As with all of the questions that are getting asked about the core of our financial systems, there are no black and white answers. I feel really comfortable with Davelj’s answer that banks borrowing via TAF is normal given its the cheapest mechanism. I even asked this of Karl on Tickerforum.

I’d say that Karl is right on when is talking about credit contraction one of the symptoms of which is the anemic bid/ask spread on the latest TAF (I haven’t verified this myself.)

Ultimately Karl and Davelj, I don’t think that you guys really disagree about semantics, merely syntax, perhaps on degree and maybe even a bit on timing. Its like one of you saying, I’m bearish because of “X” and the other saying, hey no, Im bearish because of “X+2.”

I notice neither of you is arguing inflation

Oh and Karl there is another thread here in which Davelj and I discussed deflation vs a sh*tty asset crisis. You might read that, its highly informative. On the user of the term “Liquidity Crisis”