Fight disinformation: Sign up for the free Mother Jones Daily newsletter and follow the news that matters.

Via Zubin Jelveh, this chart comes from Princeton economics professor Hyun Song Shin.  The data is taken from the Fed’s Flow of Funds report, which shows you — unsurprisingly — how much money is flowing through various sectors of the economy.

Basically, from 1954 through 1980, the household sector grew 10x.  The corporate sector grew 10x. Commercial banks grew 10x.  And the securities sector grew 10x.  All very balanced.

The came the great deregulation. Between 1980 and 2008, the household, corporate, and commercial bank sectors once again grew by about 10x.  But securities dealers?  They exploded.  The securities sector grew by nearly 100x.

And then imploded, taking the rest of us with them.  Roughly speaking, though, the securities sector still needs to shrink by a factor of about five before they get back to the size they should be.  Here’s Shin:

Overall, it would be reasonable to speculate that the securities sector that emerges from the current crisis in sustainable form will be smaller, with shorter intermediation chains, perhaps less profitable in aggregate, and with less maturity transformation. The backdrop to this development will be the regulatory checks and balances that are aimed at moderating the fluctuations in leverage and balance sheet size that were instrumental in making the current financial crisis the most severe since the Great Depression.

I’m not feeling especially optimistic right now about the the creation of new “checks and balances that are aimed at moderating the fluctuations in leverage and balance sheet size,” but here’s hoping he’s right.

We've never been very good at being conservative.

And usually, that serves us well in doing the ambitious, hard-hitting journalism that you turn to Mother Jones for. But it also means we can't afford to come up short when it comes to scratching together the funds it takes to keep our team firing on all cylinders, and the truth is, we finished our budgeting cycle on June 30 about $100,000 short of our online goal.

This is no time to come up short. It's time to fight like hell, as our namesake would tell us to do, for a democracy where minority rule cannot impose an extreme agenda, where facts matter, and where accountability has a chance at the polls and in the press. If you value our reporting and you can right now, please help us dig out of the $100,000 hole we're starting our new budgeting cycle in with an always-needed and always-appreciated donation today.

payment methods

We've never been very good at being conservative.

And usually, that serves us well in doing the ambitious, hard-hitting journalism that you turn to Mother Jones for. But it also means we can't afford to come up short when it comes to scratching together the funds it takes to keep our team firing on all cylinders, and the truth is, we finished our budgeting cycle on June 30 about $100,000 short of our online goal.

This is no time to come up short. It's time to fight like hell, as our namesake would tell us to do, for a democracy where minority rule cannot impose an extreme agenda, where facts matter, and where accountability has a chance at the polls and in the press. If you value our reporting and you can right now, please help us dig out of the $100,000 hole we're starting our new budgeting cycle in with an always-needed and always-appreciated donation today.

payment methods

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate