by Vern Gowdie, Daily Reckoning.com.au:
Since the early 1980’s the financial sector has ridden an extraordinary wave of prosperity. The combination of increasing debt levels and rising share markets turbo-charged the growth in the banking and investment industries.
To highlight the strong correlation between the fortunes of the financial sector and credit booms, let’s look at two images. The first from Hoisington Investment Management is titled ‘US Total Debt since 1870’.
The second graph was obtained from Thomas Philippon’s, November 2008 research paper titled ‘The Evolution of the US Financial Industry from 1860 to 2007: Theory and Evidence’.
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