That's the last time M1 was at the $1.4 trillion level.
Americans haven't looked back since.
Since that date in 2008, hoarding of spending money has increased at a rate north of 66% overall. Compare that to the previous four year period from October 2004 to October 2008 when money in consumers' spending accounts increased only 8.4%.
Theoretically, in excess of $1 trillion has been removed from consumer spending over the four year period since 2008, but it has been kept in such a way that it is ready to spend, suggesting Americans have been waiting to spend the money, preparing to spend the money, or just plain saving the money in the only accounts they own where they can keep it.
I'll go with the latter.
This is an enormous sum when compared with the actual dollar increase in GDP for the three years from 2009 through Q3 2012 annualized, which is a measly $1.84 trillion. Assuming non-crisis conditions, however, these monies might have been spent instead of saved and GDP would have increased to at least $2.84 trillion instead of $1.84 trillion, or as much as 35% higher than the reality.
I'll go with the latter.
This is an enormous sum when compared with the actual dollar increase in GDP for the three years from 2009 through Q3 2012 annualized, which is a measly $1.84 trillion. Assuming non-crisis conditions, however, these monies might have been spent instead of saved and GDP would have increased to at least $2.84 trillion instead of $1.84 trillion, or as much as 35% higher than the reality.
Parenthetically, notice the fear represented by the near verticality of allocation to this category during the debt ceiling crisis of Summer 2011, and then the resumption of the trend upward.
Another such episode will be upon us shortly.
