Image source: Pixabay

Over the past few years, inflation has become a hot topic. It is seen as the largest economic threat by almost everyone. Deflation, however, is a considerably more perilous economic situation. One of the pillars of deflation is credit contraction, as you saw in our first story of the day.

Contrary to popular belief, the economy is not driven by employment, exports, or manufacturing. No, credit drives the modern economy.

The "Great Financial Crisis of 2008–2009" was marked by a sharp decline in loan volumes.

Now, increased borrowing rates are starting to sting everywhere you turn. Given the difficulties many regional banks are experiencing, it appears more and more likely that another round of bank consolidation is taking place in the United States.

The graph below demonstrates the current contraction in U.S. Commercial Bank Credit. 

(Click on image to enlarge)

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