British economist Tim Congdon explains frightening drop in the money supply
Even an economic novice would agree that our economy needs money. So it's unnerving to learn that money is in increasingly short supply. The US money supply has plunged at a 1930s Great Depression pace -
The stock of money fell from $14.2 trillion to $13.9 trillion in the three months to April, amounting to an annual rate of contraction of 9.6pc. The assets of insitutional money market funds fell at a 37pc rate, the sharpest drop ever.
"It’s frightening," said Professor Tim Congdon from International Monetary Research. "The plunge in M3 has no precedent since the Great Depression. The dominant reason for this is that regulators across the world are pressing banks to raise capital asset ratios and to shrink their risk assets. This is why the US is not recovering properly," he said.