Is There a Shortage of Good Quality Assets?

Since the global financial crisis in two thousand and eight, the vast majority now of credit and loquility flows are collateralized. Government austerity policies have actually reduced the supply of this pristine collateral. And you can see the problem in many cases if you look at things like term premia in the bond markets. Liquidity is basically getting scarcer and scarcer as central banks withdraw cash. In one of the warning signs i would suggest that we all ought to be paying a lot more attention to is the fact that in the us Treasury marketyou've got the lowest ever reading for bond term premia at the ten year tenor. That must be telling us something about risks in the system.

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