Courtesy of Mish.
In Reflections on the Yellen Taper-Hike Announcement; What Does the Fed Know? I quoted the opinion of Saxo Bank Chief economist Steen Jakobsen.
Steen commented “Please, do not think for one minute that FOMC have any clue about the economy six months from and even less so looking into 2015.“
I am certainly in agreement with Steen, and gave my own look into what the Fed knew or didn’t in Hilarious Transcripts of Fed Minutes from 2008 Reveal Completely Clueless Fed.
Opinions aside, let’s take a look at facts from a monetary point of view.
My friend “BC” pinged me with the following chart.
Monetary Base vs. Loans and Leases
click on any chart for sharper image
Note that the adjusted monetary base is playing catchup to loans and leases of all commercial banks.
When that happens, and I believe it will, taper or no taper, will base money be sufficient to cover all credit?
Not quite. Taking a lead from “BC”, here is a chart I put together.
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