The Federal Reserve is up to its customary statistical obfuscations. It no longer releases the L.1 Credit Market Debt Outstanding report; Q1 2015 was the last one available. Instead, it’s releasing something called D.3 Debt Outstanding by Sector, however, under this new accounting, Federal debt somehow dropped to $2,959.2 billion from $13,086.7 under the old report for the very same quarter.
That’s a neat trick. Hey, presto! And $10 trillion in debt vanishes. I’ll have to figure out how the two definitions differ. At first glance, it looks like they simply redefined it as State & Local debt, as that is nearly $10 trillion higher than before.
What is interesting, though, is that D.3 now provides a Household Home Mortgage line. As Steve Keen suggested, this actually peaked BEFORE the crisis began, sometime in 2007, at $10,613.0 billion. It’s now at $9,490.6, and has been flat for the last three years, bottoming in Q3 2014.
Household Consumer Credit, on the other hand, is doing better. It peaked in 2007 as well, at 2,615 but has risen to 3,533.1 since. So overall, Household debt has been flat for nine years, but $1 trillion in debt that was previously backed by real estate is now sans collateral. Corporates have $1.5 trillion in additional debt since 2008, but Financials have $2.8 trillion less. The end result is debt disinflation.
This is the problem Steve Keen was describing, which is an insufficient amount of credit money being created to permit any economic growth. We can certainly argue about whether to take the concept of GDP seriously or not, and about whether the government can, or should, create more credit money, but regardless, the available evidence does appear to fit his Minsky model.