I was reading an article about recently released economic data the other day. Which article it was isn’t really important, but in it was cited a statistic about consumer credit rising to levels not seen since July of 2012 and it gave me an idea. Well, at least most of us have heard rhetoric from critics of the “Fed’s low interest rate policy” (bubble fear monger rhetoric in less charitable terms) regarding irrational public behavior spawned by ultra-low interest rates, and when I read about the consumer credit statistic having not been at present levels since July of 2012 I wondered how that could possibly be if the public has been gorging on credit since the FF rate hit near zero in Q4 of 2008. So I paid a visit to the Federal Reserve website and dug up some numbers to put in picture form to see if I could find a little more reality than conjecture.
The graph below shows the average monthly increase in total consumer credit along with the Federal Funds rate since 2000. I must apologize to the bubble fear mongers… I mean to the Fed’s critics because the consumer credit data doesn’t appear to support their thesis that low interest rates mean mass gorging on credit, but rather the opposite. Gee, I wonder where all that “easy money” went. Better luck next time.