Federal Reserve Balance Sheet Update: Week of August 12, 2009 5 comments
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Total Federal Reserve balance sheet assets for the week of August 12 of $1,990 billion (an increase of $13 billion from the prior week) consisting of:
- Securities held outright: $1,373 billion (an increase of $107 billion MoM, resulting from $43.7 billion in new Treasury purchases, $53.8 billion increase in MBS and $9.4 billion in Agency Debt), or $18.6 billion increase sequentially
- Net borrowings: $340.5 billion (a decline of $47 billion month over month)
- Float, liquidity swaps, Maiden Lane and other assets: $277 billion (another record decrease of $83.7 billion month over month due to a continued reduction in Central Bank Liquidity Swaps ($32 billion) and ($52) billion in CPFF outstandings).The rate of decline sequentially has, however, slowed dramatically and was just $5.6 billion lower than the prior week (after a $37.7 billion reduction in the prior week). It appears the Fed has reached the threshold in removing Swap and CPFF liquidity.
- Foreign central bank liquidity swaps have hit another lowest level since the Lehman bankruptcy ($76.2 billion), athough the rate of sequential decline has slowed to a crawl. We would not be surprised if next week the Fed indicated more liquidity was being pumped into CB Swaps.
Foreign holdings of US Securities decreased for the first time in 5 months by $299 million sequentially (weekly) to $2,809.9 billion from $2,810.2 billion in the prior month. Keep in mind in the same time period the Fed purchased over $16.6 billion of Treasuries, indicating that in the last week the Fed was the only purchaser of Treasuries. In a normal environment this would be a very troubling development.
And to underscore that deflation still rules, The Federal Reserve's Monetary Base number of $1,643 billion was a decline of $31 billion MoM. Additionally Deposit Reserves were at $772.6 billion, a $33.2 billion decline MoM (hopefully this simply means that some banks have finally resorted to pushing excess reserves out of the basement and out the door).
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"...in the last week the Fed was the only purchaser of Treasuries. In a normal environment this would be a very troubling development."
Fed support for Treasuries via quant easing IS troubling. It is distorting the bid/cover ratio and giving a false sense of security to observers who describe the auctions as a "success".
We are still waiting for a real report by them and they keep caliming it's none of the public's business what they do with their money. Remember, it is their money after all. That is part of the problem giving a private institution the right to our money supply.
This conclusion is based on an appreciation of debasement of money supply, and consequent inflation.
I don't draw swords with such scenarios.
So we are left with the question, why isn't it happening? and left with no alternative other than to question our judgement.
It does seem that the money supply straw has failed to break the camels back of most currencies
.
This St.Louis Fed Reserve chart shows that money supply can be upped beyond an exponential level without a collapse.
What's happening now is something we have no road map for of course.
It also shows that QE is old wine in re-labeled bottles.
Spooky huh.
research.stlouisfed.or...[1][id]=AMBNS