Here Is Who Is Funding Consumer Credit YTD

Tyler Durden's picture

Earlier today the Fed announced that consumer credit increased by $6 billion in March, $1 billion greater than expectations, with seasonally adjusted revolving credit increasing by $1.9 billion, only the second time it has grown in the past 31 months (as shown below). Non-revolving credit also increased by $4.1 billion, both number to be trumpeted in the mainstream media, as it means that in March US consumers we using the credit cards once again to lever up. Yet two things that will not be discussed is that non-seasonally adjusted credit declined for the third month in a row to $2,407.5, an $8.9 billion drop M/M, following a $16.5 billion drop in February. But probably more importantly, the question of where all this credit comes from is once again perhaps best answered graphically: second chart below. As usual, thank you Uncle Sam... Which simply means that no banks wish to lend yet again. And yes, the government is and continues to be the only major source of credit (primarily for student and car loans).

Monthly change in seasonally adjusted revolving and non-revolving credit:

And total holders (i.e., sources) of consumer credit year to date:

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LawsofPhysics's picture

Once my printing license is approved, I will begin lending based on my physical gold and silver holdings.

Debtless's picture

Just nationalize the fucking banks and end this nonsense...of course thus beginning a whole other set of fun and games. But nonetheless.

Alex Kintner's picture

Honestly with all the same crooks in charge, I'm not convinced that would help now. Of course, I was all for Nationalization back in 2008 -- you know, before the biblical looting of the taxpayers.

Jack Mehoff's picture

Kinda like they are already?

Debtless's picture

you mean the government is bank-owned...

Welfareisfraud's picture

Does it make a difference? They're one and the same. "Nationalising" banks (as stupid an idea as "bailing" them out; they should be allowed to simply fail and restructure, come what may, however politically unsavoury this is to ostriches who cannot face reality) is superfluous. If you like saying the banks "own" the government, fine. It's still the government screwing everyone over in the end, be it through banks or however else. What matters is its coercive apparatus that enables it and anyone who hijacks it to do so.

Alex Kintner's picture

Hope springs eternal. Of course, it's gonna be tough paying down $150K in student loans on a McHourly wage.

Nathan Muir's picture

I can't believe this was junked.  The entire increase is nearly all due to student loans.  The ponzi never stops, pretty sad we've resorted to screwing the youth now...and don't forget, can't BK away student loans kids.

jomama's picture

not just the youth, the unemployed went back to school, too.

max2205's picture

Now they are spending what they would have paid on their mortgage AND running up the credit card. I 've seen this movie

Rainman's picture

Mortgage bills can be ignored. " Squatter Rent " is a $50 billion giveaway. Make money sitting on your ass at home ......sign me up. This should boost the PI stats.

BigSkyBear's picture

It's called "Stealth Stimulus" Bitchez!!!!

101 years and counting's picture

why would the banks lend?  its a losing business.  just take money from the Fed and buy stawks.  perfect trading records for BAC and JPM in Q1 says it all.  they even made money after the japanese EQ....amazing what happens when you have software that ADMITTEDLY is capable of manipulating markets.

chet's picture

It's cool taht commercial banks can make record profits without lending.  You know, what banks do.

Madcow's picture

yes - but insider trading is much more profitable 


Welfareisfraud's picture

Not that there is anything wrong with insider trading, other than the government's/MSM's imagination.

huckman's picture

Paging Janet T. & Merideth W.

Jack Mehoff's picture

It's simple really, we privatize the gains and share the losses. For fucks sake, last thing I want is to be a creditor to Joe Redneck. 

buzzsaw99's picture

Axis bank bitchez!

g3h's picture

Doesn't matter how much the government holds, revolving credit increased.  Period.

It is not from transfer.

Nathan Muir's picture

What nonsense you speak.  Of course it matters.  And the effects will be felt by the dear tax payer when those loans default...or perhaps you can explain to me how the hundreds of thousands of kids racking up six figure debt to attend law school or some shit MBA program are ever going to pay those debts back?

g3h's picture

Student loans are non-revolving.  Different issue.

suckerfishzilla's picture

As a gesture of goodwill don't go paying down anybody's credit cards out of sympathy for them.  They will just use it as an excuse to run up their bill again only this time for better reasons...not.  Some lessons are better learnt the hardway.

Clowns on Acid's picture

Great info Tyler. Your artcile begs the question "Why wouldn't they want to lend if they are borrowing at 0 %, and lending at Prime + 5 - 10%?"

I see it as :

  • The banks credit process has tightened to a riskless level.
  • Most balance sheets are a debt mess. Why lend to a mess.
  • Regulation (Sarb/Ox, Dodd/Frank, hundred other compliance policies) increases their cost of business where they have to increase their lending rates.
  • Therefore the banks rational response is to take the free, and freely printed, Fed $ and play the yield curve or other asset mkts. This does nothing for the real  velocity of money.
  • The US economy cannot experience real growth until it has real increases in the velocity of money.
  • This is the fatal flaw in Helicopter Ben's moonshot theory of QE. Printing money to the banks does nothing for non bank balance sheets. No bank balance sheets have to heal themselves. (Unless Ben will print me and other businesses some $ and credit my account).
  • Therefore - could you please have some of your propellar heads at ZH expand on this equation and then send it to Ben? (forget Timmy G., he is best left playing with feckin Lassie).
  • Real MV = Nominal MV + (GDP - inflation).

Apologies for long post, I gotta get back to the circus. Thanks. 

andybev01's picture

I don't understand how the gubmint is the largest lender for auto loans.

I've only bought 4 new cars off of the lot but have never been offered financing from anything resembling a government entity.

What am not understanding?

blunderdog's picture

WHAT!?!?  How do *I* get a US Federale Gummit Visa? Where do I sign up?

No one else will lend me anything, that's for sure.

jkruffin's picture

Look at that first chart! We are exactly right now where we were in July 08 when the collapse began.  This is going to be a disaster forthcoming.

Tater Salad's picture

If I were a bank, I wouldn't lend the sheeple money either.  Hey, let's go lend at a 3 point spread per year, then get villonized by the gubberment when we have to foreclose or....let's hand this over to our little prop desk here and turn it for a point a day. Boy, that's tough math  to solve now isn't it.

Until consumers start taking responsibility for their actions, there won't be any velocity to the dollars currently being hoarded by the banks. 


DavidC's picture

"...the government is and continues to be the only major source of credit (primarily for student and car loans)".