Q2 '25 Z.1 and September 10, 2025?
Doug Nolan
Once a quarter, Bubble Analysis deciphers a bevy of new Fed data.
It’s been quite a ride; epic monetary inflation.
Outstanding Treasury securities were about $3.3 TN when I started my quarterly Z.1 analyses in 1999.
It closed June at $28.5 TN. Agency Securities has more than tripled to $12.4 TN.
Total Non-Financial Debt (NFD) inflated from $18 TN to $78 TN.
Total (Debt and Equities) Securities have ballooned from $34 TN to $163 TN.
Household Net Worth inflated from $40 TN to $176 TN.
Money Market Fund Assets (MMFA) ended 1999 at $1.6 TN and finished this June at $7.5 TN.
System Repo Assets have ballooned from $1.7 TN to $7.8 TN.
Bank Deposits inflated from $4.5 TN to $21.3 TN – Banking system Assets $7.5 TN to $28.6 TN.
Broker/Dealers Assets have tripled to $6.0 TN.
Rest of World (ROW) holdings of U.S. financial assets have ballooned from $7 TN to $60 TN.
Last quarter’s Z.1 CBB highlighted “Real Economy Sphere vs. Financial Sphere” analysis.
The overheated financial sectors posted another quarter of booming growth.
Overall NFD growth slowed to a seasonally adjusted and annualized (SAAR) $2.324 TN, down from Q1’s SAAR $2.681 TN and Q2 2024’s $2.783 TN.
System Credit growth was held back by a temporary drop in federal borrowings (SAAR $471bn vs. $1.057 TN).
At SAAR $1.257 TN, growth in financial sector borrowings was down somewhat Q/Q, but remains quite elevated (2023 $346bn and 2024 $575bn).
The highly levered Banks and Broker/Dealers further expanded hefty securities portfolios.
The Z.1 category “Domestic Financial Sectors” (DFS) surged $5.117 TN, or 14.1% annualized, during Q2 to a record $150 TN.
DFS inflated $10.230 TN y-o-y and $42.069 TN, or 39%, over 22 extraordinary quarters.
Outstanding Debt Securities increased nominal $436 billion to a record $63.149 TN, with one-year growth of $3.037 TN (5.1%).
Total Equities surged $9.375 TN (41.5% ann.) to a record $99.797 TN.
Equities inflated $12.611 TN y-o-y (14.5%) and $48.987 TN, or 96%, over six years.
Equities-to-GDP rose to a non-Covid record 329% of GDP.
This compares to 249% to end 2019, and cycle peaks 188% (Q3 2007) and 210% (Q1 2000).
At $162.9 TN, Total (Debt and Equities) Securities ended June at a non-Covid record 537% of GDP.
This compares to previous cycle peaks 376% (Q3 2007) and 357% (Q1 2000) – and the end of the eighties’ (“decade of greed”) 175%.
System “Repo” Assets jumped $291 billion, or 15% annualized, to a record $8.080 TN.
Repo Assets inflated $1.090 TN, or 15.6% y-o-y, and $3.267 TN, or 68% over 22 quarters.
Money Market Fund Assets expanded $83 billion (4.5% annualized) to a record $7.481 TN, with one-year inflation of $933 billion (14.2%) and 22-quarter ballooning of $3.479 TN, or 87%.
MMFA Repo holdings surged $284 billion, or 40.3% annualized, to $3.105 TN.
Repo holdings inflated $490 billion, or 18.8%, y-o-y and $1.863 TN, or 150%, over 22 quarters.
Treasury holdings declined $267 billion during Q2 to $2.614 TN, while Agency Securities increased $90 billion to a record $993 billion.
MMFA Agency Securities holdings grew $252 billion, or 34%, y-o-y and $501 billion, or 102%, over 11 quarters.
Bank Asset growth moderated somewhat to $301 billion, or 4.3% annualized, to a record $28.576 TN.
Loan growth surged to $316 billion, or 8.4% annualized – the fastest growth since Q4 2022 - to a record $15.353 TN (up $633bn y-o-y, 4.3%).
