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Fed Balance Sheet And Monetary Base Update - New Records All Around
The Federal Reserve, just like Atlas, continues carrying the weight of if not the world, then certainly the stock market on its shoulders. As expected, both the Fed's balance sheet, and its economic equivalent, the Adjusted Monetary Base, just hit fresh all time records. This will continue for 4 more weeks at which point QE2 will end and what happens next will depend entirely on what side of the bed Bernanke wakes on.
First, a look at the balance sheet, shows yet another record breached, with total assets hitting $2.793 trillion. As usual, the bulk of the change comes form the Treasurys accumulated courtesy of weekly POMOs. In the past week, however, the rate has declined to just $12.9 billion, leading to $2.57 trillion in securities held outright. There was no change in MBS or Agency paper.
Total bank reserves also hit a new record of $1.59 trillion. At this point the SFP unwind is fully absorbed, and the change in the reserves matches changes in Fed assets one for one.
Other assets, while not back at record highs, are at $126.5 billion, following last week's periodic drawdown of whatever it is that comprise the "Other Fed Asset" line.
The notional of Fed assets under 1 year continues to be under $150 billion. So much for that stealth QE from Treasury rolls.
Courtesy of SMRA, we find that while the balance of assets grows to records, the actual average maturity of holdings has declined to all time lows, in the past week hitting just 62 months.
The most importantly variable, the Adjusted Monetary Base, just rose to another record. Yet even with the incremental weekly addition of tens of billions, there is no longer an impact on stock prices. When this number freezes and even goes into decline in 4 weeks, all bets (for the Russell 2000 at least) are off.
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The Decent Interval, filled with declining stocks and commodities, and bad news, followed by QE3. This is what is coming.
"The Decent Interval"
Good insight there Ned. That would be my guess as well. But, who knows where these guys are going to take us. But, the end game will likely be what it almost always is:
Bankers win, we lose.
Gold will be OK.
What's so decent about it?
A little early to be spiking the football. FWIW, I am firmly in the QE3 - QEx camp, but think Rickard's argument was being misinterpreted.
We are all slaves to an unproven theory. We may see the true price of central planning.
When you realize the goal is for more power and control, the financial moves are easy to predict.
Easing will continue until total bankruptcy.
Ben 'Banana Republic & Bubbles' Bernanke is now in charge of the worst hedge fund in the history of hedge funds.
Look at that shit the Fed's holding - just one, pathetic, but not at all uncharacteristic piece of shit example: Federal Reserve Owns Red Roof Inn
Good luck, Bernankincide!
Maybe the 3% [ III ] will ensure you get to shove that toxic waste up your and William 'Let Them Eat iPad' Dudley's asses!
You's guys/gals not tear that place down yet...??? Any time now.....right...???
Aint FEDERAL...AND aint got NO RESERVES...!!!
...Go figure.
I am also still waiting for the outcry and protests outside the corner of 20th street and Constitution.
But you could tear down that building brick by brick and hang every single employee of the federal reserve worldwide, but it would be like cutting off one tentacle of a giant octopus, and expecting it to die.....
http://www.archive.org/download/ModernMoneyMechanics/MMM.pdf
or
http://www.archive.org/details/ModernMoneyMechanics
You'll see as we get closer to the deadline, the crisis and fears will begin to ramp up. Take ahold of your life by calling their bluff.
But converting over to the log scale will make things look better, much better
Taxpayers taken to the cleaners.
Hercules cleaning the Aegean stables was nothing compared to the job of cleaning up the FED's balance sheet.
Bernanke being fed to the Nile crocs at the Bronx Zoo would be appropriate.
I still speculate that the "other asstes" consists of various stocks and etfs. Interesting correlations of other assets declining and markets decline.
Their gold holdings would be considered "other assets", wouldn't they? That is of course, if they haven't sold all their (our) physical gold.
Probably the make up of other assets that is gold, makes up about 5% of OA. The rest are SPY and SSO shares ;).
According to the Fed's General Counsel, they own no gold -- only gold certificates for the gold delivered to Treasury in 1934, certificates that they will never redeem. The GC says thir gold is a mere "accounting entry." So their "gold" is just fiat like everything else.
According to the Fed's General Counsel, they own no gold -- only gold certificates for the gold delivered to Treasury in 1934, certificates that they will never redeem. The GC says thir gold is a mere "accounting entry." So their "gold" is just fiat like everything else.
According to the Fed's General Counsel, they own no gold -- only gold certificates for the gold delivered to Treasury in 1934, certificates that they will never redeem. The GC says thir gold is a mere "accounting entry." So their "gold" is just fiat like everything else.
According to the Fed's General Counsel, they own no gold -- only gold certificates for the gold delivered to Treasury in 1934, certificates that they will never redeem. The GC says thir gold is a mere "accounting entry." So their "gold" is just fiat like everything else.
Keynesian endgame...exactly the scenario the Fed was trying to avoid. Any and all pumping goes right in the bank.
The 1:1 relationship suggests an increasing amount of uncertainty I think. Which of course makes a lot of sense given the circumstances.
So, Bernankincide can deepen the liquidity trap, or he can further push on that string he's been pushing on?
Two very bad options, with both most definitely ramping up public anger which will be converted into some of the biggest venting on politicians that the useless Elected RepresentativesTM on either side of the Corpocracy Aisle, whether Republirats or Demoncraps, will feel in a long, long time.
