Just a few pictures to tell the story today.
Auto Loan Demand
Average Amount Financed/ 2011
Auto Loan Amount Outstanding
Securitized Loans Outstanding
This last one has me scratching my head. ??????
Fed Balance Sheet
My conclusion from this is that consumer loan demand is falling. This would correspond to the top of a business cycle. This is at a time when consumer debt is very high.
In the "Fed Balance Sheet" link is a graph of bank reserves kept at the Fed. As many have noted the banks are not lending, but hoarding. A negative interest rate policy would penalize banks that hold excess reserves and thus theoretically stimulate more lending and securitization. Banks may be wary of having large amounts of securitized holdings, however, and may put pressure on the Fed for another round of Large Scale Asset Purchases (QE).
This is all money printing. How it can NOT show up as inflation is only dependent on where you look for inflation. How much would a new car cost if people could not access credit for the purchase? The same question applies to housing. Appliances?
A continuous flow of new money as credit lent out is essential to keep the prices of assets up. It is the assets that are on bank balance sheets, and on the Fed's balance sheet. There is no going back, only forward, but demographics of an aging population who is retiring or preparing for retirement by attempting to save, has complicated the grand scheme.
More QE will be forthcoming at any slowdown, or catastrophe awaits. This is the conclusion I reach every time I pursue the answer to credit, money, and consumer credit in particular. Consumer credit, in the absence of productivity gain sharing must fail as a house of cards fails. In a complete collapse, for there is not the support at the base in the form of saving and wage power for support during any contraction. Savings are essential.
Buying more gold and silver for the savings....