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Strategies & Market Trends : The coming US dollar crisis -- Ignore unavailable to you. Want to Upgrade?

To: ggersh who wrote (18362)	3/7/2009 3:58:19 PM
From: Slumdog	Read Replies (1) \| Respond to of 71456

>>is that money just being swallowed by the banks?<< ....it's the BBB. not better business bureau, the Bailout for Bad Bets.......

To: ggersh who wrote (18362)	3/7/2009 4:19:07 PM
From: Real Man	2 Recommendations Read Replies (1) \| Respond to of 71456

This is "adjusted base". The main part of the increase is bank reserves at the Fed, which is cash from bank deposits stored at the Fed. That process is actually quite harmful, since money that sits at the Fed is not in the economy. The Fed is printing, but not "like crazy", about 10% increase per year. They are trying very hard to push more credit into the economy, but banks refuse to lend. They are scared and store cash with the Fed instead. <g> They printed 79 bln. Normally, that would result in additional 1 Trillion or so, as 10:1 leverage multiplier is applied. That money went to pay for only a tiny part of blown up debt instead. Each 100 bln. in defaults destroys 1 Trillion in leveraged money. Basically, the Fed is trying to shovel money from one pocket to another, and the total leverage is decreasing. Their normal credit tools - low rates - are not enough to deal with deleveraging going nuts. The government is trying to shift the stuff that blew up on taxpayers, thus replacing blown up credit in the real economy. If the Fed printed that much, I'm sure stocks would go to new highs by now and commodities/gold would go completely ballistic. -g-