Domestic non-financial sectors growing strongly; big drop in Domestic financial sector leads to a drop in credit outstanding, despite an explosion in gov borrowing. "Deflationists" should look at the red boxes and appreciate what they show: the growth rate of household/business debt drops slightly and gov borrowing picks up drastically to keep total domestic non-financial debt(the key to "aggregate demand") growing. Write this down and look at it daily: "a committed enough counter-cyclical fiscal policy coupled with an expansionary/easy monetary policy can almost always arrest monetary-credit contraction (and consequent price deflation) despite the de-leveraging of the financial sector and persistent consumer thriftiness."
The full report
