The US Deleveraging Is Now Over

Tyler Durden's picture


Today the Fed released its quarterly Flow of Funds report, also known as the Z.1., which is mostly tracked to show quarterly changes in consumer net worth (and which we find far more valuable to show changes in shadow banking liabilities - more in that in a later post). So while in Q4 household net worth did increase by $1.2 trillion to $58.5 trillion, all of this change, and then some, was purely driven by the central bank induced ramp in the stock market: $1.3 trillion of the $1.2 trillion increase in Net Worth was from the change of value in equity shares at market value which at December 31 was $17.3 trillion. In other words, the illusion of wealth is and continues to be merely a iCTRL+P keystroke away. Yet the one finding that is truly surprising is that in Q4 for the first time since Q1 2008, debt across all holder classes increased: debt held by Households, Nonfinancial corporate business, nonfinancial noncorporate business, state and local governments and of course the Federal government, all rose in the quarter. In other words, the US deleveraging is now over as everyone adds debt for the first time since before the crash. The credit bubble is now officially back.

Here is the sequential change in credit market debt for all domestic non-financial sectors:

And a chart showing the assets and liabilities of the US household since 2004.

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Thu, 03/08/2012 - 16:19 | 2237038 trav7777
trav7777's picture bubble, bitchez!!!

Thu, 03/08/2012 - 16:40 | 2237131 dwdollar
dwdollar's picture

That's so next crisis!!! Come on in, buy some equities!!! It's all good until it isn't, but don't worry... you'll have at least 50 nanoseconds to cash out when SHTF!!!

Thu, 03/08/2012 - 16:52 | 2237170 max2205
max2205's picture

awesome chart...asprin please

Thu, 03/08/2012 - 17:12 | 2237214 economics1996
economics1996's picture

Here is what ZH is talking about, total credit, all classes.[1][id]=TCMDO


Leveraged 3.51 to one.  A slight problem.

Including unfunded liabilities we are leveraged 7.7 to 1.

It was the Silent Generation and GI generation that supported the Ponzi scheme programs.  The baby boomers, 1946-64, were not born yet.


Thu, 03/08/2012 - 17:23 | 2237298 Ahmeexnal
Ahmeexnal's picture

Buying PMs and gun5 on credit.

r3v01u710n about to erupt!

Thu, 03/08/2012 - 17:48 | 2237399 Chupacabra-322
Chupacabra-322's picture

@ Ahmeexnal, thanks for the idea.  Going over to Brownell' right now and charging a bundle pack of 500 rds of .45acp.  Sweet.  NDAA my ass.  Come and get some.  +infinity. 

Fri, 03/09/2012 - 23:57 | 2242425 spiral_eyes
spiral_eyes's picture

"The credit bubble is now officially back."

Yeah. M2 keeps rising. Everything else doesn't. 

Thu, 03/08/2012 - 19:50 | 2237778 macholatte
macholatte's picture

Apparently the Fascists have shown the sheeple that the way to get ahead is to borrow as much as possible and not give a second thought to paying it back. Home underwater, no problem. Renegotiate a lower interest rate and some debt relief. Obama will give you the money. 

Oh, you paid off your mortgage & your credit card debt and you paid cash for those cloths and cars and TV's and stuff? Too bad Sucka!  No gubmint check for you.

Thu, 03/08/2012 - 17:36 | 2237348 Bastiat
Bastiat's picture

Wd like to look at that on a log scale -- only a few minutes to download the data and run it in Excel but no time.

Thu, 03/08/2012 - 17:23 | 2237299 Chariots of the Feds
Chariots of the Feds's picture

Nanoseconds is SO last week.  It's all about the sub-nanoseconds now, didn't you read the ZH article the other day?  /sarc

Thu, 03/08/2012 - 17:32 | 2237327 tarsubil
tarsubil's picture

In the 80s, there was Megadeath. In the 10s, we will have Picodeath.

Thu, 03/08/2012 - 19:33 | 2237720 GovtMediaLiars
GovtMediaLiars's picture

No such luck buddy. 50 whole nanoseconds? Dream on.

Welcome To Sub-Nanosecond Markets

Market Madness 



Thu, 03/08/2012 - 16:42 | 2237135 The trend is yo...
The trend is your friend's picture

its called interest on top of interest or compounding.  At 18.99% interest these idiots will never get out of debt.  Negative Amortization credit cards BITCHEZ...

Thu, 03/08/2012 - 16:41 | 2237136 Silver Bug
Silver Bug's picture

Happy days are back!!


I think not.

Thu, 03/08/2012 - 18:17 | 2237479 Spirit Of Truth
Spirit Of Truth's picture

"Mission accomplished!" - Ben Bernanke

Thu, 03/08/2012 - 20:09 | 2237839 blunderdog
blunderdog's picture

Well I for one am delighted that the deflationary threat has passed. 


