This week’s harvest of headlines records a lot of hope in the crude oil markets as well as remarkably reckless borrowing. Matched, of course, by the equivalent in lending.
All without a regard for how the debt will be serviced. Financial history is at the point where the real power shifts from the Federal Reserve System to Mister Margin. It has many times since 1913 and since the advent of reckless central banking the roles of each side have become very distinct.
The Fed’s ambition is to get the accounts fully leveraged or “out of line”. This has been impressive. Mr. Margin’s job description is to get the accounts “in line” and that will be done.
It could take until November.
The following is part of Pivotal Events that was published for our subscribers September 14, 2016.