Government and Private Sector GDP Components from 1929 to 1950

Notice that a wartime government GDP component increased sharply from 1942 to 1945 resulting in a greater GDP growth. However, the living standards in the US during WW2 declined inspite of higer GDP numbers. Prosperity returned only after war ended and government spending collapsed allowing the private sector component to nearly doubled a single year, 1946. Even as the government spending decreased, leading to a contraction in a GDP growth, the post-war years were more prosperous than the war and pre-war era. 

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Federal Debt And Budget

FEDERAL DEBT 1940 – 2016 (PDF)   (XLS)

SURPLUSES OR DEFICITS (–): 1789–2020 (PDF)   (XLS)

Provides data on budget receipts, outlays, surpluses or deficits, Federal debt, and Federal employment over an extended time period, generally from 1940 or earlier to 2016 or 2020. To the extent feasible, the data have been adjusted to provide consistency with the 2016 Budget and to provide comparability over time.

 

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FISCAL YEAR 2016 HISTORICAL TABLES

Source: https://www.whitehouse.gov/omb/budget/Historicals

Why the Dollar’s Reign Is Near an End

The single most astonishing fact about foreign exchange is not the high volume of transactions, as incredible as that growth has been. Nor is it the volatility of currency rates, as wild as the markets are these days.

Instead, it’s the extent to which the market remains dollar-centric.

Consider this: When a South Korean wine wholesaler wants to import Chilean cabernet, the Korean importer buys U.S. dollars, not pesos, with which to pay the Chilean exporter. Indeed, the dollar is virtually the exclusive vehicle for foreign-exchange transactions between Chile and Korea, despite the fact that less than 20% of the merchandise trade of both countries is with the U.S.

Chile and Korea are hardly an anomaly: Fully 85% of foreign-exchange transactions world-wide are trades of other currencies for dollars. What’s more, what is true of foreign-exchange transactions is true of other international business. The Organization of Petroleum Exporting Countries sets the price of oil in dollars. The dollar is the currency of denomination of half of all international debt securities. More than 60% of the foreign reserves of central banks and governments are in dollars.

The greenback, in other words, is not just America’s currency. It’s the world’s.

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Excess Reserves and M2 Money Supply Chart

Reserves of depository institutions US excess reservesUS M1 M2 Money Supply Charts_Page_5

What we see here is that the banks are holding excess reserves in excess of  $1.7 trillions, this is not part of the money in circulation and does not effect market prices. However, M2 money supply incresed by $3.2 trillions since the beginning of great recession in December of 2007 and this money definitely does affect prices.

Below is the M3 chart, FED stopped publishing M3 numbers so the chart only shows figures up to 2006.

M3 Money Supply 1959 to 2006

 

Below is the Federal Reserve balance sheet dated 2013-08-14. The FED buys assets with the money it creates adding to the money supply in addition to the monetary base. Total asset figure is $3.68 trillions, this money is in circulation.

FED Assets and Liabilities