Saturday, February 6, 2010

"Banks Aren't Lending!"

In 2007, at the height of the boom, I forecast that the mantra for the next several years was going to be "the banks aren't lending!" The phrase is slowly creeping back into the socialist lexicon.

How did I know? Because central banks have used the BoE playbook to engineer for-profit depressions for the past 316 years.

When the central bank intentionally drains the cash supply, it isn't that banks don't lend, it is that people don't borrow. Banks are literally dying to lend, but they can't because no one with a brain wants to leverage themselves into a depression.

Bernanke made his name in the isolated dream world of academia, proposing that banks caused the Great Depression because they didn't lend enough, that dropping cash for sale from helicopters was the answer.

Could Ben be any more naive about the building block basics of free market capitalism? Does he understand that Princeton's socialist utopia doesn't really exist? Does he understand that the CUSTOMER is king in a free market, and the central bank is but a pawn?

Hey Ben, banks don't lend; customers borrow. This is the USA. We're still free.

Go ahead, fire-sale your snake oil paper at 0%. People don't want anything to do with leverage when prices are contracting at 10-20% per year, or more. Why? Because they aren't as dumb Princeton's pride and joy. No one wants to lose with leverage. Did it ever occur to Ben that a helicopter stuffed with cash for sale at a premium, buzzing through the middle of a depression, is a ridiculous sight that makes people chuckle?

That's exactly why the private Federal Reserve bank cartel is forcing borrowed "Stimulus" with a multi-trillion dollar price tag. Because there is only one entity dumb enough to borrow cash at a premium in 2010: the government.


  1. FDR- it would seem with this explanation that small business would have no problem getting a loan aside from the stricter lending requirements such as a hefty down payment and putting thier houses as collateral. Does this senario refer more to the housing loans?

  2. There's no incentive to lend...ergo...growth kill.

  3. Hey FDR, not sure if you short individual stocks, but if you do, copper stocks FCX and JJC would be a slam dunk. I usually stick to ETF's, but this is too easy.

  4. FDR

    It sounds like it is a win=win for the FED. Lending trillions to dummy's or go seize assets. They can't lose, or am i missing something?

    Also, do you have a remark about Tim G remark this weekend that the US will never lose its AAA rating!


The USA's political-economc system is best described as:

On Nov 2, 2010, I plan to vote (FOR or AGAINST) my incumbent congressman

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