[deMolay]

At rates not seen since the 1930`s. Caveat Emptor. Those saying the worst is over are in for a surprise. http://www.telegraph.co.uk/finance/financetopics/recession/6190818/US-credit-shrinks-at-Great-Depression-rate-prompting-fears-of-double-dip-recession.html

[DantesPeak]

It is unclear why the US Federal Reserve has allowed this to occur.

My WAG is that is a side effect of the Fed's unwinding of over $500 billion in central bank "dollar swaps" undertaken about a year ago. That was blantant attempt to push the dollar higher, that many financial professionals clearly misunderstood. The reversal of that policy has caused the dollar to come tumbling back to earth.

Anyway those extra dollars from foreign countries probably at first migrated to US banks, or US bank branches, and became part of M3.

However the key point is that does this portend bad news for the economy is - generally so, but the effects of recents inflationary actiosn by the Fed, ECB, and IMF will probably reverse that decline before long.

[thylacine]

I keep looking at this set of economic data (BOGNONBR). I haven't much of a clue what it all means, but it doesn't look like a system that is on an even keel. Massively negative late last year and now massively positive. They'll soon have to start plotting it with a logarithmic y axis.

[vision-master]

This is what popped into my mind.

[heroineworshipper]

"central banks will be forced to engage in outright monetisation of government debt by next year, whatever they say now."

If that happened, suspect a lot of us would stop buying bonds completely. China would be the only one still buying bonds because it's not in the business of making money, only economic stimulus. Your government would have to instantly devalue money to 0 & forget about any more borrowing.