...starting to understand the issues I have been obsessing about on this blog regarding ZIRP and QE in this environment.
By Ambrose Evans-Pritchard, International Business Editor
Published: 8:43PM GMT 17 Feb 2010
US Federal Reserve - US bank lending falls at fastest rate in history
David Rosenberg from Gluskin Sheff said lending has fallen by over
$100bn (£63.8bn) since January, plummeting at an annual rate of 16pc.
"Since the credit crisis began, $740bn of bank credit has evaporated.
This is a record 10pc decline," he said.
Mr Rosenberg said it is tempting fate for the Fed to turn off the
monetary spigot in such circumstances. "The shrinking in banking
sector balance sheets renders any talk of an exit strategy premature,"
Rates may rise later this year, warns CBIThe M3 broad money supply –
watched by monetarists as a leading indicator of trouble a year ahead
– has been contracting at a rate of 5.6pc over the last three months.
This signals future deflation. The Fed's "Monetary Multplier" has
dropped to a record low of 0.81, evidence that the banking system is