The U.S. Banking System Is Now Insolvent

FYI....the U.S. banking system is currently insolvent.

The Fed pumped $100 billion into banks via its new fangled auction in recent days, but this was mainly just so that major investment banks, e.g., Citigroup, meet their capital reserve ratios at the end of the quarter.

http://news.yahoo.com/s/ap/20080328/ap_on_bi_ge/fed_credit_crisis

http://news.bbc.co.uk/2/hi/business/7319413.stm

In effect, what the Fed is doing is temporarily allowing banks to trade some of their virtually worthless subprime financial assets for AAA Treasuries for 100 cents on the dollar so that they are technically still solvent. However, they are not solvent in reality, as was seen in the case of Bear Stearns when the rumor mill forced reality to the surface.

The question is: How long the Fed and Wall Street can "make believe"?

To underscore how the banking system is insolvent, examine a current chart of non-borrowed bank reserves at the Fed's web site:

http://research.stlouisfed.org/fred2/series/BOGNONBR

In March the negative reserves worsened severely, which would look like this:



(graph compliments of a poster at Ticker Forum)

Hence, the billions pumped into the banking system in recent weeks was just to maintain sufficiently positive reserves to meet mandated reserve requirements.

Given the current condition of the U.S. banking system, one should be focused on capital preservation and anticipation of a severe economic contraction....possibly as bad as the 1930s.

A bear market fund which may be effective if U.S. equities start to collapse is the Prudent Bear Fund (BEARX):

http://finance.yahoo.com/q?s=bearx

More information about this fund and their concerns regarding the economy can be viewed at:

http://www.prudentbear.com

There could be a short-term rally in U.S. stocks, but 2008 is likely to see an unprecedented collapse in the values of almost all financial, and probably real, assets. One should plan accordingly.

Here is the flip side of that coin...

http://research.stlouisfed.org/fred2/series/BORROW?cid=50

"...Given the current condition of the U.S. banking system, one should be focused on capital preservation and anticipation of a severe economic contraction....possibly as bad as the 1930s..."

"Capital preservation" is what the banks are doing right now. That is also called "not extending credit".

Which has resulted in a credit crunch. Which causes more banks to get into deep doo-doo because they can't get credit.

So the Fed releases some money one way or another. And the banks continue to increase their capital while refusing credit. Which then continues the cycle.

SoT:

Where are you coming up with the -136 billion number? Just from somebody at tickerforum?



My bet is some of us don't understand what goes into these numbers in these charts.

Kris

Are you saying that EVERYTHING the banks borrowed from the Fed during March is simply going to satisfy reserve requirements?

This statement from your OP "but this was mainly just so that major investment banks, e.g., Citigroup, meet their capital reserve ratios at the end of the quarter"...is that your opinion or a known fact backed up by something? It wasn't mentioned in either of your linked articles.



Kris

Kris Gandillon said:

SoT:

Where are you coming up with the -136 billion number? Just from somebody at tickerforum? The chart (without your additional "downturn leg") was accurate thru YESTERDAY (03/28/2008) and really looks like this: (corrected while we cross-posted - see post below - data thru February NOT thru March 28, 2008)

My bet is some of us don't understand what goes into these numbers in these charts.

Kris

Click to expand...

I see you corrected the part about the chart being accurate thru 3/28.

It was based on data thru 2/1:

http://research.stlouisfed.org/fred2/data/BOGNONBR.txt

I presume someone at Ticker Forum found the current numbers and created the updated graph accordingly.

Kris Gandillon said:

Are you saying that EVERYTHING the banks borrowed from the Fed during March is simply going to satisfy reserve requirements?

This statement from your OP "but this was mainly just so that major investment banks, e.g., Citigroup, meet their capital reserve ratios at the end of the quarter"...is that your opinion or a known fact backed up by something? It wasn't mentioned in either of your linked articles.



Kris

Click to expand...

