{"id":467357,"date":"2017-04-07T12:26:12","date_gmt":"2017-04-07T12:26:12","guid":{"rendered":"http:\/\/juniorminingnews.com\/?p=467357"},"modified":"2017-04-07T12:26:12","modified_gmt":"2017-04-07T12:26:12","slug":"doomsday-device-2","status":"publish","type":"post","link":"https:\/\/juniorminingnews.com\/?p=467357","title":{"rendered":"Doomsday Device"},"content":{"rendered":"
\"\"<\/a><\/div>\n

By Bill Bonner<\/a><\/span> <\/p>\n

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Disappearing Credit<\/p>\n

All across the banking world \u2013 from commercial loans to leases and real estate \u2013 credit is collapsing. Ambrose Evans-Pritchard writing for British newspaper The Telegraph:<\/p>\n

Credit strategists are increasingly disturbed by a sudden and rare contraction of U.S. bank lending, fearing a synchronized slowdown in the U.S. and China this year that could catch euphoric markets badly off guard. Data from the U.S. Federal Reserve shows that the $2 trillion market for commercial and industrial loans peaked in December.<\/p>\n

The sector has weakened abruptly as lenders tighten credit, especially for non-residential property. Over the last three months it has dropped at a rate of 5.4% on annual basis, a pace of decline not seen since December 2008.<\/p>\n<\/p>\n

C & I loans, y\/y growth. Readers may recall that we recently showed this chart in \u201cLibor Pains\u201d, in which we discussed corporate debt. Actually, y\/y commercial & industrial loan growth peaked in early 2015 already, not just \u201clast December\u201d\u2026 but lettuce not quibble (Pritchard likely meant to refer to total commercial bank credit, the growth rate of which reached an interim peak in late 2016 \u2013 shown further below). The point remains that credit growth is falling fast \u2013 click to enlarge.<\/p>\n

If new loans aren’t made, the supply of credit money will contract. That’s the \u201cdoomsday device\u201d embedded in our credit money system: It is subject to sharp and disastrous drawdowns in the money supply.<\/p>\n

When loans are paid or written off, the outstanding credit (money) ceases to exist. This reduces the money supply and triggers corrections, recessions, or market crashes.<\/p>\n

Real money doesn’t disappear in a credit contraction. But our fake \u201ccredit money\u201d does. This makes the entire system vulnerable to the credit cycle. Credit increases. Then it decreases. And as credit money vanishes, the recession deepens\u2026 causing the credit market to tighten further and causing more money to disappear.<\/p>\n

That’s why a credit contraction is so dangerous in today’s world. With more than $200 trillion in outstanding debt, even a soft contraction could lead to a worldwide depression.<\/p>\n

That’s why the Fed will not risk jacking up interest rates too far, too fast. Instead, it will follow inflation, and then do an immediate about-face when the credit cycle turns around.<\/p>\n

Doom Index<\/p>\n

A dear reader helpfully suggested that we put together a \u201cDoom Index\u201d \u2013 with indicators of an approaching bust. Our research team in Delray Beach, Florida, is working on it.<\/p>\n

In the meantime, as to the doom indicator highlighted above, namely the flow of credit: This is an economy that depends on bank lending. If it slows, so does the economy. And credit growth is falling at a rate not seen since 2008.<\/p>\n

Bank credit growth at all commercial banks has begun to decline sharply from an interim peak in September 2016. It should be noted that the current decline in the growth rate is taking place against a very different backdrop compared to the last one between late 2012 and late 2013 \u2013 which occurred concurrently with QE3 debt monetization \u2026read more<\/a> <\/p>\n

Source:: Acting Man<\/a><\/p>\n

The post <\/a>Doomsday Device<\/a> appeared first on Junior Mining Analyst<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

By Bill Bonner Disappearing Credit All across the banking world \u2013 from commercial loans to leases and real estate \u2013 credit is collapsing. Ambrose Evans-Pritchard writing for British newspaper The Telegraph: Credit strategists are increasingly disturbed by a sudden and rare contraction of U.S. bank lending, fearing a synchronized slowdown in the U.S. and China […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"footnotes":""},"categories":[4],"tags":[],"_links":{"self":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/467357"}],"collection":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=467357"}],"version-history":[{"count":0,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/467357\/revisions"}],"wp:attachment":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=467357"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=467357"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=467357"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}