Loans NEC (“not elsewhere classified”/mostly business) expanded $217 billion (16.4% ann.) to a record $5.513 TN, with y-o-y growth of $519 billion (10.4%) and 22-quarter ballooning of $1.603 TN (41%).
Mortgage loans increased $67 billion to a record $7.114 TN, the largest increase in two years.
Consumer Credit increased $30 billion (4.5% ann.) to $2.696 TN, the strongest expansion in six quarters.
Repo Assets gained $35 billion to $817 billion, with one-year growth of $164 billion, or 25% (strongest since 2019).
Banking system Debt Securities holdings gained $106 billion to a four-year high $6.336 TN (up $364bn y-o-y, 6.1%).
Treasury holdings surged $108 billion, or 24.9% annualized, to a record $1.849 TN.
Treasury holdings were up $245 billion, or 15.3% y-o-y, and an unprecedented $970 billion, or 110%, over 22 quarters.
On the Liability side, Bank Repos expanded $67 billion to $814 billion.
Total Deposits increased $111 billion to a record $21.256 TN.
Deposits were up $886 billion y-o-y (4.4%), with 22-quarter growth a historic $5.730 TN, or 37%.
Broker/Dealer Assets expanded another $259 billion, or 18% annualized, to a record $6.018 TN.
Assets surged $849 billion, or 16.4%, y-o-y; $1.594 TN (36%) over 11 quarters; and $2.076 TN, or 53%, in 22 quarters.
Broker/Dealer Loan assets jumped $75.4 billion (40.6% ann.) to $818 billion – the strongest quarterly growth in four years.
Loans expanded $143 billion y-o-y, or 21.2%.
Broker/Dealer Debt Securities holdings surged $106 billion, or 36.3% annualized, to a record $1.279 TN.
Debt Securities inflated $316 billion, or 32.8% annualized, over the past year, and $677 billion, or 112%, over 11 quarters.
Treasury holdings increased $26 billion (21.3% ann.) during Q2; $155 billion (43%) y-o-y; and $287 billion (127%) over 11 quarters.
Ballooning Agency Securities holdings (to a record $624 billion) were even more notable: Q2 $57 billion (40.6% ann.); one year $479 billion (332%); and 11 quarters $557 billion (815%).
The only comparable period was the two-year doubling of Agency Securities into the 2008 crisis.
Broker/Dealer Miscellaneous Assets surged $109 billion (27% ann.) to $1.745 TN (high since Q3 2008).
One-year growth increased to $173 billion, or 11%, with 22 quarter ballooning of $511 billion, or 41%.
After Q1’s blistering $241 billion expansion, Repo Asset growth slowed to $75 billion - to $1.855 TN.
Repo Assets expanded $147 billion y-o-y (8.6%) and $525 billion, or 39%, over 11 quarters.
How did the Broker/Dealers finance such lavish asset growth?
Growth slowed, though the $15 billion increase pushed “Repo” Liabilities to $2.713 TN – the high since Q3 2008 - following Q1’s monster $362 billion surge.
This put one-year growth at $333 billion, or 14%, with 11-quarter ballooning of $1.100 TN, or 68%.
Miscellaneous Liabilities jumped $147 billion to $1.265 TN – the high since pre-crisis Q3 2008.
It was the strongest quarterly growth since Q2 2007.
The liability Loans increased $69 billion (24% ann.) to $1.248 TN, with one-year growth of $208 billion, or 20%.
“Other Financial Businesses” – formerly “Funding Corps” – “Includes funding subsidiaries, custodial accounts for reinvested collateral of securities lending operations.”
Assets expanded $76.8 billion, or 24% annualized, to $1.353 TN – the high back to Q4 2008.
One-year growth accelerated to $266.7 billion, or 24.4%, with 22-quarter growth of $726 billion, or 115%.
It’s worth noting that “Funding Corp” Assets surged $267 billion, or 22%, in the nine quarters preceding the 2008 financial crisis.
Funding Corps invest a portion of incoming balances (i.e., proceeds from short sales) into Open Market Paper (commercial paper), with the increase in Funding Corp holdings accounting for $63 billion of the total $71 billion Q2 gain in system Open Market Paper.
System Asset-Backed Securities (ABS) increased $32 billion (7.6% ann.) to $1.728 TN – the high since Q1 2013. At $179 billion (11.6%), one-year growth was the strongest in three years.
