Three Month Treasury Bill Yields
The Graph of the Week brings some historical perspective, showing the three month Treasury Bill yields from 1960 to the present. The graph comes from Carl Tannenbaum's article "The Incredible Shrinking Banking Industry" in the October 2007 issue of Business Economics. The article was based on his NABE Presidential Address, given at the NABE Annual Meeting:
Figure 1 shows that the decade following the first oil shock of 1973 brought record levels of both interest rates and interest rate volatility.Many factors contributed to this development, but easy monetary and fiscal policy through the 1960s and 1970s certainly played a role.
The series of recessions that were endured during that decade battered loan portfolios and hampered profitability. Depositors that had once been content with three percent yields realized that their purchasing power was eroding at a rapid pace, and clamored for better returns.
The abstract of the article is here. The entire article is available to NABE members.