The New Media Journal | US Credit Shrinks at Great Depression Rate

The New Media Journal | US Credit Shrinks at Great Depression Rate: "Professor Tim Congdon from International Monetary Research said US bank loans have fallen at an annual pace of almost 14pc in the three months to August, from $7,147 billion to $6,886 billion. 'There has been nothing like this in the USA since the 1930s,' he said. 'The rapid destruction of money balances is madness.'

The M3 'broad' money supply, watched as an early warning signal for the economy a year or so later, has been falling at a 5 percent annual rate.

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' 9 percent annual pace, the M2 money supply shrank at 12.2 percent and M1 shrank at 6.5 percent.

'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.

It is unclear why the US Federal Reserve has allowed this to occur.

Chairman Ben Bernanke is an expert on the 'credit channel' causes of depressions and has given eloquent speeches about the risks of deflation in the past."