According to the Federal Reserve, loans and leases on the books of US commercial banks in the United States totaled in the neighborhood of $6.785 trillion in December 2007. The amount of deposits banks had to cover these loans totaled $6.664 trillion. In other words, banks were fully loaned up. Also according to the Fed, loans and leases at US commercial banks were about $8.518 trillion in November 2015, and banks had around $10.962 trillion in deposits.
Further, foreign investors a substantial percent of outstanding American debt, public and private, a little less than $10 trillion. So, no matter how you slice it, the US economy was highly leveraged and highly indebted to third parties. If we caught a cold, the rest of the world was going to catch pneumonia. As we all well know, we did indeed get sick in 2008, and the rest of the world felt it and then some …Read On…