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Wednesday, July 04, 2012
US Financial System has now been reset
For the first time in 40-plus years, the ratio of monetary base to credit in America has returned to 5%.
(If you want to check the data, see here and here.)
The way I see it, we'e looking at fractional reserve lending for the country as a whole. True, much of the new money is not in the real economy, but overall it looks as though the powers that be have shoved enough in to get back to a more conventional ratio.
Having said that, money+debt in relation to GDP or any other measure of economic activity is now hugely out of balance.
5 comments:
Explain to a layman.
The way I see it, we'e looking at fractional reserve lending for the country as a whole. True, much of the new money is not in the real economy, but overall it looks as though the powers that be have shoved enough in to get back to a more conventional ratio.
Having said that, money+debt in relation to GDP or any other measure of economic activity is now hugely out of balance.
Nice article, thanks for the information.
Anna @ sewa mobil jakarta
the powers that be have shoved enough in to get back to a more conventional ratio
For how long? Cf Jesse.
James: quite.
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