He put up a short-term chart of revolving credit. Here's the long-term data plotted on a log chart.
Constant exponential growth on a log chart looks like a straight line. The line in the chart above is not straight though. It is curving downwards and has been doing so fairly consistently for 40 years. That means that the exponential growth rate in revolving credit is clearly slowing and has been slowing for a long, long time.
We may actually be seeing the first signs of peak revolving credit. Now imagine how much worse it would look if I adjusted it for inflation over the years. Hey, guess what? You don't have to imagine it.
In inflation adjusted dollars, total revolving credit is currently no higher than it was in early 2001. For those keeping track at home, that was two recessions ago.
April 14, 2009
Chairman Ben S. Bernanke: Four Questions about the Financial Crisis
Credit is the lifeblood of market economies, and the damage to our economy resulting from the constraints on the flow of credit has already been extensive.
True Blood
When you came in the air went out.
And every shadow filled up with doubt.
I don't know who you think you are,
But before the night is through,
I wanna do bad things with you.
Source Data:
St Louis Fed: Total Revolving Credit Outstanding
St Louis Fed: CPI-U
I just posted an update to this post. One of the links wouldn't even let you read the headline without subscribing.
ReplyDeleteLove the Trueblood intro music!
ReplyDeleteMy wife ia a MAJOR vampire fan (true bood/twillight) so I see it all.
A bit off topic but did anyone have any idea Anna Paquin was so freaking hot?
Oh yeah, nice post on stuff, I was distracted.
GYSC,
ReplyDeleteWho knew Sookie Stackhouse would get engaged to vampire Bill Compton?
No wait. I mean who knew real life Anna Paquin would get engaged to real life Stephen Moyer?
I really mean anyone who didn't watch the show and find their performances so believable?
Hahaha!
My girlfriend is addicted to vampire novels.
My girlfriend's mom made us get HBO so that we could watch True Blood.
Vampires, vampires, vampires, vampires!
I'm not completely immune though, so who am I to talk? I like True Blood.
I also enjoyed Daybreakers. Bernanke nearly ruined it for me though. I kept picturing credit while watching it, lol.
http://www.youtube.com/watch?v=ayYiMygqlfo
Stag, GYSC,
ReplyDeleteI met a very famous vampire one evening while getting a "bite" to eat one night about 15 years ago. Seriously.
Believe it or not, this famous vampire had given up his "day" job and had gone into the restaurant business in NYC. He called his restaurant "Grandpa's". Nice guy.
Ooh, I almost forgot. The vampire's name was Al Lewis. But he was better known as Gandpa from the TV series, The Munsters. The food was good. IIRC, I ordered my steak medium, but it was served rare. Go figure.
mab,
ReplyDeleteGreat story!
"Grandpa's" is a good name for a restaurant. I say this because I once ate at "Grumpy's". A friend and I were its only customers the night we ate there. The cook came out to ask us how we liked the food. We said it was good, but we were just being nice. The place was clearly struggling.
It's now a Starbucks.
My password just hit its 2 week expiration again and I was asked to do a word verification.
My word was "minst". I think I'm ready for word association therapy. I had two words come to mind instantly. Bad fish and junk coins! Hahaha! :)
Mab,
ReplyDeleteThat's awesome!
No particular reason for posting this evening except that my word ver. is "venom." I'm not joking.
ReplyDeleteSo, let's revisit one of our old friends and see if we can conjure up any "signs"...
Me: I'm feeling venomous
Cleverbot: Why are you sad?
Me: ZIRP
Cleverbot: That's the coolest name ever! What's your name?
Me: Ben Bernanke
Cleverbot: What does that mean?
Me: We're screwed!
Cleverbot: I know this.
Mark - Thank you for the charts!
ReplyDeleteVery interesting.
Special thanks for the 2nd chart, "inflation adjusted."
The "inflation adjusted" chart shows a dip in revolving credit in ~1980 to 1982, similiar to the 2009 dip.
My 1st question was, hmmm, was there a recession in ~1981? No need to wonder, I just scrolled down to the previous post, and yep, there's a recession marked on the previous post graph.
Excellent work, my friend.
- jus me
(what the heck happened in 1978? Look at that spike!)
(or I could have looked up at chart 1 for the recession bars. duh.)
ReplyDelete-jus me
Looking at the data provided in your link, revolving credit almost doubled in January 1977 (not 1978).
ReplyDeleteA few minutes with google reveals, um, well, nothing obvious about January 1977. (although there was a big housing price run-up in '77, many articles google finds assert it was a consequence of the credit expansion.) (but no explanation, why did credit double in Jan '77?)
So I'm left with two curiousities:
1977 credit expansion
~1981 credit dip
-jus me
G.H.,
ReplyDeleteLOL! I think Cleverbot has achieved sentience!
jus me,
ReplyDeleteI'd like to know what is up with those spikes too.
Here's a look at the raw data (in billions).
1976-09-30 16.4
1976-10-31 16.7
1976-11-30 16.7
1976-12-31 16.5
1977-01-31 30.7
1977-02-28 30.5
1977-03-31 31.0
1977-04-30 31.8
That's certainly odd looking data. Clearly something happened.
Here's a look at the seasonally adjusted CPI during the period.
1976-09-01 57.600
1976-10-01 57.900 (+0.5%)
1976-11-01 58.100 (+0.3%)
1976-12-01 58.400 (+0.5%)
1977-01-01 58.700 (+0.5%)
1977-02-01 59.300 (+1.0%)
1977-03-01 59.600 (+0.5%)
1977-04-01 60.000 (+0.7%)
The biggest jump is roughly during the spike (note the day of the month is not consistent between data sets).
It could just be a coincidence but who knows?
There's also something else special about January 1977. It was a local minimum in the Fed Funds Rate.
01/1976, 4.87
02/1976, 4.77
03/1976, 4.84
04/1976, 4.82
05/1976, 5.29
06/1976, 5.48
07/1976, 5.31
08/1976, 5.29
09/1976, 5.25
10/1976, 5.02
11/1976, 4.95
12/1976, 4.65
01/1977, 4.61
02/1977, 4.68
03/1977, 4.69
04/1977, 4.73
05/1977, 5.35
06/1977, 5.39
07/1977, 5.42
08/1977, 5.90
09/1977, 6.14
10/1977, 6.47
11/1977, 6.51
12/1977, 6.56
01/1978, 6.70
02/1978, 6.78
03/1978, 6.79
04/1978, 6.89
05/1978, 7.36
06/1978, 7.60
07/1978, 7.81
08/1978, 8.04
09/1978, 8.45
10/1978, 8.96
11/1978, 9.76
12/1978, 10.03
And lastly, here's some scary headlines.
January 21, 1977
http://tvnews.vanderbilt.edu/program.pl?ID=45826
Governor of Minnesota institutes 4-day work week of 10 hrs. a day in order to conserve energy.
January 21, 1977
http://tvnews.vanderbilt.edu/program.pl?ID=45827
Urgent meeting at White House today to discuss problem of natural gas shortages.
...
...if cold weather conts., there won't be enough gas to meet everyone's needs.