Everyone’s a Lender Now: Shadow Banking USA
By Charles Hugh Smith
How much private credit has been put in place but isn’t in the official credit total is unknown and very likely unknowable. That means total systemic risk is also unknowable. Everyone wants to lend us money now, even though they’re not banks: the insurance company Progressive offered us a loan, PayPal offers us a business loan every time we log in, and the payment processor Stripe includes a pitch to borrow money on its dashboard page.
Then there’s the ubiquitous payment plans offered by seemingly every vendor retailer.
These are parts of the shadow banking system (SBS) that we see, but most of the system is hidden in the global economy’s complex financial plumbing. The shadow banking system differs from nation to nation, as it developed to avoid whatever is tightly regulated or restricted within each banking system.
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