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.)

4 comments:

  1. James Higham5 July 2012 at 20:10

    Explain to a layman.

    ReplyDelete
  2. Sackerson9 July 2012 at 08:41

    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.

    ReplyDelete
  3. James Higham15 July 2012 at 09:59

    the powers that be have shoved enough in to get back to a more conventional ratio

    For how long? Cf Jesse.

    ReplyDelete
  4. Sackerson15 July 2012 at 18:39

    James: quite.

    ReplyDelete

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