Federal Reserve Q4 2025 Z.1 “flow of funds” report.
Non-Financial Debt (NFD) expanded $3.987 TN during 2025, greater than all years excluding pandemic stimulus periods 2020 and 2021. Prior to 2020’s $6.862 TN debt monstrosity, 2007 held the record for annual NFD growth at $2.527 TN. Last year’s debt growth significantly exceeded 2024’s $3.501 TN. For further perspective, annual NFD growth averaged $1.874 TN for the decade 2010 through 2019. In the 15 years since the 2008 crisis, NFD has more than doubled (107%) to $80.719 TN, or 262% of GDP. This compares to 233% in 2007 and 192% to end the nineties.
At $1.930 TN, the increase in Treasury Securities accounted for almost half of 2025’s NFD growth – surpassed only in 2023 ($2.382 TN) and 2020 ($4.317 TN). Since the end of 2007, Treasury Securities have inflated an astonishing $25.576 TN, or 569%, to a record $36.054 TN. In one of history’s greatest Credit inflations, Treasury Securities as a percentage of GDP surged from 31% to 98%. Including the Agencies’ $12.843 TN, total Treasury/GSE debt has ballooned to a record 119% of GDP.
For Q4 2025, NFD expanded a seasonally adjusted and annualized rate (SAAR) of $3.915 TN, up significantly from Q4 2024’s $3.218 TN. Combined with Q3’s blistering SAAR $6.875 TN, it was the strongest six months of NFD expansion since the pandemic. Indicative of reckless Washington’s financial dominance, Federal Government debt expanded SAAR $2.682 TN during Q4. This compares to Household debt’s SAAR $688 billion increase, Total Business’s $522 billion, and State & Local Governments’ SAAR $23 billion. Curiously, Rest of World U.S. borrowings expanded SAAR $770 billion (second only to Q3 2021).
Bank Assets expanded nominal $379 billion during Q4, up from Q3’s $200 billion — and compared to Q4 2024’s $18 billion. Loan assets surged $344 billion, up from Q3’s $165 billion and Q4 ‘24’s $192 billion – for the strongest loan growth since Q4 2022. Mortgage Loans increased $63 billion (3.5% annualized), with Consumer Credit gaining $60 billion, the strongest quarter since Q4 ‘22. Business loans (“not elsewhere classified”) rose $220 billion – over the past four years second only to Q4 ‘24. Debt Securities holdings declined $33 billion to $6.413 TN, the first contraction in a year – led by the $42 billion fall in Corporate bonds (to a one-year low $906bn). Treasury holdings increased $21 billion to a record $1.962 TN, with one-year growth of $239 billion, or 13.9%.
As the banking system lends aggressively, Wall Street ballooning is unrelenting. Securities Broker/Dealer assets expanded another $147 billion, or 9.6% annualized, during Q4 – with one-year growth of $1.006 TN, or 19.1%. This easily surpassed 2006’s previous record $839 billion expansion. Broker/Dealer Loan assets surged $187 billion, or 25.5%, last year – second only to 2020’s $233 billion. Debt Securities holdings jumped a record $270 billion in 2025 – having more than doubled (116%) in 13 quarters to $1.299 TN.
When it comes to Bubble Dynamics, few areas compare to Broker/Dealer “repo” (repurchase agreements/securities lending) activities. For 2025, Broker/Dealer “repo” assets expanded $300 billion, or 17.7%, to a record $1.990 TN — surpassing 2004’s previous record quarterly expansion ($279bn). Broker/Dealer “repo” liabilities ballooned $492 billion, or 21.1%, to a record $2.828 TN – surpassing record 2023’s $484 billion and 2006’s $387 billion. Over 13 quarters, “repo” liabilities ballooned $1.214 TN, or 75%.
In a separate Z.1 category, Other Financial Businesses (the old “Funding Corps”) – Wall Street “funding subsidiaries, custodial accounts for reinvested collateral of securities lending operations” – jumped $67 billion, or 19.4% annualized, during the quarter to a record $1.444 TN – with one-year growth of $259 billion, or 21.8% (second only to 2020’s $360 billion).
