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To: AllansAlias who wrote (52104)	8/31/2002 12:07:58 PM
From: Lee Lichterman III	Read Replies (1) \| Respond to of 209892

I haven't found a good link to explain it this morning but I did research it before and it is pretty straight forward. Basically, it is all the borrowing FROM the Fed BY commercial banks. In other words, C, JPM, AXP etc when they are short on cash, borrow from the Fed to keep liquidity and usually this is for a short term loan only. While trying to answer your question, I did stumble upon this though that might explain the spike. From frbsf.org Paragraph 3 - b......... b. Special Drawing Rights Certificates Special drawing rights ("SDRs") are issued by the International Monetary Fund ("Fund") to its members in proportion to each member's quota in the Fund at the time of issuance. SDRs serve as a supplement to international monetary reserves and may be transferred from one national monetary authority to another. Under the law providing for United States participation in the SDR system, the Secretary of the U.S. Treasury is authorized to issue SDR certificates, somewhat like gold certificates, to the Reserve Banks. At such time, equivalent amounts in dollars are credited to the account established for the U. S. Treasury, and the Reserve Banks' SDR certificate account is increased. The Reserve Banks are required to purchase SDRs, at the direction of the U.S. Treasury, for the purpose of financing SDR certificate acquisitions or for financing exchange stabilization operations. The Board of Governors allocates each SDR transaction among Reserve Banks based upon Federal Reserve notes outstanding in each District at the end of the preceding year. =========== So I gues if the South American stuff is getting real bad and the IMF is short on cash, they can borrow from us a well? Not sure how to interpret this but maybe that is the spike up. Anyway, I am off to show the kids the beach all day. Good Luck, Lee

To: AllansAlias who wrote (52104)	8/31/2002 6:39:54 PM
From: NOW	Read Replies (2) \| Respond to of 209892

From Richard Russel: "With the massive amount of debt now built into every corner of the US economy, the Fed will not accept deflation. The Fed will do anything they can to ward off deflation. If it takes more money supply, they'll do it. If it takes another drop in short rates, the Fed will do it. If it takes monetizing foreign debt or corporate bonds or God knows what, the Fed will do it. Write this down on your bathroom mirror -- THE FED WILL DO ANYTHING TO AVOID DEFLATION. So far, the Fed is depending on the US consumer to "keep things going." Homes and cars are being financed with just the thinnest of down-payments. Banks are practically begging consumers to take out loans. "Nothing down" is the watchword of the day. The Fed wants you to keep buying. " Dowtheoryletters.com