we've seen lots of posts about reduced liquidity and credit

[Spartacus]

I've posted Gary North's view and the Adjusted Monetary Base

Aaron thinks liquidity is rising(correct me if not), and here's a supporting view

http://interestrateroundup.blogspot.com/

do a search for " Money, Money everywhere"

[Finster]

Re: we've seen lots of posts about reduced liquidity and credit

Question tailor-made for Bart! Perhaps he can update us, but he recently cited broad money growth in the range of 10% per annum ... pretty high...

[Spartacus]

Re: we've seen lots of posts about reduced liquidity and credit

I'm agreeing with Noland - the US FED has been contracting liquidity where it can but many private-sector agents have ways to expand liquidity and there's lots of demand for it

At the same time, Shedlock has a post about contracting consumer credit.

So I don't know, is credit growing or not? Are we in an environment of contracting liquidity or expanding liquidity?

Maybe the answer is "yes".

I've posted Gary North's view and the Adjusted Monetary Base

Aaron thinks liquidity is rising(correct me if not), and here's a supporting view

http://interestrateroundup.blogspot.com/

do a search for " Money, Money everywhere"

[jk]

Re: we've seen lots of posts about reduced liquidity and credit

i think different sectors may be having different experiences. there may be the beginnings of some reduced availability of credit in the consumer/mortgage area, but even there it hardly sounds restrictive. in the financial sector, the institutions will create credit in an eyeblink. the yen carry trade is enormous, so you have to include credit creation by the boj. so where is this reduced liquidity supposed to be?

[bart]

Re: we've seen lots of posts about reduced liquidity and credit

Question tailor-made for Bart! Perhaps he can update us, but he recently cited broad money growth in the range of 10% per annum ... pretty high...

This is probably the single cleanest and simplest look at money growth... in spite of it being a very busy chart. It simply shows all the various money measures growth rates advanced 18 months to account for the inevitable lags for money to get into the system. Note that 18 months is somewhat arbitrary since it can vary greatly, but it also does roughly align with Eric's charts and views.

I believe that Gary North is focused too much on deflation in general and does not take credit growth and other items into account enough, but he is correct that monetary base isn't growing very fast at all.

One other note - the GDP forecast does *not* take into account any CPI lies but rather attempts to very simpliistically forecast what nominal GDP growth will be.





Here's a picture of recent credit type growth, without lags, which might be helpful to some. The purple line is overall growth, and I've recently added the dotted line which tracks growth of US derivatives (on the right hand scale).

[Spartacus]

Re: we've seen lots of posts about reduced liquidity and credit

What happened to the much-touted Japanese liquidity withdrawal?

I read a bunch of stuff online that blamed the drubbing Gold and Silver took on that withdrawal, but have not heard anything about it since.

Did the japanese authorities meekly and quietly retreat from the plans?

I believe that Gary North is focused too much on deflation in general and does not take credit growth and other items into account enough, but he is correct that monetary base isn't growing very fast at all.

[bart]

Re: we've seen lots of posts about reduced liquidity and credit

What happened to the much-touted Japanese liquidity withdrawal?

I read a bunch of stuff online that blamed the drubbing Gold and Silver took on that withdrawal, but have not heard anything about it since.

Did the japanese authorities meekly and quietly retreat from the plans?

They withdrew that liquidity and have been relatively stable at a low balance since then.
From my central bank watch page:

[Finster]

Re: we've seen lots of posts about reduced liquidity and credit

What happened to the much-touted Japanese liquidity withdrawal?

Interesting, but of not much relevance to the dollar prices of stocks, bonds, commodities, etceteras...

[Spartacus]

Re: we've seen lots of posts about reduced liquidity and credit

Match up the dates - the late-April decline of Gold and Silver was widelyl blamed specifically on the Japanese liquidity withdrawal.

At the time I thought "maybe", and Bart's chart strengthens blaming the Japanese for that in my mind.

My main questions now would be around the various stock markets (India, Saudi Arabia) and the various currencies (Iceland) that took a drubbing starting well before the liquidity withdrawal.

Were the big players positioning themselves appropriately before the (previously-announced) withdrawal?

Interesting, but of not much relevance to the dollar prices of stocks, bonds, commodities, etceteras...

[Finster]

Re: we've seen lots of posts about reduced liquidity and credit

Match up the dates - the late-April decline of Gold and Silver was widelyl blamed specifically on the Japanese liquidity withdrawal.

At the time I thought "maybe", and Bart's chart strengthens blaming the Japanese for that in my mind.

My main questions now would be around the various stock markets (India, Saudi Arabia) and the various currencies (Iceland) that took a drubbing starting well before the liquidity withdrawal.

Were the big players positioning themselves appropriately before the (previously-announced) withdrawal?

Oy, Spartacus, but as tempting as it may be, inferring causation from association is a risky endeavor. One of the main problems with currencies is that they tend to follow each other down. As in "competitive devaluation". It may be only temporary, but it kind of gives each central bank cover as they play their inflationary games ...

[Spartacus]

Re: we've seen lots of posts about reduced liquidity and credit

Oy, Spartacus, but as tempting as it may be, inferring causation from association is a risky endeavor. ..

I'm the first to agree with you.

I made the same point in the discussions I had on several fora about the hit Au and Ag took.

[bart]

Re: we've seen lots of posts about reduced liquidity and credit

Oy, Spartacus, but as tempting as it may be, inferring causation from association is a risky endeavor. One of the main problems with currencies is that they tend to follow each other down. As in "competitive devaluation". It may be only temporary, but it kind of gives each central bank cover as they play their inflationary games ...

No guts, no glory in risk land? ;)

The BoJ liquidity subtract sure was a major factor in my book at the very least, especially since it was date coincident with a Fed and Treasury special anti-liquidity moment.

[Finster]

Re: we've seen lots of posts about reduced liquidity and credit

I'm the first to agree with you.

I made the same point in the discussions I had on several fora about the hit Au and Ag took.

In all fairness I'm engaging in a bit of exaggeration in service of thoughtful reflection. Hope you are not taking my confrontational style personally; it just seems that often more understanding is gained from flushing out points of disagreement, and challenging the conventional wisdom is prime territory for it... ;)

[Finster]

Re: we've seen lots of posts about reduced liquidity and credit

No guts, no glory in risk land? ;)

The BoJ liquidity subtract sure was a major factor in my book at the very least, especially since it was date coincident with a Fed and Treasury special anti-liquidity moment.

But was it a causal factor? Is all "liquidity" the same? If the Wiemar Republic or Argentina prints zillions of marks or pesos, does it cause the dollar price of things to rise?

[bart]

Re: we've seen lots of posts about reduced liquidity and credit

But was it a causal factor? Is all "liquidity" the same? If the Wiemar Republic or Argentina prints zillions of marks or pesos, does it cause the dollar price of things to rise?

You could always attempt to prove that it wasn't a causal factor... and there were points during Wiemar or Argentina when the dollar price of things rose significantly too... ;)