Consumer credit has contracted 15 of the last 16 months. Bernake was just out telling lenders to make it easier for small businesses to get credit.
Credit is a money “equivalent” but not measured in M2. Some say credit is the vast majority of “money” supply. Depending on definitions.
Here’s Mish, from 2008;
”Although Japan was rapidly printing money, a destruction of credit was happening at a far greater pace. There was an overall contraction of credit in Japan for close to 5 consecutive years. Property values plunged for 18 consecutive years. The stock market plunged from 40,000 to 7,000. Cash was hoarded and the velocity of money collapsed.
These are classic symptoms of deflation that a proper definition incorporating both money supply and credit would readily catch. Those looking at consumer prices or monetary injections by the bank of Japan were far off the mark. Yes, there was deflation in Japan. Furthermore, if deflation can happen in Japan, then there is no reason why it cannot happen in the US as well.”
