Balance sheet liquefaction and the race for precious metals

Furthermore, the size of global financial markets has become so large that their downfall would severely threaten the underlying economy.

The Fed can only supply the much needed repo market collateral through deficits, hence the need for war to stimulate the economy and lending interest. They have apparently lost the ability to taper with the last fumbling attempt.

Out of Control Money Printing

Money may not be flowing into the economy in direct proportion to the unprecedented recent money supply expansion, but it is making it into equities as is evidenced by all-time highs.

This provides useful behavioral cover. Even though a small portion of individual investors hold stocks, the perceptual cues from such stock rises remain a crucial confidence enabler.

Banks currently care most about leveraging their credit via capital markets — and the resulting higher asset prices — not about their unused reserves or traditional lending practices.

Read More: www.resourceinvestor.com/2013/10/02/balance-sheet-liquefaction-and-the-race-for-precio