Loan Loss Reserves? Ahh No Worries
Banks are gearing up, or maybe they just have so much in Reserve just makes sense
Why do banking Loan Loss Reserves even matter anymore?
When the US Treasury SPV (aka the FED) expanded its balance sheet 2x in a few months, didn't this just basically add Reserves to the system? Wait, what’s this? Oh yea its Total Reserves:
Anyway, we had to comment since Zhedge put this article out late today,
Zhedge Loan Loss Reserves JPM et.al.
What does it matter if JPM and the other GSIBs (globally systemic investment banks) puts them in the LLR category, with savings so high the future liabilities aka (Reserves) will remain elevated and loan growth, well that’s a moot point so money will remain within the bowels of the banking system, the whole scheme is now one major intramarket transfer system from US Treasury > SPV aka FED >GSIBs to MainStreet > Right back into the GSIBs as Total Reserves. So when one wonders why this much increase in the supply of “M” or Money in the MV = PQ equation leads to deflation in most things and not inflation (except asset prices) look no further than massive debt loads and a declining “V” or velocity as Cash is being hoarded. Which is anathema to inflation.
So with all that I don't see all these loan loss reserves as nothing more than a unit of account entry and not an alarm bell for things to come. No matter what comes you can rest assure this chart of Total Factors Supplying Reserve Funds will go parabolic once again and the SPV will have no problem doubling this bad boy:
-Magnelibra Econemotions
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