Poverty Repledged, Reused and Rehypothecated

Written By: The WealthCycles Staff

Repledged, Reused and Rehypothecated is a subject ZeroHedge first put in the media back in May of 2009. At the time deflation and breaches of trust chopped $6 trillion, or almost one-fifth, off of the money supply. This prompted the Federal Reserve Bank (Fed) to re-inflate by the same amount in on-again, off-again cycles.

Revisiting the subject is important to WealthCycles readers because it determines, to a large degree:

·      near- to medium-term trend for many asset markets;
·      future printing pace, altering markets & purchasing power;
·      the stability of the Western banking system.

The U.S. Treasury commented recently on the scarcity of collateral in the financial system, both as a result of the Fed’s purchases and degradation from “high quality” for some assets (Eurozone or EZ bonds; mortgage-backed securities, or MBS).

The printing pace will be slowed this fall, coyly timed with the limited (debt ceiling) U.S. federal borrowing. Further, Dallas Fed branch President Richard Fisher

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testiomials As employment shrivels (it is), real wages fall (they are), and redistributionists struggle to keep disposable incomes up, people are falling behind on payments—assets aren’t all performing, and many will die.”

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