- Short-term credit provided to finance mortgages, auto loans, and other businesses collapsed at the annual rate of $662.5 billion.
- Banks lending literally pulled out of the credit markets at the astonishing pace of $856.4 billion per year, their biggest cutback of all time.
- Meanwhile, nonbank lenders pulled out at the annual rate of $468 billion, also the worst on record.
- Mortgage lenders pulled out for a third straight month. (Their worst on record was in the prior quarter.)
- And consumers (line 10) were shoved out of the market for credit at the annual pace of $90.7 billion, the worst on record.
More Evidence: Data from the St Louis Fed shows that the “monetary multiplier” has collapsed from a decade-average of 1.6 to the depths of 0.893. The “velocity” of money has slowed to a crawl. Professor David Beckworth from Texas State University said the Fed’s efforts to boost the money supply are barely keeping pace with the deflation shock. Stimulus is not gaining traction. The credit system is broken. (Source.)
Paper or Plastic? Credit card companies are charging off over 10% of their balances as increasing numbers of Americans cannot make their payments. The country charges much of what it buys – think about 10% of that not being paid for. Plastic coated shoplifting. (Source.)
What does all this mean? Our national credit card is being taken away. So, we all buy less stuff, which means businesses don’t sell as much, which means few workers are needed, which leads to layoffs, which means there are fewer people buying stuff, and so on, and so on . . . a downward spiral of economic misery.