by Some concern by Monetarists out there that current short term risk free rate of interest compared to the average of a past period of the short term risk free interest rate is a cause for serious concern wrt equity prices…Think of financial asset prices as a function of the equation P = (A-L)/A where A and L are Depository system Assets and Liabilities…At point 1 the fiscal surpluses were being saved in the TTL accounts at Depositories increasing system L by 0Bs … at point 2 the Fed increased Depository system A by hundreds of billions in September 2008, causing credit provision to cease and the GFC …. and at point 3 they again did the same thing as 2 establishing over trillion of A in March 2020 causing the credit function to again cease until this regulatory function was suspended
Topics:
Mike Norman considers the following as important:
This could be interesting, too:
Robert Vienneau writes Austrian Capital Theory And Triple-Switching In The Corn-Tractor Model
Mike Norman writes The Accursed Tariffs — NeilW
Mike Norman writes IRS has agreed to share migrants’ tax information with ICE
Mike Norman writes Trump’s “Liberation Day”: Another PR Gag, or Global Reorientation Turning Point? — Simplicius
Some concern by Monetarists out there that current short term risk free rate of interest compared to the average of a past period of the short term risk free interest rate is a cause for serious concern wrt equity prices…
Think of financial asset prices as a function of the equation P = (A-L)/A where A and L are Depository system Assets and Liabilities…
At point 1 the fiscal surpluses were being saved in the TTL accounts at Depositories increasing system L by $100Bs … at point 2 the Fed increased Depository system A by hundreds of billions in September 2008, causing credit provision to cease and the GFC …. and at point 3 they again did the same thing as 2 establishing over $1 trillion of A in March 2020 causing the credit function to again cease until this regulatory function was suspended ….
Today Treasury no longer utilizes TTL accounts and we are in large fiscal deficit anyway, and no where have I seen currently is the Fed proposing to increase A at this time rather their stated policy is to continue to gradually “normalize” system A at much lower levels…
“Correlation is not causation” etc…