Fed Balance Sheet Hits New Record At $2.55 Trillion As Bank Reserves Hit $1.3 Trillion All Time High

Tyler Durden's picture

The Fed's insatiable desire to redo all the debt monetization mistakes of the Weimar republic continues. This week, the Fed's balance sheet hit a fresh all time high of $2.55 trillion, primarily as a function of increasing Treasury holdings. Not adding today's $7.2 billion POMO to the total holdings, the Fed's total Treasury holdings increased by $22.8 billion W/W, even as MBS posted their first decline in two weeks now that repurchases have materially slowed down as mortgage rates are substantially higher than at the start of QE Lite. This means that net of today's monetization, the Fed owns 7.2% more Treasurys than even the adjusted Chinese holdings of $1.16 trillion. Another key observation: excess reserves which have surged in recent weeks due to the unwind of the SFP program and due to the delay in liability catch up with Fed assets, increased by another $6 billion to a record $1,296 billion. And, naturally, only a hedge fund as big as the Fed would list $116.1 billion in other assets.

Total Fed balance sheet:

Total Reserves versus changing assets:

Total change in marketable assets since the start of QE Lite:

And the top holders of US debt:

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reader2010's picture

We are fucked, and that's for sure.

ghostfaceinvestah's picture

This ain't gonna end well, that is for sure.

Zimbabwe or USA 1930.  I would say "choose your poison", but it is being chosen for us.

reader2010's picture

Can I still manage to escape this shit hole before it gets too late?

Rainman's picture

Uh-oh.....$116B in other assets might be all the gold they gots.

smlbizman's picture

i heard chatter to day on cnbc, yeah i know, the guy said we have gold at ft. knx, wst. pnt. at the feds vault and it is so great news that they only consider it at 42. ++ and not 1400 an onunce so shit were rich bitch, than the guy said they could sell it for 350 bil. and pay some bills or spend...at this point i put my gun on the roof of my mouth...   

RockyRacoon's picture

Funny how neither of those tards suggested actually selling the gold hoard, for differing reasons, of course.   I think they both know why.

dark pools of soros's picture

how much paper silver did they buy from Blythe??

jesse livermoore's picture

I was watching that segment, the first guy suggested selling some because it just sits around and does nothing and it wasn,t like we going back on the gold standard anytime soon.  he even china would buy it right up!!!!!!!!!!!!

Judge Judy Scheinlok's picture

China and Japan are fucked!

So is the FED but who gives a shit!

You really have to appreciate this.

So what exactly was Madoff guilty of?

plocequ1's picture

Exactly. Who gives a fuck? What can one do except say to yourself  who gives a fuck? We are doomed.

RockyRacoon's picture

Check.   I'm ready to rock n roll.

BTW, has anyone ever told you that you're butt-effin-ugly?

Judge Judy Scheinlok's picture

Solicitation is a crime.

"I'm here because I'm smart, not because I'm young and gorgeous!"

RockyRacoon's picture

I've used worse pick-up lines and been successful.   Sad that you saw past my ruse.

asdasmos's picture

"So what exactly was Madoff guilty of?"


Trying to beat the government.

Burnbright's picture

Trying to beat the government.

At their own game, which is why he lost.

dark pools of soros's picture

he didn't owe enough to Goldman

Judge Judy Scheinlok's picture

Yes, at it's own game. LoL. I think it has more to do with who it was in his target audience.

A jew steals from you? Oh hush, hush everything is going to be alright. We will spread the cost of the theft across all taxpayers. No worries.

A jew gets stolen from and it's straight to jail, even if you are a jew.

NewThor's picture

Soon Bernanke and The Federal Banksterati will have the whole world

on their balance sheet. Gratz Earth 2011. All these things must pass.

