How Can We Have Record Bad Loans And Record Excess Liquidity At The Same Time?

We knew Bernanke was lying when he said the latest QE round is supposed to help the jobs economy. That was almost a year ago and it is now fully mainstream that QE doesn’t do that. However nobody in the mainstream says he was and is lying, the never do when a persons job demands they lie and really everyone with a good executive position job in the world has to lie.

Everyone has to speak the company line, the Party line, the government line. Not doing so is the essence of a whistle blower. The stupendous majority of people climbing the rungs of any organization have internalized this. They accept it and celebrate it. They hold loyalty to the organization as the highest standard. They self select.

Everyone expects these persons to lie. So they lie even though they know we know they are lying. It’s their job after all. I always like to go back to the famous tobacco executive hearing. Everyone remembers this.

https://www.youtube.com/watch?v=jQUNk5meJHs

Note the congressman asks “if they believe nicotine is addictive”. He probably didn’t quite know it but by asking the question that way, instead of just asking as a point of fact if it is he was giving them permission to lie. Once ‘belief’ is made part of it then no lie can ever be proven. Still, we knew they were lying but could not be convicted of it.

At any rate most probably don’t remember that they knew the executives were lying because they had to lie as part of their job. And some part of everyone understood this and forgave it. It’s just how the world works.

Now around places like this, dusty corners of the internet, where non company, non party, non government people roam and protecting their organization and thus themselves is not part of the equation ideas run free. However they carry no weight. If anyone here would by chance enter into an organization with a mind to advance, oblivious to the necessities of being a ‘company’ man they will soon be weeded out.

I’m not sure why Bernake lied about the reason for QE. It doesn’t really matter.

…and when that tsunami of liquidity finally hit’s the streets, these articles will be about the masses being forced to eat dog food because that’s all their food stamps will afford. There will be shortages of everything when it happens, even labor, as the astute buy forward, cleaning out the shelves, and re-suppliers hire in a futile attempt to meet demand and keep supply chains open.

By the time the “inflation” word is mainstream, the Crack Up boom will be in full swing, destroying the currency. And that’s also when the above photo will be transposed onto the present day. Blue Chinese tarps replace white canvas, SUV’s substitute for ’29 Fords and Chryslers. Tar Paper will again come into vogue.

And the good that will be derived is “The long run” will have finally arrived and the Keynesian dream will be dead.

When? Could start tomorrow or in 5 years.

RE 8195 “and when that tsunami of liquidity finally hit’s the streets, “

There appears to me no way for those bank deposits to ‘hit the street’. Unless people go on a borrowing binge and that isn’t going to happen.

Let’s follow the money. The Fed buys Treasury paper and MBS from those that have them. The sellers in turn buy mostly other financial assets from those who have them and so on and so forth and the money is every step along the way is a bank deposit. So note that for the most part it is assets which inflate and the money stays in the financial economy.

Now some of the money is being put closer to the real jobs economy via increased mortgage lending but there again the main effect is the increase in prices of real estate and we can be almost certain the sellers are plowing the sale proceeds back into RE.

The level of government borrowing is no effected by QE, only their cost of borrowing. Government borrowing and the previously gigantic but now shrinking deficits were a way for the Feds purchases to be intermediated, ie. put out into the real people real jobs economy. The deficit shrunk more than 40% last year.

I’m open to suggestions on how Fed ‘printed money’ is going to find it’s way into the non financial economy because I don’t see it now.

As a side note if the prices of the assets inflated by Fed ‘printed money’ falls then the ‘money’ would disappear, as the assets deflated.