An economics, investment, trading and policy blog with a focus on Modern Monetary Theory (MMT). We seek the truth, avoid the mainstream and are virulently anti-neoliberalism.
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Monday, October 15, 2012
Loan growth is losing momentum
Looks like lending is starting to lose momentum. This chart suggests momentum peaked back in June. Could be a sign that the economy is slowing and will continue to slow.
I believe the big spike up in 2009ish was due to a one time moving a bunch of stuff the banks had to take from some of the shuttered "shadow banks" CIT, etc... that was tacked on to bank credit.... ie looks like the banks had to foreclose and were enabled by the regulators to reclassify them as "bank credit" ie loans rather than another previous form of asset....
But the level has breached above the former flatline area from late 2008... which is "good"...
Am I right to see this as "inside money" that necessarily sums to zero?
ReplyDeleteAlso, wasn't a problem in the earlier recession the fact that these loans outpaced true growth?
Yes and yes.
ReplyDeleteCredit can sustain demand for a while, until it gets to a point where income growth can no longer sustain it.
Here's a FRED look at the levels over a long period...
ReplyDeletehttp://research.stlouisfed.org/fred2/graph/?id=TOTLL
I believe the big spike up in 2009ish was due to a one time moving a bunch of stuff the banks had to take from some of the shuttered "shadow banks" CIT, etc... that was tacked on to bank credit.... ie looks like the banks had to foreclose and were enabled by the regulators to reclassify them as "bank credit" ie loans rather than another previous form of asset....
But the level has breached above the former flatline area from late 2008... which is "good"...
Rsp,