Paul Kedrosky finds this chart of total US bank deposits in a WSJ story about FDIC insurance. But step back a minute: just look at how total deposits have grown over the past ten years!
Since 2000, bank deposits have grown from just under $4 trillion to just over $7 trillion: that’s an increase of $3 trillion, or $30,000 per household. And this during a time of record-low savings rates and soaring household debt. I’m quite sure that people aren’t borrowing money just to deposit it in the bank, so what’s going on?
I do think it’s safe to look at this chart and see very obviously the effect of Alan Greenspan’s loose monetary policy. We might not know whose deposits we’re looking at, exactly – although the rise in uninsured deposits would certainly seem to indicate that it’s the rich who got much of the benefit – but we do know that ultimately the money came falling out of helicopters courtesy of the Federal Reserve.
And maybe the next time someone asks George Bush to defend his economic record, he might do well to ask them how much money they have in their bank account today, compared to when he took office. Judging by this chart, there’s a very good chance the number will have risen substantially.