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Thursday, September 20, 2012

Has the Fed succeeded?

The Z1 report for Q2 2012 is less disastrous than most of the recent reports.  But the financial powers that be are still having to paper over the gap in private credit with federal credit.  Here is the quarterly change in credit outstanding in the various sectors.

  • +0.36% Household
  • +1.08% Financial
  • +0.99% Corporate
  • +1.83% Federal
  • -0.34% State and Local
  • +0.82% Total

So private credit is growing again, but $198.2 of the $447.3 billion increase in total credit was federal.  And at 0.8 percent, total credit growth was still well short of the 2.4 percent average quarterly increase prior to 2008.  Conclusion: this was probably the last minor hurrah before the decline begins again in Q3.

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18 Comments:

Anonymous Idle Spectator September 20, 2012 4:04 PM  

So, like, the numbers, are getting different?

Anonymous Lysander Spooner September 20, 2012 4:12 PM  

Conclusion: this was probably the last minor hurrah before they hire 19 more Saudis to stimulate the American psyche.

They got nuthn else.

Problem is that damn "Broken Window Theory" just won't jibe with their, "We create our own reality."

Not only are they Evil, they are EFFn stupid too.



Blogger jamsco September 20, 2012 4:15 PM  

So . . . would you want to make predictions for those numbers for q3 and q4?

Anonymous MSNBC September 20, 2012 4:19 PM  

So if the QE3 credit influx is unable to meet the demand calls of Chinese bond market tax stimulus, then the optimal lagging indicator (dividend) should compete for the regulatory interest rate fluctuations.

Anonymous Stilicho September 20, 2012 5:09 PM  

From which table in the Z1 did you acquire those numbers?

I am missing something here. Just looking at the domestic financial sector for the second quarter: D1 shows -5.1% credit market debt growth; D2 shows -$721 billion credit market borrowing; D3 shows a decrease in credit market debt outstanding from $1.4 trillion to $1.38 trillion, etc.

If these are your own calculations based on separate numbers you track, would you mind sending me a copy so that I can follow the conversation in an informed manner?

Blogger Vox September 20, 2012 5:49 PM  

L.1 Credit Market Debt Outstanding. It has the summaries. I do have the non-revised numbers, but they're not that different this quarter.

Blogger Vox September 20, 2012 5:51 PM  

Oh, I see a problem. The current report shows Financial at 13838.2 for Q2 and 13999.7 for Q1, thus a decline. But that's revised for Q1, as the Q1 report originally had it 13689.8.

Anonymous Azimus September 20, 2012 6:03 PM  

Credit is only one component of spending... Therefore shouldn't spending be the more important economic indicator? Credit would be a better indicator of risk appetite and "animal spirits"? At least inthe financial markets...

Blogger Vox September 20, 2012 6:11 PM  

No. Spending doesn't tell you how much nonexistent money is being spent.

Anonymous aviendha September 20, 2012 6:38 PM  

"The FED has fired it's land round in the revolver."
I've heard that about 10 times now, the earliest being when they lowered interest rates to near zero.
Every six months it is the end of the world and the FED has nothing left...I wonder what desperate men are capable of to keep their power.

What else can they do? After they buy all the debt? I suppose we can have some more cash for clunkers, get everyone a new mortgage at 1%.

Anonymous zen0 September 20, 2012 7:01 PM  

Has the Fed ended Itself? Is Ron Paul redundant now?

Anonymous Stilicho September 20, 2012 7:53 PM  

Thanks

Blogger James Dixon September 20, 2012 9:20 PM  

> "The FED has fired it's land round in the revolver." I've heard that about 10 times now, the earliest being when they lowered interest rates to near zero.

And you heard correctly. Notice that the only real effect of the various QE's has been to boost the stock market, not the economy. That's because stocks are a better inflation hedge than bonds or cash.

Pretty much the only weapon the Fed has is interest rates. And while they're a powerful weapon, they can't force people to borrow. Once the rates hit zero, they've done pretty much all they can do.

Blogger Nate September 20, 2012 10:51 PM  

This could be a factor of inflation.

The debt disappearing is in old dollars that were worth more. The new debt is in new dollars that are worth considerably less. We could theoretically still see fewer loans for less real money... but have these dollar debt figures show what appears at first glance to be growth.

Blogger Nate September 20, 2012 10:56 PM  

"And you heard correctly. Notice that the only real effect of the various QE's has been to boost the stock market, not the economy. That's because stocks are a better inflation hedge than bonds or cash."

This is the statement indicative of someone that clearly lacks creativity.

You're limiting yourself to the system... and the rules of the system.

TPTB designed the system. Their system... their rules. They are free to change them and break them as they see fit... and they will.

Anonymous Luke September 20, 2012 11:28 PM  

OT: blacks in Chicago admit Obama is not going to get re-elected in Nov.:

(They also say he's clearly gay, and may well have HIV, given his weight loss.)

http://hillbuzz.org/prominent-members-of-chicago-black-community-confirm-those-closest-to-obama-know-there-is-no-second-term-coming-42773

Anonymous Red September 21, 2012 2:33 AM  

The housing bubble is back in California. I've been house shopping and the low rates is sending hordes of people to buy.

Blogger James Dixon September 21, 2012 4:12 PM  

> TPTB designed the system. Their system... their rules. They are free to change them and break them as they see fit... and they will.

Of course, but the question didn't concern changed rules. It dealt with the current system.

I expect to rules to change, but I also expect that when the politicians reach the point where they have to change them, the Fed may wind up cut out of the equation.

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