Twas a guess. Clearly, for the most part, the Fed and the banks are simply rearranging deck chairs on the Titanic.

BTW...I was taking notes in my thread and updating as I validated stuff...I actually reviewed ALL but the "dis-continued series" charts on the Fed site looking for other anomalies. I was re-saving the post in between just so I wouldn't lose any pertinent points.

I cross-checked the LAST UPDATED dates of the FED charts with the LAST DATA POINT and discovered that SOME of their charts update weekly and bi-weekly with new data points and others only updated monthly yet show an UPDATED DATE more recent than the "once a month" data point.

I went back and removed my reference to the 3/28/2008 data because even though the chart was updated that day the data point itself was still for February and not March.

Your chart of Non-Borrowed Reserves and my chart of Total Borrowings are both MONTHLY charts so we won't know what the actual numbers for March will be for another few days.

Kris

I think this "adjusted reserves" chart is what reserves look like WITH the money borrowed from the Fed:

http://research.stlouisfed.org/publications/usfd/page4.pdf

Kris Gandillon said:

Your chart of Non-Borrowed Reserves and my chart of Total Borrowings are both MONTHLY charts so we won't know what the actual numbers for March will be for another few days.

Kris

Click to expand...

Of course, what I'm curious about is this is all public info. Certainly, high finance folk are pretty smart about this kind of alarming data. I'm surprised there hasn't been a global panic in light of this rather telltale information that the U.S. banking system has gone bust.

Here is your Adjusted Reserves chart on a longer timeframe.



Current numbers are well within the trends of the longer-term past.

The ONLY charts that really look "bad" are the "borrowings" charts. The remainder of the charts on the Fed web site...about 31 charts total...are well within the trend lines for the recent historical past...going back several years.

Kris

Banks

There is an article this morning in Barron's written by Alan Abelson. He interviewed a fellow from Goldman Sachs Andrew Tilton who says his research contends the write downs and losses thus far have exceeded 400 billion and that amount exceeds the total assets of US banking system.

Bad news there are more write downs to occur to the tune of 1.2 trillion and that is Goldmans Sachs assessment.
These Wall Street guys with their upbeat views are in for a real wake up call!
vinny

Great thread SoT. Thanks for the info...

Those reserves have been negative since January

and I'm sure we've had a couple of threads on it. It was widely disseminated news in the investment community.

So don't panic just yet. You should have panicked in January, if you were going to do so.

Still, it is a bit worrisome. Don't like the way things are headed one bit, with the Goldman Sachs boys in the White House trying to get more power from the fed, which is owned by the same guys who own Goldman Sachs and the other banks the fed is supposed to regulate.

THis is sick.

http://business.timesonline.co.uk/tol/business/economics/article3645090.ece

America's Treasury Department will tomorrow put forward plans for a revamp of US financial regulation in an attempt to curb the lending excesses that triggered the credit crisis.

The new blueprint, drawn up by Treasury secretary Hank Paulson, would, if adopted, replace a system that has been built up over more than a century. The Federal Reserve would be given broad powers over financial markets, including a remit to investigate any institution thought to be endangering stability.

The main aim of the plan would be to draw together the various agencies that are charged with financial oversight. The Securities and Exchange Commission, for example, would be merged with bodies like the Commodity Futures Trading Commission, which administers trading in securities based on oil and other commodity prices.

Who owns the Federal REserve:

http://land.netonecom.net/tlp/ref/federal_reserve.shtml

Wikipedia has information on the main owners of many corporations. The cross-ownership is phenomenal. Similarly, they often have the same guys on their boards of directors. I was reading up on Lord Rees-Mogg a couple years back and he was on over 200 corporate boards, from the major media airline and just about every other major area of commerce and industry.

The federal reserve has never been audited, although by law they are supposed to return all excess (over 8% IIRC) profits to the US treasury! That 8% was considered a proper amount to cover their costs of printing and distributing money, plus a return for them.

