When sales by the central bank are too brisk, the growth of the monetary base decreases, the quantity of money and credit declines, and interest rates increase.
"With bond insurance no longer a factor, with so much of the market now unrated by the credit rating agencies, and with defaults and other evidence of broad credit declines appearing across the municipal market, retail investors are probably more vulnerable than ever," Mr. Schmitt said.
That was the biggest percentage drop since credit declined 9 percent in May 1980.
Or did lending drop because after the recession, businesses started to retrench and their demand for credit declined?
Indeed, the Federal Reserve reported on Friday that consumers' use of credit declined 3.1percentt, or $6.6 billion, in December.
Consumer credit declined by $7.9 billion, the biggest monthly drop in more than half a century, according to the Fed.
In another sign that the economic outlook remained tentative, the European Central Bank reported that the increase in demand for business loans slowed, while demand for consumer credit declined.
Across the five boroughs and beyond, the renovation business, which fell victim to tightening credit, declining home sales and overall economic misfortune, is starting to pick up.
Demographers credit declining rates of AIDS and homicide, which ravaged black neighborhoods in many American cities in the 1980s and '90s, as well as reduced death rates from heart disease.
However, although India's "Wall Street" was less affected, its "Main Street" bore the brunt of the downturn, with slower growth, tighter access to credit, declining exports, higher unemployment, and less investment.
Meanwhile, net lending to individuals in the form of mortgages or consumer credit declined - in other words, people paid back more than they borrowed.This follows a big repayment in consumer credit by American citizens in July and a rapid slowdown in eurozone broad money supply growth.
