Gyroscopic Investing

Although it appears obvious conceptually, we're not so sure the markets yet fully appreciate the fact that in true generational deleveraging cycles, monetary policy is powerless to influence credit expansion.  Again, our near myopic focus on credit is driven by the fact that credit is the cornerstone of modern economic development and balance, and certainly not just in the US.  The character, availability and price of credit regulate the ongoing tone of aggregate demand, so monitoring credit is simply crucial.  If credit cannot expand, then neither can aggregate demand.  A simple yet key truism, especially in our current circumstances.  As you can see below, we've seen literally unprecedented monetary expansion so far in the current cycle, yet private sector credit creation (as is exemplified by the bank loans and leases outstanding) remains wildly subdued at best.  The whole pushing on a string thesis?  Exactly.

Adam1226 wrote: Again, makes me want to place a big bet on 30 year government bonds...