Money & Credit: Debatable Points

Check out the accompanying pdf and chart collection. Executive Summary: Some economic prognosticators still believe that a credit crunch and recession are just around the bend. Today, we question two of their main arguments: We don’t believe that falling M2 presages anemic GDP growth; contrary to conventional wisdom, there is no reliable correlation between the two. And we can’t see consumers slamming the brakes on their spending and hobbling the economy; they don’t need to with their net worth at a record high and real disposable income growing. … Also: The inverted yield curve correctly predicted the banking crisis earlier this year, but there has been no credit crunch so far; we are monitoring commercial bank lending stats closely. ... And: Dr. Ed reviews “Golda (+ + +).