What err, struck me as particularly terrifying about that particular graph you're showing us is that, it would seem to suggest, the entire finance ecosystem, leave aside John Doe and his shopping, has suddenly gone on holiday. You may very well ask what does this all mean for the economy and investors. Bad news I'm guessing.

If it's suddenly dropped from 70 billion to 10 billion, that is the trade in bank IOUs has contracted by 7, then I'm guessing that the very demand for bank credit (or willingness to supply) has just declined 7 times, or something proportional to that decline. At any rate, the above charts I quoted confirm that we are in a place where the rate of credit creation has fallen behind the rate of credit destruction, hence the January dip in the M2 supply.

Looking at rising LIBOR rates its costing banks more to lend to each other. I hadn't realised M2 supply had dipped. Could be fun with rising interest rates and the FED tapering.

The Fed is paying for the higher rates on those interbank loans. RRPO. I don't know what the excuse for LIBOR is, but keep capital from flowing into US markets to capture yield? With the dropping dollar its a doomed gambit. If M2 has dipped its because the players have left the slot machines and moved to the gaming tables. The Fed also RRPOs money markets to protect the NAV of people holding that bag. The Fed has been backstopping investors (Banks, MM accounts, FDIC for Goldman) who no longer really seem to need it. Everyone is all in.

The last time interbank lending was at the lows in 2016 was 1979! 29 years of trust among banks has been erased within 8 years. The only entity large enough to absorb that kind of financial stress without collapsing the economy is a group of central banks.