Thu, 03/08/2012 - 16:20 | 2237044 Pairadimes
Pairadimes's picture

Who's gonna pay for this? You are! Get back to work!

Thu, 03/08/2012 - 16:26 | 2237071 SheepDog-One
SheepDog-One's picture

Not me, thats for damn sure. I cashed out of this clownshow ahead of time. My fellow americans, have fun getting ass raped at 20% interest the rest of your lives.

Thu, 03/08/2012 - 16:34 | 2237105 surf0766
surf0766's picture

The baby boomers should pay for it. !! They caused it !

Thu, 03/08/2012 - 16:42 | 2237133 JohnnyBriefcase
JohnnyBriefcase's picture

Watch what you say about boomers around here.


They were born knowing so much and they don't take kindly to critisism which may or may not be the reason why we are in this mess.

Thu, 03/08/2012 - 16:52 | 2237172 LowProfile
LowProfile's picture

Boy howdy!  Check out the comments here!

These fuckers are going to take the high hard one a la Deliverance, with no lube, or even a reacharound.

Thu, 03/08/2012 - 17:09 | 2237244 economics1996
economics1996's picture

It was the Silent Generation and GI generation that supported the Ponzi scheme programs.  The baby boomers, 1946-64, were not born yet.

You people are idiots sometimes.

Thu, 03/08/2012 - 17:17 | 2237274 LawsofPhysics
LawsofPhysics's picture

precisely, and how many had to be killed off to get the ponzi going?  Food for thought if you think it will keep going.

Thu, 03/08/2012 - 17:27 | 2237309 economics1996
economics1996's picture

The Ponzi scheme is over.  Bernanke is juggling and working hard to keep the balls in the air.  Sooner or later he will screw up.

 "I got a serious question for you, 'What the fuck are you doing?' This is not shit for you to be messin' with. Are you ready to hear something? I want you to see if this sounds familiar . . . Any time you try a decent crime, you got 50 ways you're gonna fuck up. If you think of 25 of them, then you're a genius . . . and you ain't no genius."

Thu, 03/08/2012 - 17:19 | 2237277 JohnnyBriefcase
JohnnyBriefcase's picture

Boomers were born into this system and seemed (still to this day) perfectly willing to go against all logic and reason and accumulate mass quantites of unsustainable debt that they will never be able to pay off and pass it off to the younger generations.

Or are they just really, really stupid and "didn't see this coming"?

Thu, 03/08/2012 - 17:23 | 2237300 economics1996
economics1996's picture

I saw it coming in 1983 when Reagan turned his back on the American people, raised SS taxes, cut the top rate, and fucked the next generation.

That was when I became a Libertarian.

Thu, 03/08/2012 - 17:33 | 2237329 LowProfile
LowProfile's picture

But...  But... Reagan said Libertarianism was the heart of the Republican party!


Thu, 03/08/2012 - 18:03 | 2237439 GeorgeHayduke
GeorgeHayduke's picture

And here I've been told by my Republican friends (all 3 of them) that Reagan was GOD! I've tried to explain that Reagan was the father of the borrow, spend and screw the next generation policy that the Republicans embraced since his disastrous 8 years in the White House. But all critical though goes out the window with these folks once the Gipper's name is invoked.

Thu, 03/08/2012 - 18:20 | 2237492 wee-weed up
wee-weed up's picture

I'd have to say Obama has Reagan beat by a mile when it comes to "borrow, spend and screw the next generation."

Thu, 03/08/2012 - 18:23 | 2237505 JohnnyBriefcase
JohnnyBriefcase's picture

Don't give that puppet credit. They have perfected distraction and consolidated the "free press".

TV is way way more engrossing to the average consumerbot now than it was back then.

Thu, 03/08/2012 - 18:28 | 2237516 GeorgeHayduke
GeorgeHayduke's picture

Oh, I'm not defending Demoncrats. Heck, even the Dems became Republican-lite, corporate butt kissers after Reagan and have used the same tactic. Both Parties (as if there are two) have been driving this bus toward the cliff at top speed for a few decades.

The problem is, we're approaching the cliff right about now, but most folks haven't been looking out the windows. In fact, we may already be off the cliff and flying in a slight arc toward the bottom. Gravity will help the acceleration down soon enough.

Thu, 03/08/2012 - 22:29 | 2238295 Quaderratic Probing
Quaderratic Probing's picture

Cliff no longer matters computers will set stock price to any value you name, legislate gold illegal (again). Call for outright 50% cut in USA debt if you don't like it you lose the right to any and all trade with US banks and companies.

Thu, 03/08/2012 - 18:03 | 2237447 vast-dom
vast-dom's picture

u meant libertarian moron.