We are headed to complete takeover by private interests of all our financial markets. Those interests are owned, nearly completely, by foreign persons.

http://business.timesonline.co.uk/tol/business/economics/article3645090.ece

Spirit of Truth

Thanks for starting this thread. This, coupled with the news today of Paulson's proposal to put the federal reserve on top of the whole US financial system is a huge coup!

Greenspan loosens, Bernake tightens. They have tens of thousands of number crunchers in their Washington office alone, surely he knew exactly what he was doing (not just us guys looking in from the outside).

Roped a calf, they did!

Do you suppose Paulson and Bernake will get knighted by the queen for taking down the US financial empire?

They'll use this financial morass that they created to finish us off and bring us into total captivity. All those Americans who are in debt up to their ears will have no other choice but to comply.

The FED should change it's moniker to "The Borg!"

All you have to know about the truth of our financial house is to watch the actions of the banksters. The charts and numbers can be made to say just about whatever you want them to say. I don't think many of us are going to trust the "numbers" coming out of the Fed or almost any .gov agency. About the only agency I have trusted in the past is the GAO and they have put out warning incessantly. That and the Comptroller of the Treasury, Walker who has now resigned.

The bailout of Bear Sterns, the massive injections of liquidity into the system with diminished effect each and every time, the devaluation of the dollar and now the latest action to give the Fed more power tells us all we need to know about what the real situation is. I saw this on the other forum as well. Thanks for posting SOT.

No matter how they do it - Inflation/Deflation - I think we can all agree that the body is dead and that the corpse stinks to high heaven.

Time to revisit the YouTube

http://www.youtube.com/watch?v=ipJTqCbETog

This was made for the Columbia University Business School follies, when Ben was slamming the interest rates upward at a (now we know) fatal rate.

We weren't the only ones who knew the take down was underway. Just didn't know what shape it would take.

Now we see why BushI got his Knight of the Garter. He took the floor out from underneath our economy with the big NWO outsource the jobs plan. The key to the final destruction. The big banana! A hundred years from the creation of the federal reserve they'll run the whole shebang.

Thanks to the wonderful education foundations of Rockefeller and Carnegie, carving history into self-serving slices, most Americans don't even know this has been a running battle in the forefront of American politics since the beginning! The people vs. the "money trust".

Take down!

Where's Andrew Jackson? Here's a cartoon of him killing the hydra which the money trust had become:

Kris Gandillon said:

SoT:

Where are you coming up with the -136 billion number? Just from somebody at tickerforum?


My bet is some of us don't understand what goes into these numbers in these charts.

Kris

Click to expand...

The Fed has allowed banks to borrow on behalf of brokers, and even brokers to borrow directly from the Fed. So this chart has lost some of its historical meaning.

But SoT might be surprised to learn that I still pretty much agree with the current situation - that is the Fed and the Federal Home Loan Banks are lending to insolvent financial firms to avoid a chain reaction meltdown of the financial system caused by their bankruptcy.

I think SoT and I mostly disagree on how long they can postpone the collapse of the system. With tax refunds and rebates coming along soon, I don't see a collapse anytime soon. The Fed also has the final trump card of hyperinflation, although I admit that probably they would have to pump in trillions $ to get that going - and they may in the end lose control of the situation first.

Still the Fed has lent $300 billion, and the FHLB $150 billion, on dubiously valued assets to financial firms. So that $450 billion will go into other things, and indirectly work to expand the money supply, and slow down the rate of collapse.

HB - I still don't think bread will hit $100 per loaf. Hell, I can't afford it at $3.

the banks are still solvent if they can still borrow money from the fed. The banks will still be solvent tomorrow, monday, and the rest of the next 100 years. There may be drastic changes, but the banks will still be solvent, and you will still be able to keep money there.

To panic now, or to try to build panic now is pointless. Here I will manufacture my own graph......


