Saturday, July 9, 2011

Maybe it's me...

I thought it was really interesting, my FRED graph from the 1st, comparing "U.S. Government Securities" to "Total Investments" at "All Commercial Banks". So when I woke up aimless this morning, I ended up at FRED, looking at that data again.

At FRED, typing total investment into the search box gave me a bunch of Bank of America Merrill Lynch stuff, plus

  • Total Investments at All Commercial Banks, and
  • Total Loans and Investments at All Commercial Banks

The first of these I had seen on the way to building the graph for 1 July...

Graph #1

I clicked Edit Graph, added the data series LOANINV as a "New Line" and got to see how "Total Loans and Investments" (the red line) compares to "Total Investments" at commercial banks.

Graph #2

Everything below the blue line is investments. Everything above the blue line, up to the red line, is loans.

Then (of course) I had to see the ratio. I clicked Remove Line to get rid of the red line, then added the LOANINV series again -- but this time I clicked "Line 1" first. Then I entered the formula b/a and clicked Redraw Graph.

Graph #3

Persistent increase from 1947 til maybe 1980, then flat.

Or maybe: up fast (1947-1967)... up slow (1967-1979)... up almost not at all (1979-1989)... and then flat or maybe slightly down.

The graph shows a definite transition, whether you see that transition happening at an instant in time, or over a longer period.

I'm a long-period guy, myself. I think I see at 1967 the beginning of the end of the "golden age" that followed World War II. And I definitely see in the 1980s the policy changes of Reaganomics, which arose in response to the death of the golden age.

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