Thu, 03/08/2012 - 17:34 | 2237332 Shizzmoney
Shizzmoney's picture

Most who ran poker websites in the poker world (despite bills passed like the UEIGA) are of the baby boomer generation, like Phil Hellmuth, and claimed he didn't see it Black Friday coming (despite his site cheating players).

Yes, they are THAT Stupid.

Thu, 03/08/2012 - 19:41 | 2237731 4horse
4horse's picture

whole countries condemned because of bankers

entire peoples cursed over corrupt pols
                                        all bought&sold

whole generations to be betrayed because you are a plant

a plant
sown chaos
from some marketing dept
planted here like a bug
to entrap crap. which you're good at
like your bosses, with the mind of a morass
altogether a bog, of like underlying aspen
let's guess: dieffenbachia



Fri, 03/09/2012 - 05:16 | 2238946 chindit13
chindit13's picture

When I look at the debt figures for student debt, and see that it now exceeds total credit card debt, I wonder just how far from the tree the young acorns fell, given that they have accumulated “mass quantities of unsustainable debt which they will never be able to repay“.  To make matters worse, even though the student debt cannot be extinguished through bankruptcy, the deadbeats make themselves easy to hunt down, since they are usually outside an AAPL store waiting for the latest iteration of a gimcrack of which they already own all previous iterations.  Add this to the new young “champions of freedom”, like private data retailers Facebook and Google, I see that topping whatever madness the Boomers created is going to be a piece of cake.

None of that describes you? What? Collectivism and generalization are only for others?

By the way, the biggest chunks of national debt have been wrung up quite recently. The voting age is 18.  If you are over 18, please accept your share of the guilt.

Fri, 03/09/2012 - 07:18 | 2239029 JohnnyBriefcase
JohnnyBriefcase's picture

Hmm I wonder where the younger generation learned their financial bad habits from.

If only their irresponsible parents had taught them a thing or two about responsibility.

Thu, 03/08/2012 - 17:21 | 2237283 dwdollar
dwdollar's picture

Right... I'm sure the obvious Ponzi that is SS was the main topic of conversation when the Boomers were partying and getting high in the 60s and 70s.

Thu, 03/08/2012 - 17:26 | 2237308 aerojet
aerojet's picture

I don't care what anyone says, drugs fuck up your brain permanently.

Thu, 03/08/2012 - 17:36 | 2237345 Shizzmoney
Shizzmoney's picture

As you pop advils, tylenols, pain killers, Zoloft/Prozac, and Cialis when you get home.

Thu, 03/08/2012 - 17:41 | 2237365 LowProfile
LowProfile's picture


I don't care what anyone says, drugs fuck up your brain permanently.

Boy howdy!  I took a long course of this shit and my brain hasn't been the same since.

Started reading all sorts of weird shit on Austrian Economics, Agorism, History, etc.

Get you some!

Thu, 03/08/2012 - 17:47 | 2237393 JohnnyBriefcase
JohnnyBriefcase's picture

You're no daisy.

You're no daisy at all!

Thu, 03/08/2012 - 23:57 | 2238450 TheFourthStooge-ing
TheFourthStooge-ing's picture

aerojet must have been a little bit high when he said:

I don't care what anyone says, drugs fuck up your brain permanently.

Really? If that's true, then why do I have to buy more weed when I run out?


Thu, 03/08/2012 - 17:25 | 2237303 LowProfile
LowProfile's picture


It was the Silent Generation and GI generation that supported the Ponzi scheme programs.  The baby boomers, 1946-64, were not born yet.

Yeah, but the Boomers are the only ones left, and they had a chance to turn it around, but they chose socialism/crony capitalism and empire.  So fuck 'em.

You people are idiots sometimes.

Key word being "sometimes.

Thu, 03/08/2012 - 17:30 | 2237313 The Man in Room Five
The Man in Room Five's picture

Allowing an evil system to continue is just as bad as starting it.

Thu, 03/08/2012 - 17:54 | 2237417 Uncle Remus
Uncle Remus's picture

That is debatable.

Thu, 03/08/2012 - 18:17 | 2237477 Bastiat
Bastiat's picture

Then why haven't YOU ended it?

Thu, 03/08/2012 - 18:29 | 2237513 JohnnyBriefcase
JohnnyBriefcase's picture

The people who are even aware of the system probably account for 5% of the population. Of that probably 1% would ever think of doing anything to actually change it and they would just get suicided as soon as they made their intentions known.


Thu, 03/08/2012 - 18:55 | 2237593 LowProfile
LowProfile's picture


Then why haven't YOU ended it?

Hey, Rome wasn't burnt in a day.

Thu, 03/08/2012 - 18:23 | 2237501 Thomas Jefferson
Thomas Jefferson's picture

Granted.  Generational warfare is useless.   That being said.  Its the boomers who are voting for ass clown 1 and ass clown 2.

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