I used to doubt the public anger would rise to a fevered pitch amongst American Sheeple, but lately, I am beginning to hear, see and observe things that have caused me to rethink my previously held assumptions.
All the deep capture and corporate sponsorship of politicians, even with the best hired guns on Madison Avenue, astroturfing and putting lipstick on the pig politicians, will do no good, in the face of a continuation and worsening of the situation working and middle class Americans are facing.
And even average people, while not necessarily knowing the details, know they're being royally screwed, and that somehow, someway, they are being penalized so that Wall Street and the Financial Sector can be fed with a silver spoon.
The usual solution, when that pitch reaches (unchartable) highs is to blame everything on an outsider. To be able to do this, a shocking event (false flag) must be staged.
Who'd it be? China?
Watch out below!
We're saved!
The Pause that refreshes...Helicopter Ben shifts the onus onto Congress and President to cut federal spending / raise debt ceiling.
The printing pause will only last long enough for the S&P to decline to the 1250, then the whining and MSM class warfare reports begin in earnest. At 1200 the printing begins again.
It is quite clear that Bernankes gamble has failed.
There has been an asymetrical wealth effect, which has left main street in the dust.
And in the process of sparking asset inflation, Bernanke has brought forth commodity inflation that is suffocating the very economy he is trying to manipulate, all the while, he has made a mockery of the price discovery mechanism that allows for efficient and fair financial markets.
Equities don't reflect reality, nor do interest rates, and in the last act, a few savvy insiders are grabbing for that very last brass ring in the form of over-inflated IPO's.
These offerings will mark the top of this cycle, unfortunately there is no bottom this time, just a full on system reset in which we will lose more than our financial assets and wealth.
Just like in 2007-08, housing, which has been falling for many months, will precede what will be once again a massive collapse in the economy and asset prices, except this time, there are no more bullets in the gun, no more term sheets, and no more hope.
We are as good as dead.
+++++
That was a fantastic reply.
You should write a blog!
A market of price discovery and no daily injections of printed money to prop it up? How can we live like that?!
Yup, when this number freezes/declines in four weeks, and the RUT,SPX & COMPQ go into free-fall (remember, per Jon Hilsenrath, the "hurdle" for QE3 is very high, so a meager 5%-10% correction won't do), the big move into Treasuries will commence.
What's surprising is how much Treasuries have already rallied---before QE2 has even ended. So in another 4 weeks, after the shit hits the fan in risk assets, I would think that 2.5% on the 10 year will be a chip shot.
If the Fed really wants the world to feel the pain, and beg for some QE mercy, then 2.0% (a new secular low) would not be out of the question....sometime in July or August.
Bernanke is never going to wake up. He is under the influence of such big numbers that provides every college student majoring in finance a wet dream at night and leakies by day as they lust to have the same power as well.
QE3 or not QE3, that is the question.
Bankers and government must be protected. Q.E.D. Q.E.3
fuck this.
hey, look at this paper... trade your life for it.
What I want to know is: What is Bernanke doing to implement the Basel III accords? I would like to see some analysis of that.
All major G20 financial centers have committed to having the Basel III capital framework adopted before the end of this year.
Gold short term bubble (July-October) is coming closer :
http://saposjoint.net/Forum/viewtopic.php?f=14&t=2626&start=420#p32823
Atlas (or Enoch) never tasted death, as he was translated to God's home in the sky. Lucky guy.
This is the key to recognizing the Fed is not omnipotent. Paradoxically, the difficulty rests in the simplicity of percentages. To maintain a given growth rate in stock prices (assuming little or no organic demand), the funny money demand must grow at an ever-increasing rate.
That's why, in part, QE2 packed a smaller punch than QE1 (it was smaller). And it's why, unless QE3 is Jupiterian sized, QE3 will be even less potent than its older siblings. But if it is QE-Jupiter, the Fed destroys its chief liability, everything denominated in it (including the banks), and its reason for being. BB is really in a box. Maybe we should punch some air holes in it.
don't worry
'bout a t'ing
'cause every little t'ing
gon be a'right, mon
(Ben) woke up dis mornin'
smiled at dee risin' sun
t'ree little birds
by (Ben's) doorstep
singin' sweet songs....
You know, this staggering balance sheet is almost incomprehensible. I have been commenting for months that stimulus was around $5 trillion. However, and seeing where the Fed is, the two year stimulus bill from DC plus the Fed is actually closer to $7 trillion...on what...a $1.5 trillion [and soon to be contracting] economy? It is mind boggling that anyone thinks this can continue.
The question then is, what part of the Fed's balance sheet should be shorted prior to what will have to be a forced liquidation? Never mind when, but what? Tyler, even though the Fed has bought far less of the 30 year T bill, isn't that where the initial pressure would come? After all, selling that one initially creates the much vaunted "steepening yield curve" which bankers just love, love, love.
We are all beyond f*cked in this situation.
pm's & oil under pressure..waiting to buy getting very near it..will this next run put PM's and Oil far past last 6 month highs??
China slow down is what they say is the reason..BS..the FRN is burning down.
Sell your paper silver for time being
http://deadcatbouncing.blogspot.com/2011/06/silver-breakout.html
"The most importantly variable, the Adjusted Monetary Base, just rose to another record"
That is a statement that can only be made by someone that doesn't understand money & banking.