FINRA Margin Debt Statistics
Margin debt is a key indicator of market sentiment and systemic risk. By tracking the amount of capital borrowed against securities, investors can identify periods of extreme speculation. Our analysis adds context by adjusting debt levels for Inflation (CPI) and Money Supply (M2), revealing the true relative scale of leverage in the financial system.
Nominal vs Real Value
Comparing current margin debt to 2000 or 2008 without adjusting for inflation is misleading. By using the Consumer Price Index (CPI), we normalize historical data to today's dollar value. This allows for a fair comparison of leverage intensity across different market cycles, highlighting when debt levels truly reach "danger zones" in real terms.
The M2 Liquidity Context
The M2 Money Supply ratio is perhaps the most critical lens for margin debt. As the total amount of money in the economy grows, debt levels naturally rise. By calculating the ratio of Margin Debt to M2, we can see if leverage is growing faster than the monetary base itself. A spike in this ratio often signals that the market is over-extended relative to available liquidity.