emtbd1979 - 10/21/2016 15:42 Deere6 - 10/21/2016 10:58 Thanks for posting john, very interesting. So does this spell another 1980s type situation for agriculture? A period of high inflation followed by massive deflation and high interest rates? What are your thoughts, keep in mind I was born in 1987. not quite. The 80's were a perfect storm and not started by any single event but s multitude of events. This from the FDIC shows just how many things had to happen to cause a huge failure of rural banks. Lot of mention about *everyone's friend the FMHA* also. https://www.fdic.gov/bank/historical/history/259_290.pdfThat is a pretty good summary article. Some excerpts: ------------------------------------------ Between1970 and 1979 farm real estate debt rose from $29 billion to $71 billion. Higher levels of real estate debt were supplemented by debt incurred to finance machinery and equipment to maintain the larger farms The boom in farmland values had been supported by an explosive growth in farm debt
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Debt fueled booms........................ hmmmm.................... now where do we see that?
One of the curses of fractional reserve lending. New money creation (increase in the money supply chasing the same basket of goods) via easy credit when times are good. Money supply contraction as credit contracts or defaults and the money pool shrinks. When a loan is made, new money is created that did not exist prior.
What is called the business cycle is really a credit cycle.
There ought to be a better way.
John
Edited by John Burns 10/22/2016 11:57
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Lending expansion and bank reserves dropping?
