Tuesday, 2 December 2008

A sign of the times

I am not quite sure what is federal credit? Is it the volume of loans given by the US Federal Reserve to the rest of the economy?

However, I know two thing; this number exploded in the aftermath of the Lehman bankrupty and that this development was definitely not a sign of a healthy financial situation.

7 comments:

Chris said...

Hi! I am an American living in the UK. I am not sure where you got these numbers. Your source part of the chart has no URL so I cannot tell. My guess is that this is the amount of money loaned out (as you suggest) from the Federal Reserve (probably the Reserve Bank of New York as the central Federal Reserve isn't actually a bank; only the regional ones are). However, it could also be the amount of US Treasury Bonds outstanding (like the UK Gilt, but much easier to get as you can buy them directly from the US Treasury, Bureau of Public Debt at Treasury Direct; yes, you too can own a part of the big American black hole!).

Alice Cook said...

Chris,

Thanks for your comment. I think you are right.

The data comes from the St. Louis Federal Reserve website.

The data code is RSBKCRNS

the URL is

http://research.stlouisfed.org/fred2/series/RSBKCRNS/downloaddata?cid=342

I don't normally put on URLs, but I always give some idea where I got the data from. However, if challenged, I will stand and deliver. I just think that excessive sourcing of data is a bit tedious.

Alice

Chris said...

Ah, as an academic (but not in economics; it is a slight hobby of mine), I have to say that citation is one of the most tedious things ever. Thanks for the source.

Anyway, after looking at it, I am no closer to an answer than before. I have a feeling that this is credit given to banks that are a part of the reserve system (almost all of them, except the hedge funds and investment banks) and not actual money handed out (but they will probably eat (or be force fed) it all in the end...nom nom nom).

I would have to agree with you that it is not healthy but the US has been a sick old man for a long, long time.

Anonymous said...

The reason for the sudden jump is the Fed started paying interest on the money.

Chris said...

Ah, I see. Thanks. I remember them announcing that but with so many new alphabet soup facilities, it is hard to keep track of them all.

Anonymous said...

It is a graph of the fed measurement of chance-of-certain-doom-in-the-next-3-months, measured in basis points. Failing that, is it not just Fed assets?

ntk said...

The sharp jump is commensurate with the sharp jump in base money, if it helps any.