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The tail end of my three-part discussion of banking (link) ended with the argument that the circular nature of funding flows means that they do not represent a constraint on debt growth, instead the willingness (and ability) to absorb credit risk is the constraint. If we accept this, there is an important implication for our ability to forecast recessions that are driven by a contraction in “animal spirits.” I outlined this argument in the first volume of my (planned) two part texts on recessions. (I only have parts of the second volume completed, as I hit some difficult areas that I feel I need to think about more carefully.)...Bond Economics Credit Growth And Recession ForecastingBrian Romanchukhttp://www.bondeconomics.com/2022/05/credit-growth-and-recession-forecasting.html
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The tail end of my three-part discussion of banking (link) ended with the argument that the circular nature of funding flows means that they do not represent a constraint on debt growth, instead the willingness (and ability) to absorb credit risk is the constraint. If we accept this, there is an important implication for our ability to forecast recessions that are driven by a contraction in “animal spirits.” I outlined this argument in the first volume of my (planned) two part texts on recessions. (I only have parts of the second volume completed, as I hit some difficult areas that I feel I need to think about more carefully.)...Bond Economics Credit Growth And Recession ForecastingBrian Romanchukhttp://www.bondeconomics.com/2022/05/credit-growth-and-recession-forecasting.html
Topics:
Mike Norman considers the following as important:
This could be interesting, too:
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The tail end of my three-part discussion of banking (link) ended with the argument that the circular nature of funding flows means that they do not represent a constraint on debt growth, instead the willingness (and ability) to absorb credit risk is the constraint. If we accept this, there is an important implication for our ability to forecast recessions that are driven by a contraction in “animal spirits.” I outlined this argument in the first volume of my (planned) two part texts on recessions. (I only have parts of the second volume completed, as I hit some difficult areas that I feel I need to think about more carefully.)...Bond Economics
Credit Growth And Recession Forecasting
Brian Romanchuk
http://www.bondeconomics.com/2022/05/credit-growth-and-recession-forecasting.html