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To: pater tenebrarum who wrote (45633)	4/11/2000 5:59:00 PM
From: John Madarasz	Read Replies (3) \| Respond to of 99985

heinz, we all saw what happened last tuesday when the cork got left in the bottle... where are we here? Complacency...Concern...or Capitulation We can't be at Contempt yet? Can we??? <g> Regards, JM

To: pater tenebrarum who wrote (45633)	4/11/2000 7:03:00 PM
From: John Madarasz	Read Replies (1) \| Respond to of 99985

Heinz... Is the Fed making money off interest on these overnight repros? Reserve Requirements and Money Creation Reserve requirements affect the potential of the banking system to create transaction deposits. If the reserve requirement is 10%, for example, a bank that receives a $100 deposit may lend out $90 of that deposit. If the borrower then writes a check to someone who deposits the $90, the bank receiving that deposit can lend out $81. As the process continues, the banking system can expand the initial deposit of $100 into a maximum of $1,000 of money ($100+$90+81+$72.90+...=$1,000). In contrast, with a 20% reserve requirement, the banking system would be able to expand the initial $100 deposit into a maximum of $500 ($100+$80+$64+$51.20+...=$500). Thus, higher reserve requirements should result in reduced money creation and, in turn, reduced economic activity. In practice, the connection between reserve requirements and money creation is not nearly as strong as the exercise above would suggest. Reserve requirements apply only to transaction accounts, which are components of M1, a narrowly defined measure of money. Deposits that are components of M2 and M3 (but not M1), such as savings accounts and time deposits, have no reserve requirements and therefore can expand without regard to reserve levels. Furthermore, the Federal Reserve operates in a way that permits banks to acquire the reserves they need to meet their requirements from the money market, so long as they are willing to pay the prevailing price (the federal funds rate) for borrowed reserves. Consequently, reserve requirements currently play a relatively limited role in money creation in the United States. ny.frb.org TIA John

To: pater tenebrarum who wrote (45633)	4/11/2000 7:11:00 PM
From: bobby beara	Read Replies (2) \| Respond to of 99985

Heinz, we had a minor change reading in the McOscillator today (a push between advancers and decliners) and we have a bearish divergence between the oscillator which has been making lower highs since March 24th and the dow/nyse which has been making higher highs. Also i believe the transports, which closed on the 200 dma today are running into price resistance between here and the 3100 area. i think the old economy stocks are getting close to a tradeable top, the question is will they rotate the money into the oversold nasdaq or will the whole shebang go bang again -gg-