","tag-wall-street"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/14666","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=14666"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/14666\/revisions"}],"predecessor-version":[{"id":14667,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/14666\/revisions\/14667"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=14666"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=14666"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=14666"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}