This is what debt-deflation looks like
Nov 02
This chart shows what debt-deflation looks like. To put it into perspective, the 8.71% decline in commercial bank credit from the October 2008 peak represents the disappearance of $637 billion in debt. (7.34% of that decline has taken place in 2009, as shown in the chart.) That represents 1.87% of the $34 trillion in total debt that will have to be deleveraged to reduce debt/GDP to post-Great Depression levels. For a very good explanation of how the debt-deflation process takes place, I recommend reading the article Debt-Deflation: Just the beginning?
Comments2
JMCD says:
November 30, 2009 at 3:22 pm
What is this chart? Notice that you title it “Total…loans and leases” yet the vertical axis is in percent. I’m guessing it is year-over-year change, but I shouldn’t have to guess. Some of the charts in your book, like this one, are frustrating because the axis descriptions/labels are either excessively small or missing. While reading your book I had trouble seeing what you said this chart showed.
voxday says:
February 28, 2010 at 11:37 pm
Yes, it’s year-over-year change in percent.