Featured Stories World News Commentary Money Watch Multimedia Prison Planet U.S. News Science And Technology

The Worst Money Supply Plunge Since The Depression Means A Double Dip Is Now A ‘Virtual Certainty’

  • Print The Alex Jones Channel Alex Jones Show podcast Prison Planet TV Infowars.com Twitter Alex Jones' Facebook Infowars store

Vincent Fernando, CFA
Business Insider
May 27, 2010

The stock of U.S. money as measured by ‘M3′ money supply fell to $13.9 trillion from $14.2 trillion during the three months ending in April.

This 9.6% annualized contraction is unprecedented in the post-Depression era, and shows how, in this sense, America isn’t printing more money. There are actually less dollars in the system since U.S. money supply is crashing, even well into the recent economic recovery.

The positive take on this is that we don’t have to worry about either inflation or the Fed tightening significantly any time soon.

The negative take is that this crashing money supply will lead to both deflation and a double dip recession:

Telegraph:

“It’s frightening,” said Professor Tim Congdon from International Monetary Research. “The plunge in M3 has no precedent since the Great Depression. The dominant reason for this is that regulators across the world are pressing banks to raise capital asset ratios and to shrink their risk assets. This is why the US is not recovering properly,” he said.

  • A d v e r t i s e m e n t

Mr Congdon said the Obama policy risks repeating the strategic errors of Japan, which pushed debt to dangerously high levels with one fiscal boost after another during its Lost Decade, instead of resorting to full-blown “Friedmanite” monetary stimulus.

“Fiscal policy does not work. The US has just tried the biggest fiscal experiment in history and it has failed. What matters is the quantity of money and in extremis that can be increased easily by quantitative easing. If the Fed doesn’t act, a double-dip recession is a virtual certainty,” he said.

The danger, critics such as Mr. Congdon say, is that Bernanke as a Keynesian may fail to appreciate the signifance of the recent money supply drop, failing to avoid a new recession.

The Worst Money Supply Plunge Since The Depression Means A Double Dip Is Now A Virtual Certainty 150410banner7

This article was posted: Thursday, May 27, 2010 at 3:47 am





Infowars.com Videos:

Comment on this article

Comments are closed.

Watch the News

FEATURED VIDEOS
Kiev Censors MH17 Air Traffic Control Recordings See the rest on the Alex Jones YouTube channel.

U.S. Govt: MH17 Stance Based On Obvious Social Media Hoaxes See the rest on the Alex Jones YouTube channel.

© 2013 PrisonPlanet.com is a Free Speech Systems, LLC company. All rights reserved. Digital Millennium Copyright Act Notice.