Page 18 - September October 2018 Disruption Report Flip Book

MONETARY POLICY SEJPATN.U-AORCYT.20210818
So what you have to really be analyzing, what most people don’t analyze or think about even, and that’s commercial banks. Commercial banks produce bank money. Right now 86% of the total broad money supply is produced by banks. So you have to watch and see what’s going on with banks and what policies are affecting banks.
...[O]ne reason that people don’t watch this very carefully is that policies that affect commercial banks don’t change very rapidly, usually. Usually. What happened after Lehman, we had Dodd-Frank. That was a massive change. That was the law, not even a regulation. They’re still coming up with the regulations. Those are still changing.
Bank supervision was changed. And bank capital requirements were changed. We had massive change affecting banks and affecting the biggest part of the money supply. And people aren’t used to monitoring that kind of thing. They don’t understand it. Because ...it usually doesn’t change very much.
...[Q]uantitative easing came with lots of costs. It mitigated the business cycle problems associated with bank regulation, but it created many price signal distortions. And the biggest one and the easiest one to think about is chasing yield, and leveraging up, and taking way too much risk. And that’s what we’re paying the price for now.
...[Y]ou’ve got the Argentine peso, you’ve got the Turkish lira, you’ve got the Indonesian rupiah, you’ve got the Indian rupee at all-time lows. All of these currencies and markets have been disrupted. Bubbles popping. Because ultimately there was quantitative easing. And the quantitative easing, due to yield chasing, got people in these markets in the first place. (MACROVoices, Steve H. Hanke, 10/18/18)
Was synchronized global growth a “fake narrative”?
In a podcast, Daniel Lecalle, a professor of global economics and chief economist for Tressis, said:
[W]hat we’re seeing right now is, basically, that markets are starting to get nervous about a number of catalysts that were not expected to happen. The first one being that bond yields, the US Treasuries, the 10-year, would be rising above what was considered to be a
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