Horrifying h3 fed data: Banking system officially insolvent?

[*T*]

This freaked me out a bit, to be honest. I think the banking system may be officially insolvent:

Notice the amazing drop off in non-borrowed bank reserves
http://research.stlouisfed.org/fred2/data/BOGNONBR_Max_630_378.png

Notice also that the gap is being filled by the fed
http://research.stlouisfed.org/fred2/data/BORROW_Max_630_378.png

...so the fed's liquidity is not going to the real economy but is just filling in the black hole in bank's balance sheets, to try to support lending.

And a good explanation here:
http://www.greenrushcapital.com/fed.html

Any ideas anyone? Have I got the wrong end of the stick?

[FRED]

This freaked me out a bit, to be honest. I think the banking system may be officially insolvent:

Notice the amazing drop off in non-borrowed bank reserves
http://research.stlouisfed.org/fred2/data/BOGNONBR_Max_630_378.png

Notice also that the gap is being filled by the fed
http://research.stlouisfed.org/fred2/data/BORROW_Max_630_378.png

...so the fed's liquidity is not going to the real economy but is just filling in the black hole in bank's balance sheets, to try to support lending.

And a good explanation here:
http://www.greenrushcapital.com/fed.html

Any ideas anyone? Have I got the wrong end of the stick?

We took this by Dr. Hudson and Dr. Atlee a few weeks ago and both interpreted the net non-borrowed reserves as indicating an unwillingness of banks to borrow from each other and the latter a willingness of the Fed to make up the difference.

Here (http://piggington.com/bank_reserve_requirements_and_the_taf) is a good explanation by an expert in the industry.

Here (http://www.tickerforum.org/cgi-ticker/akcs-www?post=27325) is the non-professional and apparently incorrect explanation here that he is referring to.

[bart]

We also have this waiting in the wings:


"The Chairman noted that the President had recently signed the Financial Services Regulatory Relief Act of 2006, which among its provisions gave the Federal Reserve discretion, beginning October 2011, both to pay interest on reserve balances and to reduce further or eliminate reserve requirements. The Act potentially has important implications for many aspects of the Federal Reserve's operations" Source: Fed minutes from Oct 2006 (http://www.federalreserve.gov/FOMC/MINUTES/20061025.htm) (emphasis mine)

[c1ue]

I'm not sure which post is being referring to, but there was a note about liquidity vs. solvency.

While I do understand the point that the TAF is probably one of the cheaper ways to get liquidity, would not the danger of insolvency also exist in this situation?

Or to put it another way:

a bank WITH deposits and WITH TAF has lots of liquidity and is solvent.

a bank WITHOUT deposits and WITH TAF could be liquid and solvent, or equally could be insolvent and liquid.

Though this sounds like a physics lecture or perhaps a mixology discussion on black and tans, the distinction seem important to me.

[bart]

I don't know if this will help or not c1ue, but:


There were only 52 bidders at the last TAF auction
Successful bidders must have collateral, even though the collateral accepted these days isn't always strictly AAA
Insolvent does automatically not mean a bank will go away or not meet its obligations
Insolvent banks in Japan in the '90s are still around
Behind the scenes operations do exist

[c1ue]

Bart,

Mish has talked at length about zombie banks in Japan in the '90s; I firmly believe we're looking at the same thing now.

The recent financial sector bounce is the first dead cat wave...

[*T*]

More from the greenrush folks on this
http://www.greenrushcapital.com/greenrush_dr_strangemath.pdf (PDF)

and a related iTulip thread
http://www.itulip.com/forums/showthread.php?t=3231

[krakknisse]

Checked in on the Fed's data. Didn't find anyone else commenting on it. This release on March 20th, 2008, latest data preliminary from March 12th:
http://www.federalreserve.gov/releases/h3/Current/
The not seasonally adjusted data are here, showing a slightly worse picture:
http://www.federalreserve.gov/releases/h3/hist/h3hist4.txt

Any comments? Non-borrowed reserves are still negative, -17 billion. I'm also noting that the TAF accounts for 7% of the monetary base. Wouldn't it be fun if every American took $100 out of his/her checking account tomorrow, or better yet, take out $1000?

