Comments on News Kontent: The Crisis & What to Do About It

You are quite right, I didn't re-read the Soros it...

2008-11-23T12:31:00.000+11:00

You are quite right, I didn't re-read the Soros item or give your question the attention it deserved.
As for the consumption decline, that was Keen's estimate for the australian economy, so adhoc it was but the right magnitude.
Credit is moneylike to various degrees and the confusion that they are the same is what causes the illusion of endless liquidity just before risk appetite turns.

Economies are now searching for a new definition of money in an adhoc way.
Nolan wrote:

"“Moneyness of Credit” remains an invaluable analytical concept. Despite acute vulnerability, the U.S. Credit system – hence the American economy – has resisted implosion specifically because the heart of the monetary system has retained its “Moneyness.” Indeed, nationalizing Fannie and Freddie was seen as necessary to retain confidence in the core of contemporary “money” – agency obligations, “repos” and money fund assets. This highly inflated supply of “money” has become so large as to almost on its own shoulder the entire U.S. (global?) financial system and economy. “Money” has become Too Big and Consequential to Suffer a Loss."

But that was before the end, in sep 07, what is money as oppossed to credit will become the central question of the age.

Kevin, credit is a loan, which is a form of debt....

2008-11-23T02:17:00.000+11:00

Kevin, credit is a loan, which is a form of debt. Functionally, there is no difference between money created by the central banks and money created by commercial or investments banks. In any case, your comment that consumption must fall by 25% seems a bit ad-hoc. Consumption in the US will fall, but that's because US consumers are over indebted, and the Ponzi scheme devised to keep US interest rates low is rapidly collapsing.

Fiat money is debt, yes. But credit is another ani...

2008-11-22T09:45:00.000+11:00

Fiat money is debt, yes. But credit is another animal. The centers of credit creation in the late decade were both the formal credit creation system, the central banks and the shadow system, the US investment banks. It is the demise of the shadow system that caused the crisis, which is why consumption must fall about 25% worldwide.

"Since money and credit do not move in lockstep...

2008-11-22T06:06:00.000+11:00
"Since money and credit do not move in lockstep..."

What is he talking about here? I thought Money WAS Credit! Maybe he differentiates between credit created by the Fed and credit created by banks?