This little graph comes courtesy of the Reserve Bank of Australia, and shows a slowing in the growth of the money supply and consequently credit growth in this country. Or is that the other way around?
Note growth declines began well before the GFC. Demonstrating an apatite for credit was already at its peak, long before asset markets began their collapse. During height of fear, some freshly printed money flowed into the banking system. But it had little or no effect on turning around credit growth. This money was likely to have been exported, in search of a return.
I'm not sure how this correlates with the rise in the Ausssie dollar. The dollar's rise has in part to do with the commodity markets. But the carry trade has brought us hot international currency looking for reward in our comparatively high cash rate, currently 4.75%!
Looking forward to seeing this graph for the 2011/2012 figures. With the property market cooling, credit expansion may actually fall into the negative. Given our excessively property-focused consumption economy.
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