The tragic tale of the last fool in line
By The Mogambo Guru
After a wonderful weekend celebrating Mozart's birthday by gorging on German food, I was in a particularly bad mood to be rudely jostled awake by the sound of alarms ringing in the Mogambo Secret Bunker In The Backyard (MSBITBY). Soon enough, I discovered why; Total Fed Credit was down by a goodly $6 billion last week. Wow!
Now, there are a couple of reasons why TFC could be down. For one, Ben Bernanke and his precious little Federal Reserve might be trying to slow the growth of the money supply, and thus finally brake their decades-long inflationary monetary expansion to belatedly head off dangerously rising inflation in consumer prices. To this possibility, experienced Fed-watchers will guffaw "Hahahahahaha!" with an ill-disguised and disrespectful tone of scorn and utter, utter contempt.
Another reason is that, maybe, nobody wants to borrow any money, and so the Fed doesn't have to create any new money or credit to accommodate them! To buttress that argument, I present Bloomberg.com, which quotes J Matthew Dalton at Belle Haven Investments saying that, "Liquidity is out of the market, bidders are pulling away. Without liquidity, you've got a real problem."
And speaking of liquidity, I notice that the enormous $723 billion stash of US government securities actually owned by the Fed (which is a private bank creating money out of thin air for their own purposes, and then using the money to buy the debt of the government, which we taxpayers will have to repay), dropped by $5 billion last week, too! Of course, I don't know what it means because it could mean a lot of things, but it is highly unusual!
(Continued here. The author, 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.)
After a wonderful weekend celebrating Mozart's birthday by gorging on German food, I was in a particularly bad mood to be rudely jostled awake by the sound of alarms ringing in the Mogambo Secret Bunker In The Backyard (MSBITBY). Soon enough, I discovered why; Total Fed Credit was down by a goodly $6 billion last week. Wow!
Now, there are a couple of reasons why TFC could be down. For one, Ben Bernanke and his precious little Federal Reserve might be trying to slow the growth of the money supply, and thus finally brake their decades-long inflationary monetary expansion to belatedly head off dangerously rising inflation in consumer prices. To this possibility, experienced Fed-watchers will guffaw "Hahahahahaha!" with an ill-disguised and disrespectful tone of scorn and utter, utter contempt.
Another reason is that, maybe, nobody wants to borrow any money, and so the Fed doesn't have to create any new money or credit to accommodate them! To buttress that argument, I present Bloomberg.com, which quotes J Matthew Dalton at Belle Haven Investments saying that, "Liquidity is out of the market, bidders are pulling away. Without liquidity, you've got a real problem."
And speaking of liquidity, I notice that the enormous $723 billion stash of US government securities actually owned by the Fed (which is a private bank creating money out of thin air for their own purposes, and then using the money to buy the debt of the government, which we taxpayers will have to repay), dropped by $5 billion last week, too! Of course, I don't know what it means because it could mean a lot of things, but it is highly unusual!
(Continued here. The author, 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.)
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