Wednesday, 10 October 2012

U.S. Bank Credit hits new All-Time High, Excess Reserves decline

The Bank Credit of All Commercial Banks in the U.S. hit USD 9.81963 trillion for the period ending 26 September 2012 according to recent data from the Federal Reserve Bank of St. Louis. This was the highest figure ever reported. Compared to last year (4 week moving average basis) the growth rates for the past three weeks have been above 5.9%. At the same time Excess Reserves of Depository Institutions fell to the lowest level since March 2011 while M2 Money Supply also hit a new all-time high.

Credit expansion indeed. Combined with a low personal savings rate, high personal consumption, poor manufacturing numbers, net export figures deep in the red and the Fed funds rate remaining at record lows, this do not smell like a recipe for sustainable improvements for the U.S. economy. Actually, it's just more of what got the U.S. economy into financial problems in the first place (in addition to wars, excessive government spending and corporate bailouts of course) and a reason as to why employment figures and the economy have not recovered quicker. Remember to go bubble-watching on a regular basis (in addition to keeping an eye on the U.S. government bond bubble).


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