Credit where credit is due
A switch from liquidity to credit is under way in the US. The rest of us are not so lucky.
The chart below encapsulates the dichotomy between credit and liquidity which I’ve been thinking about for some time. I won’t go into the details but the key take-away here is that the more the Fed intervened with QE, which supported financial assets, the less room on bank balance sheets for real credit (loans). This is now reversing with QT.
This has a…
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