Why the US is pumping out money like crazy. A liquidity explosion is not far off | Seong Sang-hyeon’s Macro Beyond, Part 2
- What to look for
- You can examine the basis for the outlook that, from 2026 onward, the main driver of liquidity could shift from the Fed’s balance sheet to credit creation by the Treasury and banks.
- Why it matters
- This helps you learn to distinguish the three layers of the monetary base, bank lending, and private credit, and understand credit expansion channels such as LCR easing and the JPMorgan example.
AI summary
The video presents the outlook that, from 2026 onward, the main driver of market liquidity could shift from the Federal Reserve’s balance sheet to credit creation by the Treasury and commercial banks. Liquidity consists of three layers: the Fed’s monetary base, bank loans and deposits, and corporate bonds and private credit. These moved in the same direction in the past, but the video argues that bank lending could increase even during the Fed’s quantitative tightening in the future. It contends that, rather than directly reducing its roughly 40 trillion dollars in debt, the US government seeks to lower its debt ratio through growth and broad money expansion, and may ease banking regulations such as the LCR to achieve this. If available emergency borrowing were recognized as a cash equivalent, banks could redirect approximately 5 hundred billion~1 trillion dollars into loans and generate greater liquidity through the credit multiplier. JPMorgan’s low cash ratio is presented as a precedent. The content below summarizes the video’s claims and forecasts; it does not represent finalized policies or verified figures.