I can read the words but don't quite get the "don't worry" attitude:
http://www.federalreserve.gov/releases/h3/nonborrowedreserves.htm
and this:
http://www.bloomberg.com/apps/news?pid=20601039&refer=columnist_baum&sid=a7EAJelhvLh0

To me, the amount of debt/credit is declining/imploding, demand is still there, i.e. the price is going up. Cheaper to lend at the Fed. So this is more of a symptom than a disaster. The Fed has potentially infinite reserves, so no "bank run" is possible. But if the non-borrowed reserves increase, then sooner or later the Fed must increase the monetary base. Inflationary, yes? (as in actual monetary inflation).

[GRG55]

Checked in on the Fed's data. Didn't find anyone else commenting on it. This release on March 20th, 2008, latest data preliminary from March 12th:
http://www.federalreserve.gov/releases/h3/Current/
The not seasonally adjusted data are here, showing a slightly worse picture:
http://www.federalreserve.gov/releases/h3/hist/h3hist4.txt

Any comments? Non-borrowed reserves are still negative, -17 billion. I'm also noting that the TAF accounts for 7% of the monetary base. Wouldn't it be fun if every American took $100 out of his/her checking account tomorrow, or better yet, take out $1000?

I can read the words but don't quite get the "don't worry" attitude:
http://www.federalreserve.gov/releases/h3/nonborrowedreserves.htm
and this:
http://www.bloomberg.com/apps/news?pid=20601039&refer=columnist_baum&sid=a7EAJelhvLh0

To me, the amount of debt/credit is declining/imploding, demand is still there, i.e. the price is going up. Cheaper to lend at the Fed. So this is more of a symptom than a disaster. The Fed has potentially infinite reserves, so no "bank run" is possible. But if the non-borrowed reserves increase, then sooner or later the Fed must increase the monetary base. Inflationary, yes? (as in actual monetary inflation).

That's already happening. Others have posted this chart before, and you can participate directly in all the fun by following along on the St. Louis Fed's website...;)
http://research.stlouisfed.org/fred2/series/MZM

Rhetorical question to all deflationista's out there. What about this chart looks deflationary to you?

http://research.stlouisfed.org/fred2/data/MZM_Max_630_378.png

[krakknisse]

Thanks GRG55, you're always helpful. That MZM chart sure looks good! I'm sorry I didn't see it before I made this graph... (Trying to contribute...) Here is another chart I made, just combining two Fed data series and computing the 12-month % change in the currency in circulation and the monetary base:

(Hope it is not too large). I get a few things from this graph:
- the currency in circulation is very closely linked with the monetary base.
- the increase in the monetary base has been declining since 2003, while we know that the credit expansion (broader money supply) has been increasing.

Questions:
- is this "monetary base" just bogus, because sweeps and saving accounts are not counted?
- would you not sooner or later expect an increase in the currency in circulation (drool) and the monetary base, as the Fed has to "print money"?
- is it possible to infer any hoarding of cash from the recent decline in the expansion of currency in circulation??
- I know there are various time lags between interest rate changes, currency changes come into account etc. But isn't this an important chart to watch?

Any other interpretations are welcome.
http://i27.tinypic.com/sv3m68.jpg

[krakknisse]

In response to GRG55's MZM chart. I'm drooling here over the following chart. It shows the % change in MZM over a year ago. Drool, AHAHA, maniacal laughter!
http://research.stlouisfed.org/fred2/fredgraphfile/?height=378&width=630&bgcolor=%23B3CDE7&txtcolor=%23000000&recession_bars=On&s%5B1%5D%5Bid%5D=MZM&s%5B1%5D%5Btransformation%5D=ch1&s%5B1%5D%5Bscale%5D=Left&s%5B1%5D%5Bline_color%5D=%230000FF&s%5B1%5D%5Brange%5D=Max&s%5B1%5D%5Bcosd%5D=1980-11-03&s%5B1%5D%5Bcoed%5D=2008-03-10

[grapejelly]

This MZM chart...please help clarify what I am seeing. Is this because people are taking money out of other assets and simply converting it into real, honest to goodness cash?

Or what does it mean? I am very confused. Any help is appreciated.

[bart]

Bart,

Mish has talked at length about zombie banks in Japan in the '90s; I firmly believe we're looking at the same thing now.