Solvent graph _____________forever and ever
_________________right now
______________09/11/2001
_________
________Clinton re-defines the word is
_____
_
Dec7th, 1941(start of graph)


Thanks for your time!!!

Here's my Graph...


Freedon-------------------------------Socialism

----------------------------------------Right Now

-----------------------------When W Became President

---------------------When Clinton Became President

-------------When Regan Became President

------When The FED Was Created

- 1776 Start of Graph

Hiding Bear said:

The Fed has allowed banks to borrow on behalf of brokers, and even brokers to borrow directly from the Fed. So this chart has lost some of its historical meaning.

But SoT might be surprised to learn that I still pretty much agree with the current situation - that is the Fed and the Federal Home Loan Banks are lending to insolvent financial firms to avoid a chain reaction meltdown of the financial system caused by their bankruptcy.

I think SoT and I mostly disagree on how long they can postpone the collapse of the system. With tax refunds and rebates coming along soon, I don't see a collapse anytime soon. The Fed also has the final trump card of hyperinflation, although I admit that probably they would have to pump in trillions $ to get that going - and they may in the end lose control of the situation first.

Still the Fed has lent $300 billion, and the FHLB $150 billion, on dubiously valued assets to financial firms. So that $450 billion will go into other things, and indirectly work to expand the money supply, and slow down the rate of collapse.

Click to expand...

Actually, I tend to expect everything to be kept afloat until late-summer and a related rally in stocks. But we could collapse now.

As for hyperinflation, this is a possibility. Since August when the Fed started pumping liquidity into the banking system, the CRB index has climbed 35% and the consumer price inflation rate has increased to over 4% (as far as is being reported at least). With the Fed's debasement of the dollar, it strikes me that the entire world is seeking to get out of dollars and dollar-denominated financial assets and this money is flowing into REAL things like commodities. If this pattern continues, then even though FINANCIAL ASSETS are deflating in value, REAL ASSETS may soar in value as money flows from financial instruments to real commodities. Certainly, if an exodus from U.S. treasuries begins, commodity prices could go to the moon IMO. Of course, Robert Prechter and the like would beg to differ, and I fully understand their concerns for general deflation. As it stands, this is the most likely course of events.

As for hyperinflation, this is a possibility. Since August when the Fed started pumping liquidity into the banking system, the CRB index has climbed 35% and the consumer price inflation rate has increased to over 4% (as far as is being reported at least). With the Fed's debasement of the dollar, it strikes me that the entire world is seeking to get out of dollars and dollar-denominated financial assets and this money is flowing into REAL things like commodities. If this pattern continues, then even though FINANCIAL ASSETS are deflating in value, REAL ASSETS may soar in value as money flows from financial instruments to real commodities.

Click to expand...

I don't see hyperinflation. But, I do see higher prices in commodities even as people have less money to spend - kind of like during the DEPRESSION.

"SoT:

Where are you coming up with the -136 billion number? Just from somebody at tickerforum? "

I chart I saw on the Ticker forum showed the -61 billion number. However it was then pointed out that this number from the FED did not include the money borrowed from the new discount window that just begain on the 27TH. I think that was 75 billion. I think they added that to the 61 billion to get 136 billion.

Now isn't that special?

Maher said:

I don't see hyperinflation. But, I do see higher prices in commodities even as people have less money to spend - kind of like during the DEPRESSION.

Click to expand...

Any rate of inflation higher than personal income is rising will act to reduce economic growth. So you don't need a high rate of inflation to cause the standard of living to go downm, so I agree with you there.

As I mentioned on another similar thread, falling interest rates will perversely act to also reduce total personal income.

Order out of chaos.
The New World Order.

http://www.nytimes.com/2008/03/29/b...3ab140bbfd17e2&ei=5088&partner=rssnyt&emc=rss

Treasury’s Plan Would Give Fed Wide New Power
By EDMUND L. ANDREWS
Published: March 29, 2008

WASHINGTON — The Treasury Department will propose on Monday that Congress give the Federal Reserve broad new authority to oversee financial market stability, in effect allowing it to send SWAT teams into any corner of the industry or any institution that might pose a risk to the overall system.

