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Pastimes : Clown-Free Zone... sorry, no clowns allowed

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To: LLCF who wrote (97093)	4/21/2001 5:07:05 PM
From: patron_anejo_por_favor	Read Replies (3) of 436258

Debt trapping underway? Latest figures from the St.Louis Fed show declines in both the adjusted Monetary Base AND in MZM. These were compiled before the panic April 18 rate cut: stls.frb.org stls.frb.org The MZM decline can be explained away on the basis of "sideline money being put to work in the market"; the Monetary Base figure cannot. Despite the incredible amount of Fed pumping, coupon passes and rate cuts, the Monetary Base is back to where it was immediately after the first 50 BP rate cut. This is exactly what Noland predicted with his Law of Diminishing Reliquifications, and bodes poorly for the economy and the financial system over the next 6-12 months. The "money" being created is escaping into agency debt, higher homeowner debt through refi's and higher credit card debt, rolled into ABS's and sold into the money market's. It's NOT going into capital investment and into commercial/industrial lending, nor into commercial paper to ease debt rollover concerns of distressed companies (where presumably it is most needed): stls.frb.org stls.frb.org In other words, yes, the Fed is pushing on a string here.

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