ABS inflated $467 billion, or 37%, over four years.
Exchange Traded Funds (ETF) inflated $1.123 TN, or 43.3% annualized, during Q2 to a record $11.492 TN, with one-year growth of $2.349 TN, or 25.7%.
ETFs ballooned $7.721 TN, or 205%, over the past 25 quarters.
Domestic Equities ETFs surged $788 billion during Q2, or 47.2% annualized, to a record $7.468 TN.
Equities ETFs ballooned $1.530 TN, or 25.8% y-o-y, and an incredible $5.277 TN, or 241%, over the past 25 quarters.
Household Assets inflated $7.269 TN during Q2, the largest gain since coming out of the covid crisis (Q2 2021).
Assets were up $10.446 TN, or 5.6%, y-o-y, with 21-quarter growth of $69.818 TN, or 54.8%.
Household Liabilities increased $183 billion (3.5% annualized), the largest increase since Q4 2022.
Household Net Worth (Assets less Liabilities) jumped $7.086 TN, or 16.8% annualized, to a record $176.293 TN.
Net Worth was up $10.133 TN over one year (6.1%); $29.996 TN over three years (19.7%); and $65.388 TN, or 59%, over 21 quarters.
Household Net Worth rose to (a non-Covid record) 581% of GDP, which compares to 534% to end 2019 and previous cycle peaks 487% (Q1 2007) and 443% (Q1 2000).
Inflating Household wealth comes from all directions.
Real Estate holdings increased $1.236 TN (9.5% ann.) to a record $53.224 TN – with 21 quarter growth of $19.042 TN, or 55.7%.
Meanwhile, Household Financial Assets inflated $5.847 TN, or 18.2% annualized, to a record $134.590 TN.
Financial Assets increased to 443% of GDP.
This compares to Q4 2019’s 428%, and the previous cycle peaks 372% (Q3 2007) and 353% (Q1 2000).
Household Debt Securities holdings expanded $93 billion to a record $5.844 TN.
Debt holdings gained $277 billion y-o-y (4.9%); $2.720 TN over three years (86%); and $1.589 TN (37%) over 21 quarters.
Household Equities surged $3.734 TN (39% ann.) to a record $41.790 TN - with three-year growth of $14.980 TN (56%), and a 21-quarter surge of $25.456 TN, or 156%.
With Mutual Fund holdings rising to $12.759 TN, Total (mostly) Equities expanded to a record $54.549 TN, or 180% of GDP.
This compares to Q4 2019’s 142% and previous cycle peaks 105% (Q3 2007) and 116% (Q1 2000).
Household Treasury holdings gained another $58 billion to a record $2.751 TN, expanding $253 billion (10.1%) over one year and $2.048 TN (291%) over three years.
Money Market (MM) holdings jumped $53.4 billion during Q2 to a record $4.876 TN.
MM inflated $682 billion (16.3%) y-o-y and $2.036 TN over three years (72%).
The expansion of total Treasuries, Agency Securities, Bank Deposits and Money Fund holdings slowed to $102 billion during the quarter – with one-year growth of $1.418 TN (6.5%) and unprecedented 21-quarter inflation of $6.986 TN (43%).
Household Assets-to-GDP rose to 650% (previous cycle peaks 584% 513%).
Financial Asset holdings increased to 443% of GDP, up from Q4 2019’s 428%, and the previous cycle peaks 372% (Q3 2007) and 353% (Q1 2000).
In the most consequential of these ratios, Household Net Worth jumped to (non-Covid GDP contraction record) 581% of GDP, up from 2019’s 534% and previous peaks 487% (Q1 2007) and 443% (Q1 2000).
Federal Reserve Assets declined $51 billion during Q2 to $5.737 TN.
Total Fed Liabilities contracted $54 billion to $6.632 TN.
Life Insurance Assets inflated $336 billion for the quarter to a record $10.719 TN, with one-year growth of $721 billion, or 7.2%.
Finance Company Assets expanded $32 billion to $1.728 TN, with one-year growth of $180 billion, or 11.6%.
