As Adjusted Monetary Base Rises By Half A Trillion In 2011, Treasury Runs Out Of Debt Ceiling Delay Measures

Tyler Durden's picture

Something very notable happened today receiving exactly zero recognition by the mainstream press: the process of winding down the Supplementary Financing Program ended, with either zero (assuming the entire $25 billion in 56 Day CMB matured without rolling) or $5 billion (as per the Treasury's disclosure), remaining under the SFP. This means that the entire $200 billion buffer that had previously afforded the Treasury breathing room with the looming debt ceiling, is now gone, and next steps include such drastic measures as a partial or complete government shutdown, as no incremental funding will be available to fund the daily deficit. As a reminder, as of today the Treasury had a total of $12.24 trillion in debt, just $70 billion below the ceiling, and $14.172 of debt subject to the limit. Which is not good because as per today's refunding announcement there is $99 billion in 2, 5 and & 7 year debt coming down the line next week. Which means that while the formal debt ceiling will not be breached, the total amount of debt including the fluff not counted, will surpass $12.4 trillion by next Friday. In the meantime, the SFP unwind continues to have a major impact on the adjusted monetary base. As we have discussed in the past, excess reserves continue to go parabolic, purely as a function of the SFP unwind and ongoing QE2, which in turn is impacting the adjusted monetary base, which is now half a trillion greater year to date. As we predicted previously, excess reserves will hit $1.7 trillion by the summer. These rose by $72 billion in the past week to approximately $1.4 trillion, which means that by the time QE2 is over, the Adjusted Monetary Base will hit $2.7 trillion, a $750 billion increase in 6 months. And if QE3 gets the green light, all bets are off. And once this surging monetary base is converted from excess reserves to currency in circulation, that is the moment when Weimar comes a-knockin'.

The AMB chart that speaks volumes (link).

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SheepDog-One's picture

The chart says it all, endgame upon us.

penisouraus erecti's picture

Damn - you had to say endgame and make post Mustaine's song again.....

chump666's picture

Yeah an endgame trade is there...just trying to time it.  Could be very close...

RECISION's picture

Nahh... just pull a couple more rabbits out of the hat... and it's all good.

Party on Dudes.

rocker's picture

Doesn't GDP come out at 8:30 tomorrow. Will the market find a new reason to rally on the news ???  He He He Haaaaa.

I think I need to buy a gun's picture

all those extra dollars are going to go into gold....I think thats the Bernaks plan

Mr Lennon Hendrix's picture

Bernanke is smart, because he is a doctor.

Dave's picture

You changed your avatar. Is that a drop of blood?

John_Coltrane's picture

But not a "real" one like Dr. Paul or his son who will make sure the debt limit stays where it is via the almighty filabuster.

NoClueSneaker's picture


... another coffee spill .... addy of EPA ?

Sam Clemons's picture

I've seen that if (when) gold hits $5000, most of the existing money supply will be "backed" by the gold in Fort Knox. Weird how that works out...

Everyone thinks the bankers all hate gold, but governments and central banks still have more than everyone else.

TruthInSunshine's picture

I've read 50k+ per ounce puts it at equilibrium.

DavidC's picture

What gold in Fort Knox?


TruthInSunshine's picture


Equity markets are going to crash in short order.

That 'money' isn't real until it's realized, and there's no chart showing offsetting liabilities that are yet to be realized.

A good chunk of this money is already claimed by creditors, and will never make it to circulation.

There will be a MASSIVE amount of redemptions shown around this time, when you all look back, from equity pools.

Get on the right side of this trade.

It's all a fucking house of cards, just like in 1999 and 2007. No difference.

I know this won't be popular or that many are going to agree with me, but the crash will take almost all assets down with them.

The liquidity crisis that is unfolding now is the biggest in the history of mankind.

cocoablini's picture

Its all an accounting scheme- so if the FED owns a oile of equities, why would the stock market crash unless the ponzi banks dump shares to run for cash- which in this case would be worthless- as would treasuries

TruthInSunshine's picture

The Fed doesn't own a lot of equities. They probably own none.

The Fed's conflation of the equity markets was done vis a vis a faustian pact with Primary Dealers and other institutions.

Double down's picture

I tend to agree but it is more of a feeling though.  I do not think this money will make it into circulation in a meaningfull way.  I think cash, physical cash, will command a premium over the electronic version in the near future.  The assault on the dollar's reserve currency status will come from the comedy of abundant electronic liquidity for some and the dearth for those who have to service debts.

TruthInSunshine's picture

Tyler keeps pasting the St. Louis Fed M2 chart, but no one will go further and speak about the fact that a massive chunk of those 'digital dollars' will never make it into circulation, as creditors have already liened or attached to them, or there are offsetting losses in terms of unrealized losses in other asset classes (e.g. real estate; e.g. derivatives) that will offset such shown 'money supply'.

Terminus C's picture

Sure, but what then do the creditors do with the money they have claimed?  It does not get destroyed.

TruthInSunshine's picture

A lot of it gets destroyed, as it was marked to some sort of pledge, collateral or contract or security instrument, and unless the payor gets bailed out (which is not going to happen - no way), what will they collect?

Poof. Into the ether.

Racer's picture

Debt ceilings? fuck that...

Boilermaker's picture

Yep, no shit.

Futures, up like a mother fucker.

Nobody has time for any of this reality shit.  They've a fraudulent market to keep propped up.

Bay of Pigs's picture

You notice the beatdown and margin hike had a less than 24 hour impact on gold/silver prices? Right back where we started yesterday.

Sinclairs post today was dead on.

JLee2027's picture

All I want to know at this point is when is the fiat system of shitola coming apart so America can start rebuilding.

Mr Lennon Hendrix's picture

I could make a solid case that it came apart in 1913.

dark pools of soros's picture

yeah they tear down all the other regulations but that damn debt ceiling gonna stop 'em!!

Lets_Eat_Ben's picture

shut it down! Shut it all down!

TBT or not TBT's picture

But Benny could deliver us maximum warp, now.

reader2010's picture

This whole fucking thing will end up in tears and blood, bitchez.

Boilermaker's picture

For who?  Oh, those people...ah, fuck them.  They don't count.

Robot Traders Mom's picture

Kind of like the VCU/Purdue game last weekend...

Boilermaker's picture

No, that was actually worse.  I had a 'level 7' event in my living room.

Robot Traders Mom's picture

Yeah sorry dude. Y'all got f'd when Robbie Hummel went down. The suspension didn't help. I'm driving down to San Antonio tomorrow for the VCU game. Richmond is going to knock of KU.

Boilermaker's picture

Uhhhh...The spiders beat Purdue in the regular season also.

malikai's picture

Ah, sport. The opium of the masses.

Blano's picture

I can't keep up with ZH anymore.

Lets_Eat_Ben's picture

It's making you want to off yourself?

Blano's picture

Nah, just too much good reading to keep current on.  By the time I get through one, two more show up.

Withdrawn Sanction's picture

Surely, even an MIT-educated moron can figure out (at least after $2.5 trillion of trying) that it's probably better NOT to PUSH on a string.

(No offense to non-moronic MIT grads)

disabledvet's picture

maybe it's that little e-trade baby that's "coup'ed Wall Street."

Shameful's picture

Good thing we got a new war on.  That should provide sufficient excuse to pass a new debt ceiling.  After all don't want to leave the boys without cruise missiles and hi tech bombs to drop on people.

Lets_Eat_Ben's picture

The third war to end all wars