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Wednesday, October 09, 2013

Loans and Deposits - Why the Economy Isn't Growing

http://viableopposition.blogspot.ca/2013/10/loans-and-deposits-why-economy-isnt.html

The red line shows deposits with all commercial banks and the blue line shows loans and leases with all commercial banks in billions of dollars.  Notice that until the Great Recession, the growth level in both deposits and loans and leases rose in tandem.  It is quite apparent that the tight relationship between deposits and loans broke down in the early part of 2009.  

Here is a graph showing the loan-to-deposit ratio and how it has dropped to levels not seen since the early 1980s:

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