Savings and government debt

The IS curve is use by economists to predict the demand for cash reserves as the interest changes. The idea is that a higher interest rate for deposits make people put more money in the bank for a year and keep less for reserve cash. From 1990 to 2008, interest rates held steady and cash reserves steadily decreased, people invested more and kept less cash reserves. Why? They forgot about the crash of 1982. Then the current crash, and reserves rose back up to normal levels, even though rates were zero. People feared another crash and wanted cash reserves.  So I would expect people to hold cash for quite some time after the last crash.

Dutrng the 90s, with the total economy decreasing reserves, the federal government was increasing reserves, counter cyclical says traditional economics.  Then under Bus, government begin decreasing reserves and the total economy did the same, pro cyclical.  Then we crashed. After the crash government kept on borrowing, nearly doubling the debt to GDP ratio while the economy, as a whole, built up its reserves again.

One quick takeaway is simple result from the series: A Republican president from California or Texas will crash the economy. 
  But it is not quite so simple as that. The real problem we are dealing with is California gone wacko.  Look at how California unemployment rate has begun to diverge since 1991. For Reagan and Bush, California is normal when DC debt is growing.  That broke down after the last= crash, and California is likely permanently broken. If I add the Florida unemployemnt rate we see the same pattern developing.  What is happening? Florida and California are our Club Med economies. They have difficulty maintaining reserves and their economies increasing dependent on government flows from DC, which has become volatile. As the deficit on DC decreases, these economies will falter and cause a downturn.