This guy misses the forest for the tress. He misses a lot of the trees, too.
He's right on about why we want to keep the central bank as far away from the government as possible.
He's way off the mark saying that nobody realizes the Fed is trying to expand the money (credit) supply. This makes me wonder what planet he's living on. Everyone in the markets is talking about it, it's been the prime topic of conversation in the investment world and in the investment media for years.
This guy says the reason small business can't get loans is because banks are allocating all of their capital to government bonds. No, it isn't a top-down shortage of available money to loan. It's that nobody has anything productive to do with money, so we're all just waiting.
And has he taken a look at interest rates, lately? Bank are practically giving their money away when they find a suitable borrower who wants a loan. It's just that those of us in a financial position to take on new debt are smart enough not to do it.
The reason treasuries keep finding strong bids isn't because the banks are buying them all up, it's because everyone is buying them up. All across the economic spectrum, from big corporations and institutional investors down to small businesses and consumers and even foreigners, everyone is saving. The way the markets work, at a time like this all that savings will eventually wind up in safe, liquid assets like treasuries.
