[Starwind]

Now you create a new debt and it is more likely a consumer rather than business debt. So what has happened is a debt transfer from one individual to another. In essence, we are back to square one ;-)

Correct, but your premise is that by $-volume an equal number of debtors stepped up to borrow that money again. But the point of the revolving credit reports is that, no, on balance, revolving debt went down, and other reports show re-fi and mortgage apps falling as well. The valid point has been made that with lower balances, folks may run up their cards again in the future.

However, even if other borrowers stepped up or revolving credit is run up in the future, the velocity of money slows because debt was repaid in the 1st transaction, rather than spent.

[1rudeboy]

Repaying debt is spending, and I think you are confusing the velocity of money with the multiplier-effect.