NotApplicable's picture

I just wonder how long it will take and what version of QE we will be up to by then.

the rookie cynic's picture

Every time ZH posts these FED graphs all I can see is the invasion and overthrow of Mainstreet by the global elite bankers from hell. The FED is the biggest Trojan effing horse of all time. What's the problem? Wallstreet is the problem. "The rot must be purged." http://therookiecynic.wordpress.com/2011/01/11/greenspan-loved-bubble-gu...

ghostfaceinvestah's picture

von Havenstein had nothing on Bernanke.  Benocide is in Gideon Gono territory.

NewThor's picture

When TSHTF where do these guys think they will be safe?

In their pitchfork and Nibiru safe bunkers with a life time of DVD's 

of old Ronal Reagan speeches?

Caviar Emptor's picture

There's a secret compartment in the Reagan mausoleum

dark pools of soros's picture

watching netflix on their ipads on venus...   they tell us all about mars but they already have cities on venus

TruthInSunshine's picture

I'd dare hazard a speculative bet that whatever portion of the Fed's balance sheet is comprised of MBS & CDS, that portion is worth, at best, 50%, and probably closer to 35%, of whatever the Fed has it valued at 'officially.'

Judge Judy Scheinlok's picture

Less and less as each day passes.

But I have a question for those with a real estate background. Currently Freddie and Fannie are mandating in about 90% of their salable properties that you can only buy if the home is going to be your primary residence for at least a year. Else a $10,000 fine.

This puts an large cap on speculation/flipping. No?

If you were sitting on such a large garbage barge of moldy, blighted, overvalue RE, wouldn't you want to dump it onto whoever will pay the highest price? Regardless of how many other properties this entity has purchased?

There is something going on and it smells like 3 month old milk.

TruthInSunshine's picture

They have cracked the whip even harder than that, by requiring higher FICO scores, more realistic appraisals (appraisals for mortgages are actually hard to get, in some areas, now), and a higher % down on any FHA-backed mortgage (which I do believe is well over 84% of now issued mortgages).

The reason they are trapped, though, is the same reason many banks and other repositories of real estate (commercial, industrial, office and residential) are trapped: If they dump the crap they have in their coffers onto the market now, they further depress prices, which complicates their problems, as much of their 'solvency' is tied to fantasy valuations.

True mark-to-market would cause a tsunami dwarfing the S&L crisis.

StychoKiller's picture

FRNs, FRNs everywhere and not a debtor to lend them to!  Apologies to S.T. Coleridge!

Withdrawn Sanction's picture

Judge, seems like it would depend on the price.  If it were low enough, the $10K fine would just be a transactions tax.  Painful yes, but not fatal to the deal...if the price is right.


PS...what DO you think is going on

prophet_banker's picture

right, we'd be fools to think THE FEDERAL RESERVE doesn't engage in off balance sheet transactions for leverage like the rest of the banks....that 1,600trillion dollar market has no transparency

Caviar Emptor's picture


Ben's introduction to his next Humphrey Hawkins speech: 


There is a fifth dimension beyond that which is known to man. It is a dimension as vast as space and as timeless as infinity. This is the dimension known as The Bernank Zone. Where not only can the Fed own everything, it can own twice everything


Spalding_Smailes's picture



I prefer to define inflation and deflation in terms of changes in the volume of money only. While definitions can be chosen as a matter of preference, the laws of cause and effect do not depend on the choice of definitions. It is the volume of money alone, not the volume of money and credit, that is the primary determinant of prices generally. By focusing on money I do not deny that a credit contraction has important macroeconomic consequences, nor do I deny that fractional-reserve banking makes money and credit interdependent.

The key point is that prices are formed with money because money is the final means of payment for goods, while credit is not. The value of each unit of money rises only when there is less money or more demand for existing money. A change in the volume of credit will affect relative prices but it will not affect the overall value of each money unit in a systematic way.

Lumping together money and credit as if they were the same thing leads Prechter to deeply confused and crankish writings, such as here, in The Fed's Presumed Inflation — Mostly a Mirage. In this piece, he makes a spurious distinction between the monetization of new government debt and the monetization of existing government debt. To summarize Prechter's point, when the public's holding of Treasury debt is replaced by holdings of dollars (which, to further confuse matters, he calls "IOU Dollars"), no net inflation has occurred because the volume of money plus credit has not changed.