The recent financial sector bounce is the first dead cat wave...

It looks that way from here too, the Ka(Ka) in KaPoom has hit the fan... and the Fed will not respond and has not responded in the same way that the Bank of Japan did. I believe that Mish is not taking that and a few other things into account correctly.

[bart]

Questions:
- is this "monetary base" just bogus, because sweeps and saving accounts are not counted?


In my opinion - no, and it appears that you've been reading too much Mish. ;)
Comparing monetary base against itself over the years and decades and knowing exactly what is in base (and its precise definition) is key.

I urge caution on drawing conclusions from the opinions of those with preconceived notions.



- would you not sooner or later expect an increase in the currency in circulation (drool) and the monetary base, as the Fed has to "print money"?


Yes. Central Banks do that... eventually.


- is it possible to infer any hoarding of cash from the recent decline in the expansion of currency in circulation??


I personally doubt that its a significant factor yet, and I'd be more likely to infer it from the heightened fear as shown in things like 3 months T-Bills being under 1%.


- I know there are various time lags between interest rate changes, currency changes come into account etc. But isn't this an important chart to watch?


Yes, but not in isolation.

[bart]

This MZM chart...please help clarify what I am seeing. Is this because people are taking money out of other assets and simply converting it into real, honest to goodness cash?

Or what does it mean? I am very confused. Any help is appreciated.

In my opinion, its just a reflection of the large amount of fear out there. We are in the midst of a financial crisis and the classic reaction of most folk is to pull back and go into the safest and most easily accessible forms of wealth storage.

MZM stands for Money of Zero Maturity and is basically M2 minus time deposits and adding in all balances in all money market funds.

[Lukester]

... large amount of fear out there. We are in the midst of a financial crisis. ...

My sincere apologies for entering into an altercation with you Bart. You are one of the very few here who can provide a real glimmer of light on where we are headed, and what's ahead is tumultuous enough potentially to enter into the history books.

I pay my respects and express humble regret. In the face of heightened risk of disaster, only the most sincere may escape harm.

[bart]

My sincere apologies for entering into an altercation with you Bart. You are one of the very few here who can provide a real glimmer of light on where we are headed, and what's ahead is tumultuous enough potentially to enter into the history books.

I pay my respects and express humble regret. In the face of heightened risk of disaster, only the most sincere may escape harm.

Not a problem, no hard feelings and I should have accepted your apologies on that other thread when you offered them... just too busy these days sometimes. You obviously got my point too, and that's all I was trying to get across.


In my opinion, there's already a lock on it being in the history books. It's just a matter of how many paragraphs now, sad to say.


And I still say that iTulip should adopt this as an unofficial and behind the curtains logo. :rolleyes: ;)

http://www.nowandfutures.com/grins/shit_creek.jpg

[Lukester]

Meanwhile, the gnomes are inside the SHIT CREEK store, churning out more new paddles to replace dwindling stock - while the iTulip forums keep growing like a baby KING KONG on steroids.

[bart]

Meanwhile, the gnomes are inside the SHIT CREEK store, churning out more new paddles to replace dwindling stock - while the iTulip forums keep growing like a baby KING KONG on steroids.

Fred has been promoted to chief gnome and is now replicating like in Blade Runner? :eek: That explains a lot... :cool:

[c1ue]

Well, I´m in Zurich now - the gnomes aren´t here...

[krakknisse]

That's already happening. Others have posted this chart before, and you can participate directly in all the fun by following along on the St. Louis Fed's website...;)
http://research.stlouisfed.org/fred2/series/MZM
Rhetorical question to all deflationista's out there. What about this chart looks deflationary to you?


