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Strategies & Market Trends : Currencies and the Global Capital Markets

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To: Archie Meeties who wrote (2644)	12/22/2000 5:28:08 PM
From: Thomas M.	of 3536

Pay no attention to the man behind the curtain. -g- ------------------------------------------------------------- Mogambo Guru 9241 54 Street N., Pinellas Park, Fla. 33782 DECEMBER 5 ~ Something must be going on that we don't know about. Otherwise, the Fed wouldn't be using this power to provide a constant avalanche of liquidity to the banks. This ability is an emergency power of the Fed. Like 007's "license to kill," it's to be used as a last resort. He doesn't shoot the snotty bellboy, even though he can. Likewise, this expansion of credit is not supposed to be used as a permanent super-charger. Nevertheless, new loans by the banks are expanding at a rate of $384 billion per year. GDP is expanding at only $237 billion per year. Additionally, the fractional-reserve ratio, if you use the required reserves and bank savings data provided each week in Barron's, is now a minuscule 1.2%. The textbook average is 10% or more. The Treasury also printed up another $3.9 billion in new fiat money. Ignoring the huge multipler effects of the Fed credit balance, this is still a straightforward combined $9.4 billion of new liquidity in one week. One week! -RICHARD DAUGHTY

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