{"id":26462,"date":"2021-06-22T23:50:28","date_gmt":"2021-06-22T23:50:28","guid":{"rendered":"https:\/\/thepatientinvestor.com\/?p=26462"},"modified":"2021-06-22T23:50:28","modified_gmt":"2021-06-22T23:50:28","slug":"deflationistas-and-base-effects","status":"publish","type":"post","link":"https:\/\/thepatientinvestor.com\/index.php\/2021\/06\/22\/deflationistas-and-base-effects\/","title":{"rendered":"Deflationistas and base effects"},"content":{"rendered":"

Deflationistas like respected economist David Rosenberg<\/a> point to a sharp decline in bank credit over the past 12 months as evidence of deflation.<\/p>\n

By the end of April, commercial bank loans and leases had declined by $510 billion, or 4.7% of total, over the past 12 months.<\/p>\n

\"Commercial<\/p>\n

That would be cause for concern but it does not take into account the massive $742 billion surge in lending in the preceding two months, March-April 2020, when borrowers drew on lines of credit to ensure that they had sufficient liquidity during the pandemic. They were afraid that banks would withdraw credit facilities in anticipation of widespread corporate defaults.<\/p>\n

\"Commercial<\/p>\n

Conclusion<\/h2>\n

There is no credit contraction.<\/p>\n

Bank credit did shrink by $510 billion in the past 12 months but this followed an unusual $742 billion surge in credit as borrowers drew on credit facilities to ensure liquidity during the first two months of the pandemic. What we have witnessed is the normalization of bank credit, with borrowers repaying credit temporarily drawn at the height of the liquidity crunch.<\/p>\n

We expect normal credit growth to resume.<\/p>\n","protected":false},"excerpt":{"rendered":"

Deflationistas like respected economist David Rosenberg point to a sharp decline in bank credit over the past 12 months as evidence of deflation. By the end of April, commercial bank loans and leases had declined by $510 billion, or 4.7% of total, over the past 12 months. That would be cause for concern but it … <\/p>\n

Continue reading “Deflationistas and base effects”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[31,45,34],"tags":[3795,4577,4949,4932,4948],"class_list":["post-26462","post","type-post","status-publish","format-standard","hentry","category-the-fed-banks-interest-rates","category-debt-levels","category-us-canada-countries-regions","tag-bank-credit","tag-commercial-banks","tag-credit-facilities","tag-loans-and-leases","tag-pandemic"],"yoast_head":"\nDeflationistas and base effects - the patient investor<\/title>\n<meta name=\"robots\" content=\"noindex, follow\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Deflationistas and base effects - the patient investor\" \/>\n<meta property=\"og:description\" content=\"Deflationistas like respected economist David Rosenberg point to a sharp decline in bank credit over the past 12 months as evidence of deflation. 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The latest NY Fed survey of consumer expectations confirm\u2026","rel":"","context":"In "Banks & Interest Rates"","block_context":{"text":"Banks & Interest Rates","link":"https:\/\/thepatientinvestor.com\/index.php\/category\/economy\/the-fed-banks-interest-rates\/"},"img":{"alt_text":"Treasury Yields: 10-Year minus 3-Month","src":"https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2023\/2023-04-11-10y3m.png?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2023\/2023-04-11-10y3m.png?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2023\/2023-04-11-10y3m.png?resize=525%2C300&ssl=1 1.5x"},"classes":[]},{"id":45774,"url":"https:\/\/thepatientinvestor.com\/index.php\/2023\/11\/29\/fed-stealth-liquidity-may-presage-early-rate-cuts\/","url_meta":{"origin":26462,"position":3},"title":"Fed stealth liquidity may presage early rate cuts","author":"Colin Twiggs","date":"November 29, 2023","format":false,"excerpt":"Commercial bank cash assets, representing reserves held at the Fed, reversed its down-trend after September 2022 -- when the UK gilt crisis occurred -- and is now edging higher, reflecting stealth liquidity support from the Fed and Treasury. Fed QT is reducing liquidity at the rate of $95 billion per\u2026","rel":"","context":"In "Banks & Interest Rates"","block_context":{"text":"Banks & Interest Rates","link":"https:\/\/thepatientinvestor.com\/index.php\/category\/economy\/the-fed-banks-interest-rates\/"},"img":{"alt_text":"Commercial Bank Reserves","src":"https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2023\/2023-11-28-bankreserves.png?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2023\/2023-11-28-bankreserves.png?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2023\/2023-11-28-bankreserves.png?resize=525%2C300&ssl=1 1.5x"},"classes":[]},{"id":22587,"url":"https:\/\/thepatientinvestor.com\/index.php\/2020\/11\/11\/low-interest-rates-no-free-lunch\/","url_meta":{"origin":26462,"position":4},"title":"Low interest rates: No free lunch","author":"Colin Twiggs","date":"November 11, 2020","format":false,"excerpt":"Total assets of commercial banks in the US spiked up by $2.5 trillion (T) in the three months ending April 2020. Since then, total assets have contracted slightly (-$117bn) but, while total assets have hardly changed, this hides some far sharper changes in the composition. Consumers Consumer loans fell sharply\u2026","rel":"","context":"In "Banks & Interest Rates"","block_context":{"text":"Banks & Interest Rates","link":"https:\/\/thepatientinvestor.com\/index.php\/category\/economy\/the-fed-banks-interest-rates\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":26249,"url":"https:\/\/thepatientinvestor.com\/index.php\/2021\/06\/10\/treasury-yields-fall-ahead-of-may-cpi\/","url_meta":{"origin":26462,"position":5},"title":"Treasury yields fall ahead of May CPI","author":"Colin Twiggs","date":"June 10, 2021","format":false,"excerpt":"10-Year Treasury yields broke support at 1.50, warning of a correction. The breach comes ahead of the May CPI release later today, anticipating weaker inflation data after lackluster payroll growth reported last week. The 10-year breakeven inflation rate eased to 2.32%, from recent highs above 2.50%. But Pippa Malmgren points\u2026","rel":"","context":"In "Banks & Interest Rates"","block_context":{"text":"Banks & Interest Rates","link":"https:\/\/thepatientinvestor.com\/index.php\/category\/economy\/the-fed-banks-interest-rates\/"},"img":{"alt_text":"10-Year Treasury Yield","src":"https:\/\/i0.wp.com\/www.incrediblecharts.com\/images\/2021\/2021-06-10-tnx.png?resize=350%2C200&ssl=1","width":350,"height":200},"classes":[]}],"_links":{"self":[{"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/posts\/26462","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/comments?post=26462"}],"version-history":[{"count":1,"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/posts\/26462\/revisions"}],"predecessor-version":[{"id":26463,"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/posts\/26462\/revisions\/26463"}],"wp:attachment":[{"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/media?parent=26462"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/categories?post=26462"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/thepatientinvestor.com\/index.php\/wp-json\/wp\/v2\/tags?post=26462"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}