Federal expenditures of SAAR $7.340 TN were up 6.9% versus Q2 2024, with Receipts of SAAR $5.593 TN increasing 10.3%.
Rest of World (ROW) holdings of U.S. financial assets surged a quarterly record $4.136 TN, or 29% annualized, during Q2 to an all-time high $60.637 TN.
This put one-year growth at $6.878 TN, or 12.8%, with 19-quarter ballooning of $21.921 TN, or 12.8%.
Debt Securities holdings gained $286 billion (7.6% ann.) during Q2 and $1.405 TN, or 10.1%, y-o-y.
U.S. Corporate Bond holdings jumped $189 billion, or 17.2% annualized, to a record $4.597 TN, with one-year growth of $468 billion, or 11.3%.
Treasury Securities increased $96 billion during the quarter to a record $9.146 TN, with one-year growth of $896 billion (10.9%) and 19-quarter ballooning of $1.892 TN, or 26%.
Agency holdings flatlined at $1.366 TN (up $20bn y-o-y).
Repo Assets expanded $34 billion to a record $1.528 TN (up $153bn y-o-y, 11%), with 19-quarter ballooning of $668 billion, or 78%.
ROW Total Equities (Equities & Mutual Funds) inflated $2.000 TN, or 45% annualized, during Q2 to a record $19.648 TN.
Total Equities ballooned $2.970 TN, or 17.8% y-o-y, and $9.541, or 94%, over 19 quarters.
On the ROW Liabilities side, Repo Liabilities jumped $84 billion, or 17.6% annualized, to a record $1.980 TN.
Repo Liabilities inflated $322 billion, or 19.4%, y-o-y and $774 billion, or 64%, over 19 quarters.
September 11, 2001.
February 24, 2022.
October 27, 2023.
September 10, 2025?
There are individual days in our lives that changed history.
I’ll leave it to others to debate the “costs and benefits” of the post-9/11 “war on terror.”
It certainly inflicted disparate monumental costs on our nation.
In 2023, the Ukrainian nation responded with incredible courage to the Russian invasion.
Future historians will opine on the Israeli government’s response to the most heinous Hamas terrorist attack.
I feared for Israel’s future when an IDF official was quoted just days after the attack:
“Gaza will eventually turn into a city of tents.
There will be no buildings.”
How will the heinous assassination of Charlie Kirk impact our deeply fractured nation?
At such a critical juncture, many of us deeply appreciate the distinguished leadership provided by Utah Governor Spencer Cox:
“This is our moment.
Do we escalate or do we find an off-ramp?”
“We can return violence with violence, we can return hate with hate, and that’s the problem with political violence – it metastasizes because we can always point the finger at the other side.
At some point, we have to find an offramp, or else it’s going to get much, much worse.
These are choices that we can make.
History will dictate if this is a turning point for our country, but every single one of us gets to choose right now if this is a turning point for us.”
“To my young friends out there, you are inheriting a country where politics feels like rage.
It feels like rage is the only option.
Our generation has an opportunity to build a culture that is very different than what we are suffering through right now.
Not by pretending differences don't matter, but by embracing our differences and having those hard conversations.”
“Over the past 48 hours, I have been as angry as I have ever been - as sad as I have ever been.
As anger pushed me to the brink, it was actually Charlie’s words that pulled me back…
Charlie said, when people stop talking, that’s when you get violence.
He said, “the weak can never forgive. Forgiveness is the attribute of the strong.
The only way out of the labyrinth of suffering is to forgive.
Welcome without judgment.
Love without condition.
Give without limit.’
He said, ‘always forgive your enemies, nothing annoys them so much.’
A few months ago… Charlie posted to social media: ‘When things are moving very fast, and people are losing their minds, it’s important to stay grounded.
Turn off your phone.
Read scripture.
Spend time with friends.
And remember Internet fury is not real life.
It’s going to be okay.’
He again said, ‘when you stop having a human connection with someone you disagree with, it becomes a lot easier to commit violence.’
He said, “what we as a culture have to get back to is being able to have reasonable agreement where violence is not an option.”
It's as if I've lost a brother.
I wasn’t aware of this until after his tragic death.
Charlie and I shared something special – a wonderful passion.
