Friday, December 16, 2011


Found "Total Financial Assets" at FRED by accident just now.

Graph #1: Components of "Total Financial Assets"

Red: Household and Nonprofit Organizations
Blue: Nonfarm Nonfinancial Corporate business
Green: Nonfarm Noncorporate Business

Omitted are farm assets. Of course: Economists sure don't like them farmers. Also omitted: Financial business. I'm sure there's a good reason for that, too. And also the government. Perhaps because government "cannot save"...

I'm wondering what the red line would look like if we separated household assets from the assets of nonprofit organizations. ("Nonprofit" doesn't mean they don't make money. It just means they don't pay income tax on the money that they make.)

I added up the three components of TFA and showed the total in blue on a new graph:

Graph #2: Total Financial Assets (blue) and TCMDO (red)
What to compare it to? First thing that came to mind was TCMDO, Total Credit Market Debt Owed.

The distance between the lines was greater than I expected. So I tweaked TCMDO by taking out Federal debt held by the public, and adding in Gross Federal debt. The latter is a bigger number, and should make the red line closer to the blue.

Graph #3: TFA and (TCMDO less Net Federal plus Gross Federal debt)
Quite a bit closer. I suppose the difference includes farm assets. And foreign holdings maybe. Getting out of my depth, here.

But I was running out of interesting things to do with TFA. So I logged it:

Graph #4: Same as Graph #3 but on a log scale
Now I have something to say.

Just an impression, really. Looks like the closer the lines are to each other, the worse the economic performance. The bigger the spread, the better.

The lines were far apart in the 1950s and '60s, during the Golden Age. The lines came closer together during the troubled 1970s. After a brief separation in the early 1980s, the lines ran close together until the mid-1990s. During the Macroeconomic Miracle of the latter 1990s, the gap opened up again.

Then the gap collapsed completely, in two steps, in the 2000s.

Like I said, out of my depth. But I'm wondering if there is some relation between this gap-related behavior and the thing that is often called Net Financial Assets.


Jazzbumpa said...

Is it possible to disambiguate non-profits from households?

Can you get the assets of financial corporate business?

Those bits would fill in some holes in the story.


The Arthurian said...

Mañana más, 'migo.