“…the bigger question
is “Why do we ignore other people’s problems?”.
As Republican Alf
Landon’s daughter wrote me, Senator Nancy Landon Kassebaum, back: 11/4/81:
The response of the
monetary authorities and state legislatures was to give the thrifts more and
more discretion in lending (opportunities for self-dealing where greed and
fraud reached monumental levels in the thrift industry).
Michael Hudson
definition of *financialization* is apropos: "a lapse back into the
pre-industrial usury and rent economy of European feudalism".
There is essentially
only one macro-economic problem: the delusional Keynesian macro-economic
thinking / persuasion, John Maynard Keynes’ “optical illusion”, pg. 81 in his
“General Theory”, which maintains that a commercial bank is a financial
intermediary. It is both cut and
dry. The remuneration of interbank
demand deposits exacerbates this economic regression. The 1966 Savings and Loan “credit crunch”,
where and when the term “credit crunch” was first coined, is the antecedent and
paradigm.
This Romulan cloaking
device vastly exceeded the level of short term interest rates which is still
illegal.
See: "The 2006 Financial Services Regulatory Relief Act gives the Fed permission to pay interest on reserves. The IOR rate was always higher than "the general level of short-term interest rates" which is imposed in the Law. "A Legal Barrier to Higher Interest Rates," The Wall Street Journal, Sept. 28, p. A13.
The resultant dis-intermediation for the NBFIs (where the size of the NBFIs shrank by $6.2T), an outflow funds or negative cash flow, left the DFIs unaffected (the size of the DFIs grew by $3.6T), and thus exacerbated the depth and duration of the GFC.
I.e., since
Roosevelt’s 1933 Banking Act, dis-intermediation is a term that only applies to
the non-banks.
Never, from the
standpoint of the entire economy, from the standpoint of the payments’ system,
are the commercial banks conduits between savers and borrowers. The DFIs pay for their new earning assets
with new money period – not the other way around. But don’t ask a banker, don’t ask SA author
Jeremy Blum: “How Accurate Is Bernie Sanders' Diatribe Against Big Banks?”
The implications in
the flow-of-funds, in the savings-investment process, are profound. Bankrupt-u-Bernanke pontificated that a
“credit crunch”, is a “capital crunch”.
Not so. The “lack of funds”, is
not the same as the “cost of funds”. It
is a confusion of “stock” vs. “flow”.
Leland J. Pritchard, Ph.D., Economics - Chicago 1933 was 30 times smarter than
Albert Einstein, i.e., Einstein’s “very revoluntionary” 1905 epochal papers
were generally accepted 3 years after their publication. Prichard’s 1963 “very revolutionary” paper
has yet to be recognized: These compendium of articles were personally
commissioned by John F. Kennedy and his administration:
“Profit or Loss From
Time Deposit Banking”, Banking and Monetary Studies, Comptroller of the
Currency, United States Treasury Department, Irwin, 1963, pp. 369-386
Disintermediation, an
outflow of funds or negative cash flow, which Bankrupt-u-Bernanke mis-diagnosed
as a “capital crunch” in his 1991 paper in response to the Savings and Loan
debacle, “the failure of 1,043 out of the 3,234 savings and loan associations
in the United States from 1986 to 1995” and (2) the July 1990 - March 1991
recession (another “credit crunch”).
It was BuB’s prelude
to his mis-guided policy response to counter the GFC or TARP [to issue equity
warrants, to stabilize bank capital ratios], occurs because the inventory of
outstanding loans is funded at levels which can no longer be supported by rolling
over older funding: short-term, retail and wholesale funding.Just think about it, the countercyclical burden of the imposition of the requirement to add bank capital literally destroys the money stock, dollar for dollar. See: Steve H. Hanke’s “Basel’s Capital Curse”
http://bit.ly/2mZChDl
De toute évidence,
Bankrupt-u-Bernanke does not know a credit from a debit.
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