A new update of MZM was out on Friday. MZM increased 0.62% in one week, which works out to 40% annualized (seasonally adjusted), or 0.5% not seasonally adjusted, which is 30% annualized. Since the beginning of the year, MZM has increased by 5%, which is 30% annualized. Not hyperinflationary, but it sure looks as if it is going up...
http://research.stlouisfed.org/fred2/data/MZM_Max_630_378.png

[krakknisse]

The H3 fed data (http://www.federalreserve.gov/releases/h3/Current/) are out again, dated May 15th 2008. Last data point May 7th (provisional). This chart (http://research.stlouisfed.org/fred2/series/BOGNONBR?cid=123) updated to April 1st, 2008:
http://research.stlouisfed.org/fred2/data/BOGNONBR_Max_630_378.png


Now, there have been some noises that this chart is "artefactual". This chart (http://research.stlouisfed.org/fred2/series/NONBORTAF?cid=123), however, does include the Term Auction Facility:
http://research.stlouisfed.org/fred2/data/NONBORTAF_Max_630_378.png
This indicates that, one one measure of bank reserves, these measured bank reserves are lower than they have ever been. The previous low point (before the current decline) in nominal US dollars was in 1959, at 10 billion dollars. The last data point in the above chart measures the bank reserves at 8 billion 2008 dollars. Converted to 1959 dollars (using the Fed CPI calculator), this is 1 billion 1959 dollars. So bank reserves are 12% of what they were at the previous historically low point.

And, of course MZM (http://research.stlouisfed.org/fred2/series/MZMNS?cid=30):
http://research.stlouisfed.org/fred2/data/MZMNS_Max_630_378.png

[krakknisse]

Sorry, I just have to repost this reader's comment from a WSJ blog entry (http://blogs.wsj.com/economics/2008/02/08/non-borrowed-reserves-false-alarm/)aiming to pacify doubters about the decline in bank reserves (purely technical, yes). "Pass the hand grenade"!
I’m not very smart. I had to read this article more than 6 times to begin to parse it out. Here’s what I learned. I’m ready to be wrong.
The Fed volunteered to go last in a game of ‘pass the hand grenade.’
Sound banking rules prohibited the Fed from acepting grenades (collateral in the form of bad investments by the banks) at the discount window.
The Fed, hoping against hope that accumulating explosives at the core of the system may diminish the effects of a prompt bang at the big banks, opened their special ‘TAF’ (grenades welcome here) window.
In this article the bankers who designed this elegant system are arguing over whether the monies obtained in this fashion are actually borrowed or are perhaps, not borrowed.
A rational person might read that the money was ‘lent’ and that ‘collateral was posted’ as evidence of borrowing.
But I suspect that this argument pales when compared to the fact that we just accepted all those grenades as collateral into the center of our banking system.

Comment by KayGeeJay

[phirang]

it gets better:

http://www.realclearmarkets.com/articles/2008/05/should_the_fed_pay_interest_on.html

[FRED]

The H3 fed data (http://www.federalreserve.gov/releases/h3/Current/) are out again, dated May 15th 2008.

Caroline Baum of Bloomberg says in "How Non-Borrowed Reserves Became a Sexy Subject (http://www.bloomberg.com/apps/news?pid=20601039&refer=columnist_baum&sid=a7EAJelhvLh0)" that:
``There is no relationship between non-borrowed reserves and anything the Fed cares about, be it inflation, employment or real GDP,'' said Paul Kasriel, chief economist at the Northern Trust Corp. in Chicago.

He said that 20 years ago, when I was just starting out, but I still remember his exact words. They came back to me when I learned of the latest obsession with this irrelevant statistic.

What's caused the hullabaloo recently is the dive in non- borrowed reserves from $44 billion in early December to minus $8.8 billion at the end of January.

It isn't a mystery what happened. The Fed announced the creation of a Term Auction Facility on Dec. 12, enabling banks to borrow for 28 days versus a wide range of collateral. The minimum bid the Fed accepts is the expected funds rate one month out, which in the current environment means cheaper funding costs than the fed funds market.

All of a sudden, people who never glanced at the Fed's H.3 statistical release are now experts on ``Aggregate Reserves of Depository Institutions and the Monetary Base.'' Their e-mails have the same sense of foreboding as the missives put out by the Black Helicopter/Tin-Foil Hat crowd.We've glanced at the data for a decade, and while they do not indicate The End of the World they do indicate at the very least that policies in place at the Fe since 1913 have changed in response to current conditions. To call the data irrelevant and the alarm raised by the change in policy is sloppy journalism. A more constructive line of discussion is: What does it mean and what does it foretell?

[phirang]

The fed now thinks it needs to pay banks for existing, i.e. paying interest on the reserves...