The proposal is part of a sweeping blueprint to overhaul the nation’s hodgepodge of financial regulatory agencies, which many experts say failed to recognize rampant excesses in mortgage lending until after they set off what is now the worst financial calamity in decades.

Hiding Bear said:

Any rate of inflation higher than personal income is rising will act to reduce economic growth. So you don't need a high rate of inflation to cause the standard of living to go downm, so I agree with you there.

As I mentioned on another similar thread, falling interest rates will perversely act to also reduce total personal income.

Click to expand...

We're getting hit from so many directions now that it's ridiculous. But, in the end it is the FED and their masters that have destroyed us all. We'll see if on Monday the clowns in Congress institute the Bush/Paulson/Bernanke plan to overthrow the United States. I appreciate all your great efforts HB. Thanks!

Consolidation of both wealth and power.........hmmm........I reckon the remainder of the ten toes of iron and clay are about to stick out.

BornFree said:

"SoT:

Where are you coming up with the -136 billion number? Just from somebody at tickerforum? "

I chart I saw on the Ticker forum showed the -61 billion number. However it was then pointed out that this number from the FED did not include the money borrowed from the new discount window that just begain on the 27TH. I think that was 75 billion. I think they added that to the 61 billion to get 136 billion.

Click to expand...

If that's so, then the chart should only go to $61 billion, which makes more sense since this is roughly the amount borrowed resulting in unchanged bank reserves. Even so, these are absurd negative numbers IMO.

Obviously if the Federal Government is willing to abrogate a huge chunk of its regulatory and other powers to a private bank, then TS is here and TF is indeed making impact thereon. The non-borrowed reserves chart showing -136B is as of February 1st, not current, which would about now be -400 billion. I wouls suggest the charts do tell us what we need to know. The only problem is that no one has been here before to no one knows what this means.

Short answer: It means we are doomed.

The latest 'balloon' being sent up is so tragicly stupid that only W could go along with it. But, I'm sure that the Legislative BRanch is right there with him.

We've gone from a situation last August where the talking heads said "the problem is contained" to the Executive Branck giving itself away to a private corporation. Follow that trend line and you will be going straight to hell, no hand basket provided.

"...FYI....the U.S. banking system is currently insolvent..."


This should come as a surprise???

The USA is considered by some to be rather insolvent except for the ability to print bux at will and retake them from 'taxpayers'.

ittybit:

The chart with the -136 billion is an ASSUMPTION from someone, somewhere, based on numbers they are unsure of trying to PROJECT where they think we are at the current moment based on what they have read about borrowings from the new credit facilities that the Fed opened up.

The ACTUAL chart in question as of Feb 1st is only -17.5 billion.

We'll know in a few days what the March 1st numbers show and THEN we will likely be able to better predict where we really are at April 1st.

What no one knows is how much of those new credit facilities and the dollars that are being borrowed through them are "long-term" vs. "short-term". Yes, they CAN now borrow for longer than over-night or a few days which was one of the limitations of the previous credit facilities but what we don't know is ARE they borrowing long-term now or are they still really borrowing for a few days and then paying it back? THAT is the missing piece of info that we do not have at the moment....or at least I haven't seen it yet.

Kris

This, I believe, is an accurate assessment of the banking situation:

Your number's up
By The Mogambo Guru
Mar 29, 2008
http://www.atimes.com/atimes/Global_Economy/JC29Dj01.html

It was no big surprise that Total Fed Credit was up a whopping US$9.6 billion last week as the Fed continued creating money and credit to bail out its nasty little friends on Wall Street to prevent the boom, that resulted from decades of the Federal Reserve stupidly creating too much money and credit, from turning into the bust that is, alas, inevitable.

