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Strategies & Market Trends : Heinz Blasnik- Views You Can Use -- Ignore unavailable to you. Want to Upgrade?

To: Perspective who wrote (2320)	6/10/2003 11:48:08 AM
From: GraceZ	Read Replies (2) \| Respond to of 4905

Watch what they do instead of listening to what they say. I received this about a month ago from someone who is an even more dedicated Fed watcher than I am: I was reading in Fed Weekly Financial Data and noted that 1. Monetary base has risen from 670B to 720B over the last 12 months, +50B. 2. Currency has risen from 595B to 645B over the last 12 months, +50B. The base is defined as federal reserve credit + currency. Thus Fed added no net reserves because there was no need to do so. No loan demand. 3. C&I and commersh went to a new low! No loan demand, just a run-off or pay down of loans. 4. Private bank credit is persisting upward and shows real estate loan demand, a zero sum game. 5. M2 is extremely well-correlated to MZM, so MZM says nothing. 6. M2 rose 500B over the last 12 months almost all of it added was MMFs growth. This shows people are saving their money even at .7%. 7. The net in and out of currency in banks is 50B. The 50B is counted as base and under fractional multiplier of 10%(reserve requirement), the net in and out currency base supports 50B/10% = 500B. So the currency flux preferred by the public supports the real estate loan creation. You couldn't ask for a better arrangement than that. It has 19th century monetarist integrity. All 7 points show the financial system is about as benign as it could be. Thus, all those SI bears and Yahoo screamers are full of bs.