Credit Cycle Quotes

There's nothing as short as short-term debt.

Solvency is maintained by means of a national debt, on the principle, "If you will not lend me the money, how can I pay you?"

In normal times, investors should pay more attention to the credit markets because it's the energy by which everything is driven. It's the oil in the engine.

Viewed from a distance, or through the eye of the All-Knowing CEO of the Universe, the crash of 2008 followed the usual pattern. A long-lived boom driven by cheap credit, going back as far as 1982 (though subject to interruptions in the mid-1980s and 1990s, and in 2001), came to grief because of a rise in the cost of borrowing money.

Every economic downturn suffered by this country over the past century can be traced to Federal Reserve policy. The Fed has followed a consistent policy of flooding the economy with easy money, leading to a misallocation of resources and an artificial 'boom' followed by a recession or depression when the Fed-created bubble bursts.

If one wants to avoid the recurrence of economic crises, one must avoid the expansion of credit that creates the boom and inevitably leads into the slump.

The 'boom-bust' cycle is generated by monetary intervention in the market, specifically bank credit expansion to business.

Each economy relies on the credit system, that is, on the erroneous assumption that the other will pay back money pumped.

We are an indebted family going out for an expensive meal to celebrate getting approved foe a new credit card. It might feel good (at the time), but we're still simply delaying the inevitable.

The problem is that you're creating a system of bubble finance where interest rates are so low that people can speculate. An asset value goes up. You put it up as collateral. You borrow against it. You buy more of the asset. You then take the rising asset. You borrow against it again. This is the nature of what's going on in the world. This isn't an excess of real savings. This is an excess of artificial credit that's being fueled by all the central banks.