And to help fund it all, the Fed's account, known as "US Government Securities owned outright", was down by $32.2 billion last week! Wow! This is about 5% of the bonds it owns! In one shot!

And the banks themselves are still showing a negative "non-borrowed reserves"! Now get this: total reserves are $43 billion (about the same as it has been for more than a decade!), and out of that total, $17 billion of it is borrowed from the Fed! Hahahaha! We are so freaking doomed!

Not to be outdone, or maybe to shut me up because they are tired of hearing my voice wailing and bewailing what's going on, foreign central banks came charging in and bought up another $17 billion of US government and agency debt to stash in their $2.2 trillion account at the Fed, which is simultaneously astonishing and unremarkable in comparison to the sheer, staggering supply of dollars that the Fed has created over the past couple of decades or so, and that is why prices are going up in dollar terms and my screams of fear and outrage are going up in decibel terms.

Dan North of Euler Hermes says that Americans have "basically polluted the world with dollars", which I think is a good metaphor for the situation, and please marvel as I wax ecologically lyrical when I write. "And as you dip your hungry and thirsty lips into the polluted ocean of commerce for your eat and drink, you will surely die of dollar poisoning, and on your financial deathbed of ashes left by the fires of price inflation, you will hear the mocking, rude laughter of The Mogambo ringing in your ears, and you will recoil in horror as you realize, albeit too, too late, that the Loudmouth Idiot Mogambo (LIM) was right and the Austrian School of economics was right; the creation of excess money and credit (monetary inflation) leads to consumer price inflation, which is a Very, Very Bad Thing (VVBT), and that buying gold and silver are the two best things that you could have done with your money!"

Well, it is not King Lear, I guess, but you get the point. But part of the reason why the Fed is doing all of this crazy stuff may perhaps be found at the famous "Mortgage-Lender Implode-O-Meter" website, which reports that "Since late 2006, 241 major US lending operations have 'imploded'."

Or maybe it's enough to see the results, regardless of the cause, and MoneyandMarkets.com can supply part of the answer when they write "the difference between the interest rate on high-yield corporate bonds and the rate on equivalent Treasury issues - is a key credit crisis indicator."

And with that in mind, they go on to note the chronology of:
July 30, 2007: Crisis Indicator Surges: More Than Doubles to 576!
August - October, 2007: Fed's First Massive Response: Crisis Indicator Falls to 354
March 10, 2008: Credit Crisis Indicator Explodes: This Time to 774 Points!
March 14, 2008: Fed Deploys the Nuclear Option

By which he means all of these astonishing, sudden, massively all-or-nothing Fed actions.

And I agree that it is perhaps appropriate to have all-or-nothing acts of desperation, as the situation is truly desperate, for which most of the problem may be found in the Wall Street Journal writing about the "US Debt Reckoning". They report that "American household debt has more than doubled in a decade to $13.8 trillion at the end of 2007 from $6.4 trillion in 1999, the vast majority of it in mortgage and home equity lines, according to Fed data."

I sigh and groan when I realize that the rest of the article contained no explanatory statistics about these facts, and that means that the calculator and I are going to meet in combat again, like I knew we would, and it's man against machine.

The answer, finally wrought out of sweat and blood, is that household debt went up by $7.4 trillion in eight years, which is close enough to say that this one subset of consumer debt increased by a whopping 1 trillion dollars a year for eight years! I involuntarily shout, "Yikes!" at the revelation!

This new money, produced by borrowing it, was the fuel that made the boom. Now it's gone, and it ain't coming back. And so what is going to power the boom that is supposed to get us out of this bust and make everything alright again? Oops!

No matter how adept you are with calculators, the answer is actually 7734 upside down, which is not 666, to be sure, but it still means "We're freaking doomed!"