September 12 – Eugene Register Guard:
“Charlie Kirk, a conservative activist who was shot and killed Sept. 10 at a college event in Utah, was a well-known Oregon Ducks supporter.
In a statement addressing the nation Sept. 12, his wife, Erika, said the Illinois native loved the MLB's Chicago Cubs and the Ducks.
‘My goodness, did he love the Oregon Ducks,’ Erika Kirk said Sept. 12.
‘He’d want me to say ‘go Ducks’, so I have to since they play on Saturday.
So go Ducks.’”
Right now, his controversial politics are irrelevant to me.
We shared a great experience together, a classic University of Oregon Ducks vs. the Ohio State Buckeyes football game at a deafening Autzen Stadium last fall.
Today, many are left devastated, especially his family and the younger generation he so inspired.
Right, left and center, it was a sad and ominous week for our United States of America.
Something quite dangerous is unfolding in our country.
According to Mass Shooting Tracker, there have been 357 mass shootings so far this year.
There was a school shooting in Colorado the same day as Charlie Kirk’s assassination.
“They” didn’t commit that shooting.
Desmond Holly committed the heinous crime.
“They” didn’t assassinate Charlie Kirk.
The cold-blooded murderer was Tyler Robinson, not the Democrats, and not the “radical left”.
The assassin is said to be from a good home and community, was a top student, was not affiliated with a political party, and somehow became perilously radicalized.
Our nation is dealing with very serious issues of mental health and radicalization – particularly with young men. Social media is inciting hatred and violence.
It has become so lucrative for some media and “influencers” to foment polarizing and emotionally charged views.
When there’s a school shooting, the community doesn’t fracture and blame the other evil enemy side.
We need a bipartisan group of leaders that will promote a much more constructive response to what, most regrettably, will be recurring acts of domestic terrorism.
The course we’re on right now is spiraling toward some elements of civil war.
Friday evening, September 12, 2025. The Sean Hannity Show
The White House’s Stephen Miller:
“The Democrat party, its pundits, its allies, the educators, for ten years have waged a campaign of eliminationist rhetoric against President Trump, against Republicans, against MAGA, against Trump officials.
It has been willful and deliberate, Sean.
The rhetoric that you played – the messages that you played in that clip – are the same exact rhetoric and messages that are used by the assassins – that are used by the two assassins who tried to kill Donald Trump.
That are used by the assassin who claimed the life of my friend, an American hero, Charlie Kirk.
This is willful and deliberate radicalization.
They know what they’re doing.
Our universities in many cases have become incubators for extremism.
They become the equivalent of madrassas for jihadism.
There is a domestic terrorism movement in this country.
When you see these organized doxing campaigns, where the left calls people ‘enemies of the Republic’, calls them fascists, says they’re Nazis, says they’re evil, says they have to be removed.
And then prints their addresses.
What do you think they’re trying to do?
They are trying to inspire someone to murder them.
That is their objective.
That is their intent.
And when you see online, Sean, as we’ve seen for the last few days: tape after tape after tape of federal workers, bureaucrats, staffers in the Pentagon, educators, professors, healthcare workers, nurses celebrating the assassination of Charlie Kirk.
These are radicalized people.
There is a domestic terrorism movement in this country.
And let me tell you something I haven’t shared with anybody: the last message that Charlie Kirk gave to me before he joined his creator in Heaven was he said we have to dismantle and take on the radical left organizations in this country that are fomenting violence.
That was the last message that he sent me before that assassin stole him from all of us.
And we are going to do that.
Under President Trump’s leadership, I don’t care how, it could be a RICO charge, a conspiracy charge, conspiracy against the United States, insurrection.
But we are going to do what it takes to dismantle the organizations and the entities that are fomenting riots, that are doxing, that are trying to inspire terrorism, that are committing acts of wanton violence.
It has to stop.
My message is to all the domestic terrorists in the country spreading this evil hate: you want us to live in fear; we will not live in fear.
But you will live in exile.
Because the power of law enforcement under President Trump’s leadership will be used to find you, used to take away your money, take away your power and, if you have broken the law, to take away your freedom, Sean.”
Sean Hannity: “Well said, Stephen Miller.”
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