LOL. Absolutely true.

The second one is known in central bank terms as "the balance sheet".

Look for no significant "shrinking" of it to occur anytime soon.

One thing I think Denninger gets wrong is the Fed's balance sheet. He says they can't do another expansion like the last one. So his end game eliminates any possibility of high inflation. He automatically assumes default and severe deflation. I'm not so sure of that. History shows us time and again that people abhor what is today the mask term of "austerity" which is really just saying living within ones means.

I think he gets that wrong. Or at least refuses to peer down that road of probability. Maybe he is right. One day cooler heads emerge that actually understand fifth grade math and wake up and say we need to change, or maybe things just fall apart because there is not enough money to pay the promises. But that sure is not what history shows us. It shows us that not only are politicians and banks prone to create more currency when trouble erupts, the public actually demands it. Math and consequences be damned. At least that is what my reading of history tells me.

I don't think human nature has changed.

Sometimes I think Denninger is too logical for his own good. I suffer the same thing. It makes me erroneously assume other people also see the logic and will react accordingly. When most usually don't.

John