12 years ago
Despite the multi-trillion dollar taxpayer bailouts and rescues
of the major financial institutions, the US credit crunch
continues with the broader measures of the money supply [M2 and
M3] *FALLING* at rates not seen since the depths of the
This appears to be a world wide problem, not just a US one.
The contracting money supply/credit has severe potential impact
beyond restricting economic expansion of new and existing
businesses. A large fraction of the outstanding residential ARMs
[adjustable rate mortgages] will reset in the next few months,
and many of the short term commercial mortgages will need to be
Question: Given that the existing commercial financial
institutions are largely refusing to extend or "roll over"
credit, why does the Federal government keep giving them taxpayer
money? Why not lend or grant the money directly to the credit
worth businesses, possibly through the SBA.
For more information about the amazing contracting money supply
US credit shrinks at Great Depression rate prompting fears of
Both bank credit and the M3 money supply in the United States
have been contracting at rates comparable to the onset of the
Great Depression since early summer, raising fears of a
double-dip recession in 2010 and a slide into debt-deflation.
By Ambrose Evans-Pritchard, International Business Editor
Published: 11:59PM BST 14 Sep 2009
Similar concerns have been raised by David Rosenberg, chief
strategist at Gluskin Sheff, who said that over the four weeks up
to August 24, bank credit shrank at an "epic" 9pc annual pace,
the M2 money supply shrank at 12.2pc and M1 shrank at 6.5pc.
"For the first time in the post-WW2 [Second World War] era, we
have deflation in credit, wages and rents and, from our lens,
this is a toxic brew," he said.
If this is of interest to you, and it should be if you live and
work in the money economy, be sure and review the reader
comments. Many of these have far better/deeper insights than do
the talking heads/gas bags on US TV, and the "whack jobs" are no
Unka' George [George McDuffee]
He that will not apply new remedies,
must expect new evils:
for Time is the greatest innovator: and
if Time, of course, alter things to the worse,
and wisdom and counsel shall not alter them to the better,
what shall be the end?
Francis Bacon (1561-1626), English philosopher, essayist, statesman.
Essays, "Of Innovations" (1597-1625).