Posted on 07/17/2021 9:51:28 AM PDT by Browns Ultra Fan
There is a slowdown in bank lending since The Fed’s intervention in March 2020.
Bank credit has slowed since March 2021 resulting in banks parking money with The Federal Reserve in the form of reverse repos.
Loans and leases are experiencing negative growth rates.
Residential real estate loans are also experiencing negative growth rates and a corresponding rise in reverse repo usage.
Commercial real estate lending remains in positive territory.
Commercial and industrial loans? Also experiencing negative growth rates.
Clearly, banks are nervous about inflation since lending at fixed-rates in an inflationary environment is bad news. Not to mention fears of asset bubbles that can burst.
Treasury Secretary Janet Yellen says she is concerned about rapidly rising housing prices, but says inflation will calm.
Perhaps Yellen will click her heels together three times to make inflation calm.
(Excerpt) Read more at confoundedinterest.net ...
You say “reverse repo” twenty times in the excerpt without saying what the hell a “reverse repo” is. Good job!
Seems loose lending standards would be more likely to fuel an asset bubble.
Turning cash into something real is a good idea while your cash is becoming trash. The Fed has slowed down printing a bit last month but there is still a lot of bloated money the market needs to catch up with. The worst Inflation in living memory is still on its way.
Had to look that up myself. Simply put Reverse Repos means banks provide less credit to individuals in the form of mortgages. A Reverse Repo means banks invest money in short term securities with a guaranteed interest rate vice lending the money for higher risks like mortgages during an inflationary economy. Hopefully, my understanding of this is accurate.
>>You say “reverse repo” twenty times in the excerpt without saying what the hell a “reverse repo” is. Good job!
It’s a type of loan. One party buys stuff from another with the agreement to sell it back at a higher price on some future date.
https://www.investopedia.com/terms/r/reverserepurchaseagreement.asp
A slowdown in lending is a desirable thing.
Not when your whole economic system is based on debt.
Took me a while to see that.
What it means is a lot of funny money asset values are posed to pop. Hard to say my house is worth $300K when no one is willing to pay that.
-credit crunch
-slowdown in increase in the money supply
-increase in taxes
-increase in the interest rate
= recession
That seem odd from where I’m at. 20% over asking is the norm, and they last maybe 5 days. Will it last? I dunno, but that’s what it is now.
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The Fed are blind central planners. Imagine the apparatchiks in the Soviet Ministry of Agriculture in 1973 and you are getting close to their mentality.
The demand for loans has more to do with government over-regulation, social and family conditions, inflation, labor, crime than merely interest rates.
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