It looks that way from here too, the Ka(Ka) in KaPoom has hit the fan... and the Fed will not respond and has not responded in the same way that the Bank of Japan did. I believe that Mish is not taking that and a few other things into account correctly.

[bart]

The fed now thinks it needs to pay banks for existing, i.e. paying interest on the reserves...


Maybe I should check with them and see if they'd pay me for reconstructing M3? :eek: :rolleyes: ;)

[phirang]

Maybe I should check with them and see if they'd pay me for reconstructing M3? :eek: :rolleyes: ;)

Mate, get any more clever, and they may pay you in 9 grams of high velocity base metal :D

but they're just a bunch of akademiks who wouldn't hurt anyone to preserve their power...:rolleyes:

[bart]

Mate, get any more clever, and they may pay you in 9 grams of high velocity base metal :D

but they're just a bunch of akademiks who wouldn't hurt anyone to preserve their power...:rolleyes:

Your choice:
1. http://www.nowandfutures.com/grins/rimshot.mp3
2. http://www.nowandfutures.com/grins/aaagh.wav
3. http://www.nowandfutures.com/grins/argh.wav
4. http://www.nowandfutures.com/grins/dark_side.wav
5. http://www.nowandfutures.com/grins/evil_laugh.wav
6. All of the above ;)

And more seriously, the thought has crossed my mind... but then I'd have to haunt them... :eek: :cool:

[krakknisse]

A new update (http://www.federalreserve.gov/releases/h3/Current/) from the Fed, out May 29th:
Non-borrowed reserves: -111 billion, worsened from -85 billion just three weeks ago.
On the St. Louis Fed site, some useful monthly series have not been updated - the last observation is for April 1st, though the last updated date is May 30th.
BOGNONBR (http://research.stlouisfed.org/fred2/series/BOGNONBR?cid=123) has not been updated. This new series is always a beauty to watch (NONBORTAF (http://research.stlouisfed.org/fred2/series/NONBORTAF?cid=123)):
http://research.stlouisfed.org/fred2/data/NONBORTAF_Max_630_378.png

The weekly MZM has been updated:
http://research.stlouisfed.org/fred2/data/MZM_Max_630_378.png

and MZM % change y-o-y:
http://research.stlouisfed.org/fred2/fredgraphfile/?height=378&width=630&bgcolor=%23B3CDE7&txtcolor=%23000000&recession_bars=On&s%5B1%5D%5Bid%5D=MZM&s%5B1%5D%5Btransformation%5D=pc1&s%5B1%5D%5Bscale%5D=Left&s%5B1%5D%5Bline_color%5D=%230000FF&s%5B1%5D%5Brange%5D=Max&s%5B1%5D%5Bcosd%5D=1980-11-03&s%5B1%5D%5Bcoed%5D=2008-05-19&s%5B1%5D%5Brevision_date%5D=&s%5B1%5D%5Bvintage_date%5D=2008-05-31

[grapejelly]

what's non-borrowed reserves WITHOUT term auction credit??? Or do we really want to know??

[krakknisse]

what's non-borrowed reserves WITHOUT term auction credit??? Or do we really want to know??

Non-borrowed reserves without TAF is the old series, BOGNONBR. It is -111 billion. If you want to know the amount of reserves banks have if you count the TAF as a "gift" (which is, or isn't, sort of), then look at the first chart in my last post. It is -even with the TAF "gift" - very, very low. The amount of bank reserves are back to amounts last seen 1957.

Just think of the banks now secretly merged to form a GOSBANK. (For the record, I posted that thought first (http://www.itulip.com/forums/showthread.php?t=3691&highlight=gosbank) on ITulip. EJ then made a very good post (http://www.itulip.com/forums/showthread.php?p=32553)).

This'll make for a nice weekend for doom-and-gloomers:
http://research.stlouisfed.org/fred2/data/BORROW_Max_630_378.png


Why aren't people tearing their hair out over this? Cmon guys, you live over there? The bus you're on is headed for a cliff. I'm just shaking my head...

[Jim Nickerson]

Non-borrowed reserves without TAF is the old series, BOGNONBR. It is -111 billion. If you want to know the amount of reserves banks have if you count the TAF as a "gift" (which is, or isn't, sort of), then look at the first chart in my last post. It is -even with the TAF "gift" - very, very low. The amount of bank reserves are back to amounts last seen 1957.