This is plain wrong. As noted above, Prechter is free to define inflation as a growth in money plus credit, but the economics of the money supply and the credit supply are not the same. Aggregating money and credit obscures the difference. Credit is not money. Money can be spent, debt cannot. Debt investors hold a claim on future money flows, while money holders hold money. The total of money-plus-credit has not changed in Prechter's scenario, but the supply of money has increased, while the supply of debt has decreased by the same amount. Whether or not the bank multiplies more loans on top of the new deposits, the supply of spendable media has increased.

Furthermore — contra Prechter — from a monetary standpoint there is no difference between the monetization of new or existing debt. In either case, money is created out of nothing by the central bank. In the former case, a corresponding amount of Treasuries is removed from the banks' balance sheets and in the latter case it is not. But the quantity of money, which is the primary determinant of the value of each unit, increases in the same way in either case.

Duration and interest are different for cash and treasuries, but they are not the fundamental differences. The fundamental difference between them is that money is accepted as a final means of payment for goods and Treasuries are not. This is why Treasuries are not cash.

Government debt is a liability that requires the payment of money proper as interest and upon maturity. Actual money is not a liability in the same sense. Fractional-reserve banking makes this more complicated because the money supply consists of currency and bank liabilities that are backed by bank assets. But these bank liabilities have the unique property that they are accepted as payment for goods and services — while other financial liabilities such as Treasuries are not.





Burnbright's picture

Not really sure what your point is but to clarify there really is no difference between credit and reserves. Although credit is created along with debt the bank doesn't suffer a loss on loaning credit regardless if any portion of princple or interest is paid back. If you don't believe me read modern money mechanics written by the chicago federal reserve.

Double down's picture

Wonder what Keen's retort would be?

Withdrawn Sanction's picture

True, credit is not money (though all money, including currency is a form of credit...as in a "note").  Credit is a form of purchasing power such as a mortgage allows one to "purchase" a house, or a car loan to purchase a car.  Indeed, the vast majority of things we buy we do so w/one form or other of credit.

Credit (as in T-Bills) can also represent a form of potential purchasing power and as backing for other forms of more liquid money.  When that potential is converted into actual purchasing power is where problems can arise.

As w/the other poster, not sure what the point of your "post" is, other than to take a swipe at Prechter.  While I hold no book for RP, I do note and find it interesting that two trolls have gratuitously slammed him in the last day or so, and now this UK marketoracle piece makes 3.  Very interesting indeed.


PS Smailes, lifting that much of another's work is not fair use, even with a citation.  It's theft.

Burnbright's picture

And people still think deflation is going to happen. Truly unbelievable based on those graphs.

prophet_banker's picture

and yet HOUSES have not hit their bottom yet, i'd bet 2012

km4's picture

David Stockman warned us months ago

"This is not 1981, this is not 'morning again' in America, we've drifted now for 30 years. Stockman continued, "In that 30 years, the deficit has gone up 14x, but our economy is only four times larger. We're losing the race, and we're now becoming the banana republic [of] finance, printing -- the Fed, these mad men who are out of control at the Fed are printing new money equal to 100 percent of the debt that we're issuing each month. This will not end well. It's going to end in a disaster."


FunkyMonkeyBoy's picture

He who owns the debt has the control.

Creditor = the FED.

Debtor = the U.S. docile populous from here to eternity.

Now back to work bitches, the Bernank doesn't like slackers, you gotta pay the interest on that un-repayable debt created from money printed out of fresh air.

Judge Judy Scheinlok's picture

And don't forget to brush 5x a day with fluoridated toothpaste! Bitchez!

Or you will look like this. No one will love you and you will have zero opportunities in the land of opportunities!


RockyRacoon's picture

Before picture, eh?  Now show us your after picture.

Judge Judy Scheinlok's picture

Real after picture(video):


Prepare yourself for the real world Rocky.