evaporating liquidity panic pdf


TThe FED has just cut its lending rate to zero, abolished reserve requirements for banks, reintroduced formally quantitative easing and has expanded swap lines with foreign central banks to ease the global shortage of dollars.


  1. Cameron says:

    I come across phrases that make me stop and think such as “rapidly expiring phase of globalisation”. Thank you.

    I continue to believe that we are still at the early stage of this pandemic. The number of new cases has begun rising parabolically. I also believe that many countries are not reporting the actual number of cases or are not making an effort to find out. To quote you “in order to keep the lights on and the shop doors open”. I’ve been even more skeptical about the number of cases, for example, India to be 112. We’ll see. Spanish flu 1918 – 1920 wreaked havoc in 2 waves and COVID-19 may do the same. China may have it under control for now but the rest of the world is just waking up to it so as it spread from China to the rest of the world there is the risk of spreading to China from the rest of the world in its second wave. I also believe there will be a long term psychological impact.

    The one subject that I may disagree with you is the AI. The concept has been around for decades
    but I don’t think it has made any progress. The only thing new is analytics. Storage and computing speed makes analytics possible. AI/machine learning is a marketing label for analytics. At the end of the day the efficacy of analytics depends on datasets and assumptions that go into it. I have not noticed it replacing workers nor do I think it will. Nowadays a high tech company with disrupting technology is nothing more than apps. Uber being a taxi company with an app. Capitalism has been unable to produce technological break-thoughts since transistors. Some would argue that internet is an exception.

    Lastly for now, I am expecting a historic market crash not seen before. Capitalism has used every trick to inflate the bubble and keep it going. Corporate debts and debts in general, ZIRP and NIRP and QE. Stock buybacks, corporate tax cuts, front running trade war, TARP, bailouts. I think it has exhausted it all. Party is over. COVID-19 is the trigger. As you have demonstrated clearly the ROP had declined paving the way for the downturn. In the US the Fed just lowered the rate to zero and announced it would buy $700 billion in Treasury and mortgage-backed securities on top of the $4.5T repo it announced last week. Desperate!!! But futures are down around 4 – 5% as I write.

    • We are of one mind about a historic crash. I just read that on Thursday just before the FED intervened, no bids had been made on treasury bonds. And this in one of the deepest markets in the world. I am proud of the graphs I produced contrasting the real multiple to the fictitious multiple which suggests 60% fall in share prices.

      Have you read my articles on machine learning and it’s effect on the rate of profit? I should not have used AI as it is a misnomer.

  2. Pingback: The Week Markets Ran Out Of Liquidity And Central Banks Rolled Out The Firehoses — Brian Green | theplanningmotivedotcom | Taking Sides

  3. Cameron says:

    I will find and read your article on ML.

    So what happened to the “Don’t fight the Fed” mantra? 🙂 Rhetorical question! Today’s market downturn confirmed that markets have gone passed the turning point. Modus operandi has changed. The Fed is powerless. If anything, whatever it does backfires. In capitalism profit rules not central bankers.

    I read this yesterday “In total, of the $1.5 trillion in cash offered through these three term repo operations, only $119.5 billion were taken – just 8% of the total the Fed had offered.”

    • Seems that I was wrong. Volatility has increased. It seems that not only have the credibility of central bankers been trashed, so too that of politicians. Can we expect the unbelievable, the closure of the markets for a period of days.

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