Slowdown! Bank Lending Slows Since Fed 2020 Intervention And The Rise Of Reverse Repos (Inflation And Bubble Fears)

There is a slowdown in bank lending since The Fed’s intervention in March 2020.

Bank credit has slowed since March 2021 resulting in banks parking money with The Federal Reserve in the form of reverse repos.

Loans and leases are experiencing negative growth rates.

Residential real estate loans are also experiencing negative growth rates and a corresponding rise in reverse repo usage.

Commercial real estate lending remains in positive territory.

Commercial and industrial loans? Also experiencing negative growth rates.

Clearly, banks are nervous about inflation since lending at fixed-rates in an inflationary environment is bad news.

Not to mention fears of asset bubbles that can burst. House prices growing at 14.6% YoY and the S&P 500 stock market index growing at 34.2% YoY.

Treasury Secretary Janet Yellen says she is concerned about rapidly rising housing prices, but says inflation will calm.

Perhaps Yellen will click her heels together three times to make inflation calm.

Milton says hello!

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