Bank excess reserves with Federal Reserve signal coming loan losses.

This latest chart from November 5, 2009 release of the privately owned Federal Reserve’s report on the excess reserves is showing a sharp increas even over a few months of suppossedly “recovery” and economic “growh”. This sharp increase in excess reserve levels in a seemingly improving economic environment signals that banks know of something else. That something else is causing them to hoard cash and keep it in safest place possible, i.e. accounts at Federal Reserve banks themselves. This menacing something is likely to be huge loan losses that are result of defaults and bankruptcies by debtors. This is, of course, very deflationary.

Citigroup is deflating.

In a sign of deflation Citigroup is closing without warning random consumer credit card lines. It has suffered consumer credit losses to the tune of $ 8 Billion in the third quarter of 2009 alone, that is deflation by any definition. And acting responsibly, trying to stay afloat, Citibank is cutting its losses or potential losses. This is what deflation looks like. Creditors are unwilling to lend while customers are unwilling to borrow and no infusions of liquidity by the privately owned Federal Reserve Corporation will change this.

Q2 2009 private sector credit collapsed at – $2.2408 Trillion annual rate.

The just released privately owned Federal Reserve’s Flow of Funds report for September 17th, 2009 shows that the second quarter of 2009 brought the greatest credit collapse of all time (http://www.federalreserve.gov/releases/z1/current/z1r-3.pdf).

Canada experiences 2nd month of deflation.

Canadian people have been fortunate to have experienced the wornderful feeling of seeing lower prices for a second month now. Deflation is there and looks like it likes it in Canada. Oh Canada.
United Press International. August 19, 2009.
Canada experiences 2nd month of deflation.
OTTAWA, Aug. 19 (UPI) — Consumer prices in Canada fell 0.9 percent in [...]

Deflation is here and now and everywhere.

If one were to listen to the policy makers and news media, one might think that deflation may still be averted and has not yet arrived. But if one reads the official economic statistics from around the world one will see that deflationary spiral has already arrived and is beginning its whirlwind motions in earnest.

Robert Prechter: Expect “Deflationary depression”.

The president of Elliot Wave International Robert Prechter explains why we are headed towards “Great Deflation” and new “Great Depression”.

Elliot Wave International: “Does This Look Like INFLATION To You? We Didn’t Think So.”

The logic is simple, yet somehow it escapes the great minds of those that are in charge of the US Economy. Deflation it is.

Swiss consumer prices post sharpest fall in 50 years.

As we can now clearly see devaluing one’s currency, as it was done a few months ago by the Swiss National Bank, did nothing to stop CPI from falling. And the sooner the prices fall the sooner will this prolonged slump end. This is economics 101, but the Central Bankers don’t want to admit it and keep tinkering with interest rates and quantitative easing policies.

Global deflation pandemic begins to brew.

Behind a global deflation virus is a collapse of demand in the U.S. Unless the economic engine in the U.S. can get cranking again, deflation could keep spreading.

Deflation in the commercial paper market.

Corporate borrowing costs continue to climb along with the steep plunge in commercial paper. Please consider Commercial Paper Falls Most Ever.

The U.S. commercial paper market, the cheapest source of corporate cash, is shrinking at a record pace, raising the cost of capital for borrowers