Bank Credit & M3 Money Supply Keeps Contracting

Great write up in the UK Telegraph.

www.telegraph.co.uk/finance/financetopics/recession/6190818/US-credit-shrinks-at-Great-Depression-rate-prompting-fears-of-double-dip-recession.html

We are headed for another major recession sometime next year. Bank credit keeps falling at a stunning 9% annual print. M3 is falling at 5%. Where is the beef?

I posted earlier that using the Taylor Rule as measuring stick, the Fed rate would have to go to -7% FFR to get asset prices reflated. Why not? Everything else is Ass Backwards. Why not pay people to borrow. Wall Street would love that as well.

tradersutra.blogspot.com/2009/09/how-to-deal.html

The deflation in both credit, lending, and the continued destruction in wages is lethal to the economy and country.

Almost all of the money that was created/printed and given to the banks never made it into the hands of the average person on the street. It was all concentrated into the hands of the ultra/super rich. They have bled the system dry, zapped every last drop of blood from the stone, that there simply is not enough money out there to service the debt that has been accumulated.

It all sets up for serious revolution.

tradersutra.blogspot.com/2009/08/meltdown-soon-social-unrestrevolution.html

tradersutra.blogspot.com/2009/09/i-love-smell-of-revolution-in-air.html

The current government plan of raising capital levels for institutions is having terrible repercussions to the lending environment. The money is being printed, given to the banks, who use it to prop up their finances. Its not going into the economy. Why? Because the government just gave the money to the banks with no checks and no questions asked. There should have been some sort of forced mandate for the banks to lend.

"The current drive to make banks less leveraged and safer is having the perverse consequence of destroying money balances."

Anybody who thinks that the economy is looking better is just kidding themselves. Anybody who thinks the steps taken so far have brought us back from the brink are delusional.

We created a credit bonfire that cant be sustained forever, when the consumer couldn't throw more kindle into the bonfire, a bigger fire was started by Treasury/Fed throwing more credit on it.

The eventual Death Spiral is inevitable.