As was feared, GDP down 2.7% in this 3rd quarter 2011 from the previous, which represents a 0.3% year-to-year growth, according to the latest figures of the monetary aggregates published by the Fed Thursday evening, confirming my previous analysis,
The present crisis is the same that the Lehman Brothers bankruptcy.
Indeed, Americans increase their precautionary savings (M2-M1) because they fear that their situation is deteriorating in the near future because of the consequences of the euro crisis.
Plus (+) saving is less money spent, i.e. less demand and less supply.
Americans increased their savings to… $ 340 billion since the 1st June! At 1st August, it reached 7,400 billion, record high,
M2-M1 increases to 7.6% year-on-year. It rises above the critical stage of 7.0%. Beyond, growth is negative in concordance with my law on the free money supply,
The situation is atypical with declining GDP and rising inflation that reached 1.8% in July, as measured by the CPI:LFE (Consumer Price Index for All Urban Consumers: All Items Less Food & Energy)
The decline in GDP is reflected in the euro zone which cannot support it. Under-capitalization (or over-debt) of big banks too big to fail will cause an uncontrollable and lethal fall of dominoes in the near future…