Richard Daughty is general partner and COO for Smith Consultant Group, serving the financial and medical communities, and the editor of The Mogambo Guru economic newsletter - an avocational exercise to heap disrespect on those who desperately deserve it.

More from - http://news.goldseek.com/GoldenJackass/1206025200.php



The US banking system is teetering at the precipice, the brink of collapse. Almost two years ago, in the Hat Trick Letter, my forecast was made crystal clear, that the housing crisis and mortgage debacle would topple and destroy the US banking system, just like what happened to Japan in the 1990 decade. The US banking system cannot withstand insolvency like the stronger Japanese banking system, which survived temporarily as vampire entities. Weekly events point to wrecked mechanisms in the US banking system. They will continue to worsen unfortunately. The financial condition of institutions within the US banking system has gone critical, with core assets gone negative. Total deposits held, free of borrowed USFed reserves, have vanished. US banks have burned through their entire capital core, melted down from disastrous mortgage portfolios, their bonds, and related CDO leveraged bond derivatives. They must now rely upon borrowed reserves from the USFed in order to continue to function as lending institutions. They have turned heavily to the USFed Term Auction Facility and now the Term Security Lending Facility for resupplied capital. That is not injected, donated, free money. It must be returned, or such is the plan. With the TSLF, the USFed now extends loans for AAA-rated mortgage bonds of private vintage, not just Fannie & Freddie type. They expanded to $200 billion per month and 28 days in duration, with a lowered 3.25% borrowing rate, and likely renewable feature. As we know, many AAA bonds are crappy. So banks might be unloading some rancid meat. The masters who control the USFed cannot be happy.

The US banks by early December had about $43 billion in total reserves. The current statement by the Federal Reserve offers a daily average ‘Non-Borrowed Reserves’ at MINUS $20 billion. Worse, the Fed Reserve estimates by early April that amount will be MINUS $60 billion. The US banks are living off borrowed money, and time. Be prepared for some high profile bank failures, a process already begun. Home loan defaults have combined with falling home collateral valuation to destroy mortgage bonds and related securities to the extent that banks have lost their entire capital. The only way to recover from this situation is for banks to find a way to make a lot of money really fast. The time has grown urgent to inflate rapidly, or else face an unstoppable chain reaction of bond failures followed by bank failures. Big banks do not have adequate loan loss reserves set aside. Money and wealth will be destroyed either from falling home portfolios and mortgage bond values, from reckless lending and much fraud at all levels.

The shocking reality is that the banking system has gone from a 10% reserve requirement to a minus 5% requirement. Still too much bank capital is in illiquid overvalued bonds. The USFed is trying to increase the money supply faster than banks can write down losses. Keep in mind what New York University economics professor Nouriel Roubini says, “For every dollar loss of capital, you reduce lending by ten dollars.” The Shadow Govt Statistics folks do such great work in removing deceptive games and gimmicks. They report the US$ money supply is growing at an annual 18.0% rate, March 2007 over March 2007. The sitting Secy of Inflation Bernanke, when pressed in Congress recently to comment on the monetary inflation gone haywire, simply said they monitor the Consumer Price Inflation only. Wow! Talk about riding a horse while sitting backwards on the saddle! What a hack! What a lousy cowboy!

It must drive them crazy that we have their number, and banter about it so openly here. It seems about a third of the people here are "stealth."

Mogambo said:

"Now get this: total reserves are $43 billion (about the same as it has been for more than a decade!), and out of that total, $17 billion of it is borrowed from the Fed! Hahahaha! We are so freaking doomed!"

However...

According to the chart below, total reserves are actually around $94 Billion depending on whether seasonally adjusted or not which varies the number by between $1 billion and $2 billion. My guess is that "Vault Cash" (real FRN's in the vault) is at least PART of the difference here because it *is* included in the total reserves calculation and is around $30-$40 billion by itself.



http://research.stlouisfed.org/fred2/series/ADJRESSL

News flash!!

The country has been bankrupt since the end of WW1!!!