System (total) “repo” (“Federal Funds and Securities Repurchase Agreements”) assets expanded $1.064 TN, or 15%, last year to a record $8.168 TN – second only to 2021’s $1.354 TN rise. Repo assets gained $297 billion, or 15.1% annualized, during Q4. Over 24 quarters, repo assets ballooned $3.355 TN, or 70%. Money fund “repo” holdings jumped $222 billion, or 32% annualized, during the quarter and $374 billion, 14.3%, y-o-y – to a record $2.994 TN (6-yr gain $1.752 TN, or 141%). Interestingly, ROW “repo” holdings fell $130 billion during the quarter to $1.473 TN (up $136bn, or 10.2% in ‘25).
Total Money Market Fund assets (MMFA) expanded $947 billion, or 13.1%, during 2025 to a record $8.190 TN (second to ‘23’s $1.134 TN). For Q4, MMFA jumped $416 billion, or 21.4% annualized – with historic 12-quarter ballooning of $2.967 TN, or 56.8%. MMFA Treasury holdings surged $285 billion during the quarter to a record $2.454 TN.
Total Debt Securities inflated $3.250 TN in 2025 to a record $65.151 TN, while Equities Securities inflated $17.533 TN to a record $111.355 TN. This pushed the inflation of Total Securities to an annual record $20.783 TN. Total Securities ballooned an unprecedented $55.293 TN, or 46%, over three historic Bubble years. For the quarter, Debt Securities increased another $628 billion and Total Equities $3.143 TN. Total Equities ended 2025 at a record 362% of GDP, up from previous annual peaks 182% (‘07) and 207% (‘99). At an unmatched 574%, Total Securities-to-GDP compares to previous cycle peaks 375% (‘07) and 358% (‘99).
ETFs inflated another $3.068 TN, or 29.8%, last year to a record $13.373 TN. Domestic Equities jumped $1.724 TN, or 25%, to $8.611 TN, with Taxable Bond ETFs rising $433 billion, or 26.7%, to $2.053 TN.
The Household balance sheet continues to be a fundamental Bubble manifestation and analytical focal point. Household Assets inflated $15.149 TN during 2025 to a record $205.613 TN. And with Liabilities increasing $662 billion (to $21.508 TN), Household Net Worth surged another $14.486 TN to a record $184.106 TN. Household Net Worth ended 2007 at a then record $68.272 TN. At 598% of GDP, Net Worth-to-GDP ended the year at a record (excluding pandemic 2020/2021). This compares to peak cycle years 2007 (483%) and 1999 (449%).
Explaining consumer spending resilience, Net Worth added another $2.173 TN during Q4. Net Worth inflated an unprecedented $40.358 TN, or 28%, over three years. For perspective, Net Worth expanded $24.0 TN over five mortgage finance Bubble years (2003 through 2007).
Household holdings of Financial Assets inflated $13.485 TN, or 10.3%, during 2025 to a record $143.866 TN – with three-year growth of $34.992 TN, or 32.1%. Household Financial Asset holdings ended the year at a (non-pandemic period) record 458% of GDP, up from cycle peaks 372% (Q3 ‘07) and 353% (Q1 2000). Equities holdings rose another $8.131 TN last year to a record $47.186 TN, and Mutual Funds added $1.352 TN to a record $13.680 TN. Equities/Mutual Funds ended the year at a record 194% of GDP, up from cycle peaks 105% (Q3 ‘07) and 116% (Q1 2000). Real Estate holdings added $1.052 TN for the year to $52.067 TN.
For 2025, Household Total Deposits expanded $705 billion to a record $15.144 TN, while Money Fund holdings rose $611 billion to a record $5.321 TN. Treasury holdings gained $318 billion to a record $2.945 TN. Over three historic years of monetary inflation, Treasury holdings inflated $1.286 TN (77.5%), Total Deposits $280 billion (2%), and Money Market Funds $2.224 TN (71.8%).
Also Bubble integral, Rest of World (ROW) holdings of U.S. financial assets inflated an annual record $8.388 TN (surpassing ‘24’s record $7.571 TN), or 14.7%, to an unprecedented $65.473 TN. Over nine quarters, ROW holdings inflated $19.787 TN, or 43.3%. Over this period, Total Equities surged $8.373 TN, or 69%, to $22.177 TN. Total Equities ended 2019 at $9.178 TN. In one of the more incredible data points, ROW U.S. holdings inflated $49.965 TN, or 322%, since 2008. It’s worth noting that ROW “repo” liabilities jumped $324 billion, or 19.9%, last year to $1.953 TN – with nine quarter growth of $480 billion, or 33%.
In short, it was another quarter of Federal Reserve data that further corroborated the Bubble thesis. I expect major deviations in Z.1 data over coming quarters.