Blog | CB Investment Management

Creditism Meets Collapse In Loan Creation.

“loan growth in the US has not only ground to a halt but, for the all important Commercial and Industrial Segment, has dropped at the fastest rate since the financial crisis, some (until recently) economic optimists, such as Bank of America’s Ethan Harris, are only now start to realize that the post-election “recovery” was a mirage.”

” …. such a sharp and protracted decline in loan creation has only happened twice before: the 2000 and 2008 recessions,”
Most of the money to fund debt now comes from credit creation, NOT savings.

This is why the Fed has to be so careful about raising rates. To much monetary tightening will quickly slow down credit creation and could cause a financial collapse. 
This is why interest rates are likely to remain far lower and for longer than before.
This could not come at a worse time because the Economy will need around 1.5 Trillion in credit creation this year based on Richard Duncan’s estimates. 
Without it, Creditism will likely collapse and the global economic bubble it has produced could possibly implode without a massive round of new fiat  money creation from the central banks and the commercial banking system.
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“loan growth in the US has not only ground to a halt but, for the all important Commercial and Industrial Segment, has dropped at the fastest rate since the financial crisis, some (until recently) economic optimists, such as Bank of America’s Ethan Harris, are only now start to realize that the post-election “recovery” was a mirage.”

” …. such a sharp and protracted decline in loan creation has only happened twice before: the 2000 and 2008 recessions,

Weekly bank asset data shows that  C&I lending has not increased since September 7 last year … .”
0417weeklycredit

 

 

 

 

 

 

 

 

 

 

 

http://www.zerohedge.com/news /2017-04-09/bank-america-previ ously-has-only-happened-2000-a nd-2008

This is a major problem because, as shown in the chart below, Most of the money to fund debt now comes from credit creation, NOT savings. The chart below shows that when capitalism was replaced with creditism in 1968 the function of capital, or savings, started to diminish. Today savings have a relatively minor impact.

0417Moneycoming from creditThis is why the Fed has to be so careful about raising rates. To much monetary tightening will quickly slow down credit creation and could cause a financial collapse.

This is why interest rates are likely to remain far lower and for longer than before.
This could not come at a worse time because the Economy will need around 1.5 Trillion in credit creation this year based on Richard Duncan’s estimates.
Without it, Creditism will likely collapse and the global economic bubble it has produced could possibly implode without a massive round of fiat money creation from the central banks and the commercial banking system.

 

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Chris Belchamber is an IRMAA Certified Planner

Medicare’s IRMAA impacts every retirement plan. Learning how to mitigate it is available via IRMAA Certified Planners designation.

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