Posted on 10/13/2013 12:33:20 PM PDT by whitedog57
According to The Federal Reserve G.19 Report for August, consumer debt topped $3 trillion! Of course, Federal government debt has topped $16 trillion, over 5 times the amount of consumer debt. Note that pickup in Federal debt growth compared to consumer debt growth after Q2 2008 (red box).
feddebtconsumer
Here is a chart of revolving consumer credit versus non-revolving credit. Non-revolving debt (e.g., auto loans) have effectively replaced revolving debt.
revnonrev
Business loans have finally grown past the prior peak in 2008.
frbusloasn
On the government side, current expenditures (purple line) continue to grow, but the rate of growth flattened out starting in 2011. But government transfer payments (Social Security, Medicare, etc.) keep growing. The interest payments on the Federal debt (green line) are a small fraction of government spending.
usgovt
So with a recovery in business lending, staggering government spending and transfer payments and consumer debt topping $3 trillion, one would think that the M1 Money Multiplier would have started rising. But alas, no. It continues its decline.
m1multi10132013
Likewise, the M2 Money Velocity (GDP/Money Supply) is declining like a paralyzed falcon.
m2veloc101313
Of course, labor force participation in the US is the second lowest in modern economies (only Mexico is lower). And has accelerated its declining starting in 2009.
lfpus
And real median household income has fallen dramatically since 2000.
household-income-monthly-median-growth-since-2000
The M1 Money Multiplier and M2 Money Velocity continue to fall despite staggering government spending (and debt). Not to mention a return of business borrowing and consumer loans.
paralyzedfalcon
Even the Fed trying to juice the economy like Lance Armstrong isn't working if people spend less and less while Bernanke's cash infusion goes directly to more chips on the Wall Street craps table instead of into production.
If government spending could insure economic growth, no government would ever have a recession.
Keep in mind that something like $45B of the monthly “QE3” purchases involve mortgage-backed securities, not government bonds. In effect, the Fed is probably buying a lot of mortgage-backed securities where the mortgages were written several years ago — meaning the money was already in circulation long before the Fed purchased the MBS instruments.
Keep in mind that something like $45B of the monthly “QE3” purchases involve mortgage-backed securities, not government bonds. In effect, the Fed is probably buying a lot of mortgage-backed securities where the mortgages were written several years ago — meaning the money was already in circulation long before the Fed purchased the MBS instruments.
Can anyone explain the 750b that dissolved in Sept of 2008?
I’m not sure what exactly you mean by that. Can you provide additional information about this?
But by buying those securities, they give the banks actual cash to lend out gamble with on Wall Street.
But by buying those securities, they give the banks actual cash to lend out gamble with on Wall Street.
How exactly does a bank “gamble on Wall Street”?
Are you that concrete-minded that you don't understand my point? Banks are now investing their reserves rather than lend them. They are gambling that the inflation-fueled run-up in stock prices will continue.
The stock market will continue to ride fairly high, as long as U.S.-”based” manufacturing continues in foreign, communist countries.
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