Jim Grant: The Problem Isn’t Liquidity, It’s Debt… UN Head: Central Banks Are Out Of Ammo

Some excerpts from Jim Grant:

“People talk about the absence of liquidity, and liquidity means basically money, it means the capacity to transact in securities at more or less continuous prices. So they say ‘There is not enough liquidity. Can’t the Fed do something?’ Maybe the Treasury is doing too much. Maybe the problem is not the lack of so-called liquidity from the point of view of the money hose. Maybe the problem is too many bonds to be financed… The demand for overnight financing strikes me as not necessarily a function of the paucity of liquidity but rather as an excess of… collateral, meaning bills. notes, bonds of the United States government. We are running trillion dollar deficits at a time of supposedly high macro-economic cotton.”

“What we have had in these past ten years is more and more intervention to perpetuate more and more excess… especially in the world’s credit markets. $15 trillion of securities prices to yield less than nothing is not a sign of ready good health.”


More and more global leaders sound the alarm that the world economy is headed for a difficult period in 2020.

Unlike several years ago, leaders across the world are now calling for immediate deployment of fiscal stimulus, but not monetary stimulus, a sign that central banks are out of ammunition to combat the next economic crisis.

UN Secretary-General António Guterres warned that the global economic outlook is facing severe headwinds, and the international community must quickly act to “do everything possible” to prevent the world from “fracturing,” mostly due to the US and China trade war.

Guterres spoke on Saturday at the World Bank Group and IMF Annual Meetings in Washington, DC.

He said that “during tense and testing times,” he “fears the possibility of a Great Fracture – with the two largest economies splitting the globe in two – each with its own dominant currency, trade and financial rules, its own internet and artificial intelligence capacities and its own zero-sum geopolitical and military strategies.”

He told international bankers that “it is not too late to avoid” this fracturing of the world, but “we must do everything possible to avert this…and maintain a universal economy with universal respect for international law; a multipolar world with strong multilateral institutions, such as the World Bank and IMF.”


Bank Heads Warn of Looming Liquidity Crisis

Fed’s commitment to pump $60B a month into financial markets may not be enough…



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