<p>I just happened to stumble upon the following graph of total demand deposits in the US.</p>
<p><a href="https://i.sstatic.net/CzPd1.jpg" rel="nofollow noreferrer"><img src="https://i.sstatic.net/CzPd1.jpg" alt="enter image description here" /></a></p>
<p>I was very surprised to see essentially no growth between 2002 and 2008. I had heard that in the same period in the UK the money supply was growing at around 10% per year and I thought that the US had a very similar situation with an enormous housing bubble developing. Surely with all those ever growing mortgages being taken out, the total of demand deposits should have been growing like crazy. I feel like there is something I'm missing.</p>
<p>FYI: I am aware that demand deposits expire as the principal is repaid on existing loans - but surely if house prices were increasing then the rate of demand deposit creation should have been greater than the rate of demand deposit expiry.</p>

CC BY-SA 4.0
2022-04-24T02:59:29.580Z
Isn't a demand deposit just a checkings account 
/current account and essentially unrelated to mortgages?
Alex
CC BY-SA 4.0
2022-04-24T07:58:11.217Z
@Alex: Yes a demand deposit is one and the same thing as a current account/ checking account ... but I thought that the money banks create for mortgages would end up in these kinds of account... where else?
Mick
CC BY-SA 4.0
2022-04-24T20:04:40.380Z
You may get your mortgage paid out to your current account but immediately send it to the sellers current account. It's extremely unlikely the seller will keep the money at a near zero interest paying account. The buyer needs to pay back the mortgage every month (usually to a designated account that is not a current account with the bank), meaning his/her current account has (large) monthly outflows. Ultimately, a current account is an account for receiving and paying money quickly.
Alex
<money-supply>
Demand deposits in the US between 2002-2008 - why no growth?
Mick
# Demand deposits in the US between 2002-2008 - why no growth?

(Asked by: username_0 on 2022-04-23)

I just happened to stumble upon the following graph of total demand deposits in the US.

[![enter image description here](https://i.sstatic.net/CzPd1.jpg)](https://i.sstatic.net/CzPd1.jpg)

I was very surprised to see essentially no growth between 2002 and 2008. I had heard that in the same period in the UK the money supply was growing at around 10% per year and I thought that the US had a very similar situation with an enormous housing bubble developing. Surely with all those ever growing mortgages being taken out, the total of demand deposits should have been growing like crazy. I feel like there is something I'm missing.

FYI: I am aware that demand deposits expire as the principal is repaid on existing loans - but surely if house prices were increasing then the rate of demand deposit creation should have been greater than the rate of demand deposit expiry.

**Tags:** money-supply

> **Comments:**
> **username_1**: Isn't a demand deposit just a checkings account  /current account and essentially unrelated to mortgages?  
> **username_0**: @username_1: Yes a demand deposit is one and the same thing as a current account/ checking account ... but I thought that the money banks create for mortgages would end up in these kinds of account... where else?  
> **username_1**: You may get your mortgage paid out to your current account but immediately send it to the sellers current account. It's extremely unlikely the seller will keep the money at a near zero interest paying account. The buyer needs to pay back the mortgage every month (usually to a designated account that is not a current account with the bank), meaning his/her current account has (large) monthly outflows. Ultimately, a current account is an account for receiving and paying money quickly.  

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## 0 answers

