Friday, September 16, 2011

Total Real Credit Market Debt per Civilian Employed

The following chart shows the total credit market debt owed per civilian employed (adjusted for inflation, August 2011 dollars).

Click to enlarge.

The "lifeblood" of our economy continues to drain. Perhaps we pumped way too much into it.

April 14, 2009
Four Questions about the Financial Crisis - Chairman Ben S. Bernanke

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.

Source Data:
St. Louis Fed: Custom Chart


Stagflationary Mark said...

Very sleek and fat did the cats appear, and sonorous with purring content. - H.P. Lovecraft

Very sleek. Very fat.

Stagflationary Mark said...

September 14, 2011
Your biggest enemy now? Fear

Times are tough, but dwelling on the dangers won't help your portfolio. Instead, it's time to get greedy.

Forehead. Desk. Whack. Whack. Whack.

Mr Slippery said...

Paying down private debt is healthy and necessary. It won't feel that way to GDP or the economy for now. The only other option is a jubilee or mass default.

Yoda: However it happens, reduced the debt must be, hmmm?

WSM said...

This is very interesting.

What all is encompassed in "credit market debt"?

Stagflationary Mark said...

Mr Slippery,

Indeed. At least the trend is in the right direction so far.

Picture what this chart would look like if we were losing jobs faster than we were paying off the debt. That would be game over.

Stagflationary Mark said...


What all is encompassed in "credit market debt"?

Pretty much everything (household debt, corporate debt, state and local government debt, federal government debt, financial sector debt).

L.1 Credit Market Debt Outstanding (pdf)

Stagflationary Mark said...

By the way, you might be wondering how we are paying down the debt. We're letting inflation do the work. Note what happens if I remove the inflation adjustment.

Nominal Total Credit Market Debt per Civilian Employed (chart)

Mr Slippery said...

Also of note is that while households are trying to pay down debt, the government is desperately trying to take on more. Without the gov taking on lots of student loans, MBS and ABS (Fed and Treasury), and running trillion plus deficits, a lot of more of the debt would go the default way and strong deflation would take hold.

Personally, I think that is the more just outcome, and the fastest way to clear the system so it can start growing organically again, but it would hurt too many reckless bankers and their cronies. The policy instead is to hurt the weakest and least politically connected.

From Barry Ritholz this morning:
The historian Daniel J Boorstin once said “The greatest obstacle to discovery is not ignorance – it is the illusion of knowledge.”

Stagflationary Mark said...

Mr Slippery,

From your link...

I continue to see recommendations that investors buy emerging market and American tech stocks. The former are located in countries without excessive levels of sovereign debt and with relatively high GDP growth rates. The latter have loads of cash, in some cases pay significant dividends, have come down price and, as I have argued, technology is accelerating. The trouble is that near term—and that means the next year or so at least—nobody can promise that a drop in stocks similar to 2008 cannot happen. Long term investors may be able to ignore a let’s say thirty percent decline in their holdings near term so long as they make some multiple on their money say five years out.

I'm reminded that investors who felt the American airline industry was accelerating (rightly so) a century ago have yet to figure out how to make money investing in it.

I bring this up because I am very frustrated with Sony right now (in regards to their PS3).

1. My first one failed.
2. Their system was hacked and my credit information was compromised (along with millions of others).
3. The PS3's Internet browser is now so unstable that even reading my own blog now causes it to crash much more often than not.

Further, my Sony TV has a line running through it until it warms up. That appeared about a year ago and it is getting worse. I strongly suspect that someday no amount of heat will remove it. Sigh.

Meanwhile, Sony's stock trades roughly at 1990 levels (even adjusted for dividends not shown in the chart). Some inflation hedge that one's been!

In Hell's Kitchen (NYC) said...

Our Sony Trinitron, bought new in 1992, is still going's only shortcoming is that it doesn't get louder as our ears get older. So I will have to operate and add an amplifier inside its (mostly empty) cabinet.

fried said...

Too funny. My ancient JVC has given up the sound and lots of picture freeze. It can no longer be coaxed into life. New one's a last-year model Samsung, at 450. Yes, I be cheap. That old JVC was from 1992.

Stagflationary Mark said...

In Hell's Kitchen & fried,

My previous TV was a JVC. It lasted far longer than I would have expected. Technically, it worked even in its last days. The picture changed size based on brightness though at the end, which tended to be a bit annoying.

I was fairly loyal to Sony in the distant past. They made great walkmen and I have fond memories of listening to music on a bus as I commuted to college.

My loyalty is wearing thin now though.