Just think of the banks now secretly merged to form a GOSBANK. (For the record, I posted that thought first (http://www.itulip.com/forums/showthread.php?t=3691&highlight=gosbank) on ITulip. EJ then made a very good post (http://www.itulip.com/forums/showthread.php?p=32553)).

This'll make for a nice weekend for doom-and-gloomers:
http://research.stlouisfed.org/fred2/data/BORROW_Max_630_378.png


Why aren't people tearing their hair out over this? Cmon guys, you live over there? The bus you're on is headed for a cliff. I'm just shaking my head...

Until all the "buses" go over the cliff, very few will become concerned. In my opinion, most of the information that reaches the average American is "disinformation," so average people are not going to do anything except vote for whichever dude seems to promise the most hope.

krakknisse, what would you be doing if you were one of us Americans?

I think if there is any one thing with which I strongly agree with Eric Janzen, it is that nothing in the US is going to change until something very significant forces a change (I hope I've got that right, EJ). I don't think we have yet begun to "sing the Star Spangled Banner" --to use the frequent baseball game analogy with regard to where we are with things actually becoming changed.

[krakknisse]

Until all the "buses" go over the cliff, very few will become concerned. In my opinion, most of the information that reaches the average American is "disinformation," so average people are not going to do anything except vote for whichever dude seems to promise the most hope.

krakknisse, what would you be doing if you were one of us Americans?

Well, after I hit the "send" button on that reply, I started thinking about that. Very tough call. What would I do if it happened over here? It very well may happen at some point (just did the maths: household debt 94% of GDP, mean household debt to median household income: 2.3). You can't immediately say emigrate, because TS may HTF over here during the transition or after. So you're basic to basics: protect your career, stay debt free, and hope in PMs. But if I were living in the US, I'd really think hard about going somewhere.

[grapejelly]

it may not matter much. I mean, $111 billion, big deal. Roughly $330 per American citizen. I am not discounting it (hahahaha, pun) but it may not matter.

[krakknisse]

It's that time of the week - Fed updated the H3 statistics yesterday (http://www.federalreserve.gov/releases/h3/Current/).
Non-borrowed reserves, June 4th: -130 billion (thats -130,000,000,000)
Worsened from -111 billion one week earlier. April: -91 b. March: -50 b. February: -18 billion: January: -4 b. December: 27b. Nov: 42b. That's some inflection point.

The St. Louis Fed graphs are now updated to May 1st. Link is in the graph. NONBORTAF (15 billion, May 1st)
http://research.stlouisfed.org/fred2/data/NONBORTAF_Max_630_378.png (http://research.stlouisfed.org/fred2/series/NONBORTAF)
BOGNONBR:
http://research.stlouisfed.org/fred2/data/BOGNONBR_Max_630_378.png (http://research.stlouisfed.org/fred2/series/BOGNONBR?cid=123)

[krakknisse]

In a bit of Fed watching, I noticed that MZMNS has not been updated since April 1st. But the seasonally adjusted MZM is updated through 20080526. One looks worse than the other. Any tin-foil hat speculation? Click on graph for link. (Take a look at the % change year-on-year. Definitely different curves).
http://research.stlouisfed.org/fred2/data/MZMNS_Max_630_378.png (http://research.stlouisfed.org/fred2/series/MZMNS)

http://research.stlouisfed.org/fred2/data/MZM_Max_630_378.png (http://research.stlouisfed.org/fred2/series/MZM)

[bart]

In a bit of Fed watching, I noticed that MZMNS has not been updated since April 1st. But the seasonally adjusted MZM is updated through 20080526. One looks worse than the other. Any tin-foil hat speculation? Click on graph for link. (Take a look at the % change year-on-year. Definitely different curves).
(http://research.stlouisfed.org/fred2/series/MZMNS)

(http://research.stlouisfed.org/fred2/series/MZM)


There's something odd with your browser or cache or connection, or you connected to the monthly data and thought it was weekly. I just checked and the weekly MZM is current to the 26th.

http://research.stlouisfed.org/fred2/series/WMZMNS?cid=30

And there are significant differences between seasonally adjusted and non seasonally adjusted data.

