Money Supply, multiplier, M1 diverges from M3

Here is a clip from The Alchemy of Finance:

"...the Federal Reserve announced a large increase in M1; the increase in M3 was more moderate...I am now willing to bet that the slowdown in the economy is going to deteriorate into a recession: the contraction in credit is going to outweigh the increase in the money supply..."

He is basically stating that the money supply multiplier is contracting...

"...I suspect that the divergence between M1 and M3 is an indication that the horse is not drinking."

Now how is the divergence between M1 and M3 an indication that the "horse is not drinking" or that the money supply multiplier is contracting?

http://en.wikipedia.org/wiki/Money_supply

M1 consists of: Notes and coins in circulation, Traveler's checks of non-bank issuers, Demand deposits, and Other checkable deposits.

M3 consists of: M1 plus Savings deposits, Time deposits less than $100,000 and money-market deposit accounts for individuals, and Large time deposits.

So, according to these definitions, since M1 increased more than M3, this means that savings deposits and time deposits (financial assets with lower liquidity than M1 items) increased by less than the increase in M1... Now how is he backing out a contraction in loan growth (or the money supply multiplier?)