Let's look at the quiet time.

Bank borrowing from the Fed: Nothing ... nothing ... nothing ... and then BANG!

Graph #1

If we crop off the big bang and look at the data from 1919 to 2007, it turns out there actually is something to see:

Graph #2

That's better. I don't like empty graphs.

I thought it was odd that the seemingly irregular pattern suddenly settled down after 1990 and became for the most part quite regular. Calm before the storm, I guess.

I want to look at the full view again, the one that shows nothing until 2007. But I'll show it "relative to GDP" this time, to give it some context. I'm using the GDPA series (which goes back to 1929) to see far back in time. But it's an annual series. You will notice we lose some of the jiggy detail we had on Graph #2:

Graph #3

There's the big bang again, on the right. And some hyperactivity on the left, during the Great Depression. Relatively quiet between.

Let's look at the quiet time.

I want to say banking activity picked up during the second World War, reaching a high point in 1945. But first I want to ask a question: Why do depository institutions borrow from the Federal Reserve?

According to the Board of Governors,

The discount window helps to relieve liquidity strains for individual depository institutions and for the banking system as a whole by providing a source of funding in time of need.

Well, they make it sound like the '40s and '50s and '60s and '70s and '80s and '90s all show little crises, small versions of the big bang on the right and the hyperactivity on the left. That was not the case, I'm certain. I'm thinking the banks mostly just needed the money so they could get on with lending.

I could be wrong about that; if I have it wrong, do let me know. In the meanwhile I'm going to say banking activity picked up during World War Two.

The graph shows some pretty good activity in the 1950s. Relatively quiet in the 1960s. More activity in the 1970s again, though less than in the 1950s. Quiet in the 1980s. Then more activity again in the 1990s, but less even than in the 1970s. All calm and quiet after that ... until the crisis.

Here's what I think the graph is telling us: In the period between the second World War and the Financial Crisis of 2007, banks and depository institutions relied less and less on the Federal Reserve as time went by.

Why would this be so? It's not that banks were lending less. No. They were lending more. More and more. But they were relying less and less on the Fed in order to do it.

The graph shows the gradual loss of power of the monetary authority -- the decline in the power of the Federal Reserve.