[grapejelly]

There's something odd with your browser or cache or connection, or you connected to the monthly data and thought it was weekly. I just checked and the weekly MZM is current to the 26th.

http://research.stlouisfed.org/fred2/series/WMZMNS?cid=30

And there are significant differences between seasonally adjusted and non seasonally adjusted data.

Bart, I love your Avatar!!!

What do these significant differences mean?

[bart]

Bart, I love your Avatar!!!

What do these significant differences mean?

Somewhere on my web site, I think on the FAQ page, are official instructions on how to build your very own trendy hat... ;) ... and the very best people use a silver liner with the tinfoil. :eek:


By significant differences between SA and NSA numbers, I mean that the algorithms for the SA data can and do change frequently, and in my opinion make it much more difficult to reliably interpret what's actually going on.

For example, MZM with seasonal adjustment last Friday was 8.747 trillion and without adjustment was 8.665 trillion. Even between friends, $100 billion or so is serious money.

[Rajiv]

Add to this the following graph -- a truly scary image

FRED GRAPH

Link to this graph (http://research.stlouisfed.org/fred2/fredgraph?chart_type=line&width=1000&height=600&preserve_ratio=true&s%5b1%5d%5bid%5d=BORROW#) | View Saved Graphs (http://research.stlouisfed.org/useraccount/fredgraph) | Description of growth rates and US recession dates (http://research.stlouisfed.org/fred2/help-faq/#graph_formulas)
http://research.stlouisfed.org/fred2/fredgraphfile/?height=600&width=1000&bgcolor=%23B3CDE7&txtcolor=%23000000&recession_bars=On&s%5B1%5D%5Bid%5D=BORROW&s%5B1%5D%5Btransformation%5D=lin&s%5B1%5D%5Bscale%5D=Left&s%5B1%5D%5Bline_color%5D=%230000FF&s%5B1%5D%5Brange%5D=Max&s%5B1%5D%5Bcosd%5D=1919-01-01&s%5B1%5D%5Bcoed%5D=2008-05-01&s%5B1%5D%5Brevision_date%5D=&s%5B1%5D%5Bvintage_date%5D=2008-06-08



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BORROW, Total Borrowings of Depository Institutions from the Federal Reserve, Monthly, Billions of Dollars, Not Seasonally Adjusted (http://research.stlouisfed.org/fred2/series/BORROW)
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[kingcopper]

Alot of the ugliness comes from the fact that Bernacke's helicopter named "TAF" is truly a new way for the enemy to loot. Kids will take candy from the candystore when it's free. Crackheads will take free crack. Banks and Brokerages will take free money!

[friendly_jacek]

Alot of the ugliness comes from the fact that Bernacke's helicopter named "TAF" is truly a new way for the enemy to loot. Kids will take candy from the candystore when it's free. Crackheads will take free crack. Banks and Brokerages will take free money!

Even more ugly is the fact that the free money went to investment banks to speculate long on oil and commodities futures to make some money lost on subprime. The banks are greedy short terms but cutting not only the branch they are seating on but the entire tree called USA and soon entire forest called global economy.

I do believe in peak oil but the price of oil gyrations we saw in the last couple of days point to $ 20-30 (at the very least) premium added by oil speculation and geopolitical fear.

This is reminiscent of the 1999-2000 tech bubble when everyone agreed with the the great future for internet but the NASDAQ valuations were unreal. Analogous, the 1998-2000 easy money went straight to tech stocks.

Who knows when the oil bubble will burst, maybe now, maybe in 2009-2010?

[krakknisse]

Fed H3 updated (http://www.federalreserve.gov/releases/h3/Current/):
Non-borrowed reserved unchanged from June 4th to 18th: -130 391 million.
I notice that required reserves and required vault cash are down some. Maybe people are withdrawing cash (the tinfoil hat interpretation) or pushing them into other investment types (the permabull interpretation).

FRED figures on BOGNONBR, NONBORTAF, MZMNS not updated (last 20080501).

WMZMNS also updated (http://research.stlouisfed.org/fred2/series/WMZMNS). It is down some from the top.
http://research.stlouisfed.org/fred2/data/WMZMNS_Max_630_378.png (http://research.stlouisfed.org/fred2/series/WMZMNS)