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Hold on to your bonds

The Fed can expand its balance sheet all it wants, but if the private sector can’t or won’t create credit, it can’t inflate, despite its best intentions…

1) For the first time in history total bank credit has fallen; adjusted for the onboarding of items previously held off balance sheet, total loans and leases have fallen by nearly 10% from the 2008 peak. Nothing like this ever, ever happened before.

2) For the first time in history, total issuance of securities against private risk (corporate or real estate) fell by an astonishing 50% since the peak. We’ve never seen anything like it.

3) Interbank loans globally have fallen by a third from the 2008 peak.

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