"Demand Deposits" is the money we use when we pay the bills. "Total Credit Market Debt", that's the bills we have to pay.
Saturday, October 6, 2018
Demand Deposits relative to Total Credit Market Debt
Demand deposits, that's the money we spend when we're not using credit cards. Basically. Except for the greenbacks in your pocket.
"Demand Deposits" is the money we use when we pay the bills. "Total Credit Market Debt", that's the bills we have to pay.
"Demand Deposits" is the money we use when we pay the bills. "Total Credit Market Debt", that's the bills we have to pay.
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2 comments:
The rise since 2010: why? Cashing in investments? Surely not reduction in debt. Cash held by whom? Individuals or corporations?
Hello, Sackerson.
"The rise since 2010: why?"
I'd say because Demand Deposits went up along with M1 money, due to Quantitative Easing.
"Cashing in investments? Surely not reduction in debt."
Definitely not reduction in debt! Sadly.
"Cash held by whom? Individuals or corporations?"
Ah, the big question! I don't think I can show a graph that answers this one. Here's what I think: In the early 1990s, individuals held a lot of it. People who had a willingness to spend. That's why the economy was able to grow in the latter 1990s. Since 2008, it is held by entities that prefer to hold cash rather than spend it; for the most part probably corporations.
Still, after ten years, if attitudes have changed enough, I'd say the ratio is high enough to support a bit of economic vigor. My graph can therefore be seen as an alternative to the story that Trump's tax cuts and Trumps deficit spending are the reasons the US economy has been looking better lately.
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