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Shadow Banking Credit Crunch

Shadow banking did not cause the credit crunch.

Shadow Banking

shadow banking comes out of the shadeEnquire About Wind Farm Development Finance

There is clearly a wider economic hunger for capital out there in the actual economy than can find satisfaction through the traditional banking paradigm.

This reality seems to be suggesting that the traditional banking model is what needs to be being reformed rather than trying to regulate 'shadow banking', or worse . . . fetter it.

Personally, I can foresee a time when the very term 'shadow banking' will fall out of usage altogether as 'shadow banking activities . . . securitization and collateral intermediation . . . fill more and more the need/desire of both the ordinary depositor's input to be being productively leveraged AND at the same time the need for the world economy to be being run on full throttle.

But there is another scenario . . . something more likely if we are to read the way things have been unfolding.

What is that ?

The 'outclassing' of the traditional banking model by something far more sparkly.

Something far more responsive to everyone's needs . . . . the sourcing of capital . . . privately.

But would this mean that the traditional notion of a bank will go off into complete extinction ?

. . . almost . . .

. . . the old-fashioned notion will survive . . . but in it's original (contracted) function . . . a function that was the only truth back in the 1850's when asset value was only 50% of the value of what the asset actually produced each year.

However, the human family has moved on.

And we will not ever go back.

We're running at a different speed.

It has been said, asset capital value is now 16 times higher per year's output than it was just before we got into the industrial revolution. But do you think that this means that the human family is teetering on the verge of falling off a cliff . . . a retracement of the ratio . . . . or could we be on the brink of another ratio . . . . explosion ?

The Lesson From The Renaissance

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Credit crunch

Bank collapse caused credit crunch but it was not the fault of shadow banking