Posted by Jankdc Link: Latest from Ellen Brown
on 10/17/2009, 9:11 pm
The credit crunch is getting worse on Main Street, despite a Wall Street bailout that is now in the trillions of dollars. The Federal Reserve’s charts show that “base money” is rapidly expanding – meaning coins, paper money, and commercial banks’ reserves with the central bank. But the money isn’t making it to where it needs to go to stimulate economic growth: into the bank accounts of American businesses and consumers. The Fed has been pumping out money to the banks, and their reserves have been growing at unprecedented rates; but the money supply in the real economy has been declining.
According to Ambrose Evans-Pritchard, writing last month in the UK Telegraph, U.S. bank credit and M3 (the broadest measure of the money supply) contracted over the summer at rates comparable to the onset of the Great Depression. In the summer quarter, U.S. bank loans fell at an annual pace of almost 14 percent. “There has been nothing like this in the USA since the 1930s,” said Professor Tim Congdon of International Monetary Research. “The rapid destruction of money balances is madness.”
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