Federal Reserve Balance Sheet Update: Excess Reserves Surge, Fed Owns 37% More Treasurys Than China

Tyler Durden's picture

There are two key datapoints to present in this week's Fed balance sheet update: the surge in excess reserves, and the comparative Treasury holdings between the Fed and other foreign countries. But first the basics: the total Fed balance sheet hit a new all time record of $2.5 trillion. The increase was primarily driven by a $23 billion increase in Treasury holdings as of the week ended February 23 (so add another $5 billion for yesterday's POMO) to $1.214 trillion. With rates surging, QE Lite has been put on hibernation and there were no mortgage buybacks by the Fed in the past week: total MBS were $958 billion and Agency debt was also unchanged at $144 billion. The higher rates go, the less the QE Lite mandate of monetization meaning that the Fed will be continuously behind schedule in its combined QE2 expectation to buy up to $900 billion by the end of June. Yet most notably, as we touched upon yesterday, the Fed's reserves with banks surged by $73 billion in the past week, as more capital was reallocated from the unwinding SFP program. As noted previously, we expect the total bank reserves held with the Fed to jump from the current record $1.29 trillion to at least $1.7 trillion by June.

Full Fed Balance Sheet:

Tracking purchases of USTs coupled with dispositions of Agency debt, shows that while the first is accelerating, the second is slowing down dramatically:

Most notably is the dramatic and sudden surge in excess reserves:

And the old faithful chart comparing Fed holdings with those of formerly major foreign holders. The Fed now surpasses China in its Treasury holdings by 37%!

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DaveyJones's picture

China: why own their treasurys when you can own their treasury

asdasmos's picture

Damon Vickers, Nine Points Capital Management founder talks about QE2 and why he thinks bernanke is buying up the US debt

(Feb 25th 2011)

- http://www.youtube.com/watch?v=5WC9CpdeHF8

Azannoth's picture

Madeoff is ROTL in prison over this

Would be funny if madoff defence looked like this

Judge: Mr. Madoff did you run the biggest ponzi schem of all time or not ?

Madoff: No I Did Not run the biggest ponzi scheme of all time !

Judge: we have evidence that you ran a 60B dollar ponzi scheme

Madoff: I did not say I didn't run a ponzi scheme. Just not the biggest Ben Shalom Bernanker has this honor!

EscapeKey's picture

Peter Schiff suggested Madoff become the Treasury Secretary.


carbonmutant's picture

Madoff's crime was not that he ran a ponzi scheme but that it was not "Government Approved"

101 years and counting's picture

add in the treasuries held by the Fed, via UK, and the Fed now owns 100% more than china.

bankrupt JPM buy silver's picture

JUST IN ...Blythe is offering 30-50% premiums on the silver contracts to settle before monday!..Bring it you whore!  bring it!



sudzee's picture

Where is this so called "cash" coming from? Does JPM/HSBC have they're own printing presses?

bingaling's picture

WB's plan worked . If I remember correctly this is how the blackmailing starts . Everyone will be jumping on this ship to collect their premiums or take delivery . 50% over spot is not a bad start . I will bet this money is rolled back in for the next few months of delivery . Every month the payoff will get bigger and bigger and the price of silver higher and higher .Not only that, on top of all of this there is a real physical demand.  Game over for Blythe .

jus_lite_reading's picture

Heard a rumor about premiums 25% but 50%?

Does anyone need more reason to buy silver now?

NOTW777's picture

"The higher rates go, the less the QE Lite mandate of monetization meaning that the Fed will be continuously behind schedule in its combined QE2 expectation to buy up to $900 billion by the end of June."

disgusting to talk in terms of being "behind" on fraud

Ragnarok's picture

What was the change in UK/China holdings?

MolotovCockhead's picture

Nice!! Print more fiat and nobody have to work for a living no more.

BennyBoy's picture

The FED's Number One!


(Soon to be the only one)

Just Observing's picture

The Fed "owns".....what a FUCKING JOKE.....they digitize 'money' to 'pay' for paper issued by the Treasury.

FUCKING MONOPOLY (tm) GAME is more solid than this bullshit...at LEAST the "banker" has a limited amount of paper in his tray.


Triggernometry's picture

Please check the rules, I just played Monopoly (tm) last night with my son. The banker is allowed to "print" money by writing values on scraps of paper when the till runs dry; he/she is allowed to simply keep a ledger(digitizing) in the event additional paper is in short supply. So while the banker starts with a limited number of bills, there is no limit to how much money can be printed or digitized.

Silver, bitchez!!!

Cognitive Dissonance's picture

"To infinity.....and beyond."

Buzz Bernanke

Hulk's picture

Looks like we have been to infinity and we are now coming back...

Doubleguns's picture

Nope, just a fly by before we run out of gas.

Cognitive Dissonance's picture

I bet Boeing, after a suitable 2 or 3 year delay, will begin delivering those new tankers just in time for an aerial fill-up.

A_MacLaren's picture

Can you ask Wm Banzai to photoshop in "The Bread's Face"?  I'd really enjoy that image.

Cognitive Dissonance's picture

William Banzai and Banzai7 labs are currently wall papering the lab's waiting room. But WB has informed me he will return just as so as the paste runs out or he gets sick of manual labor. Or he needs another iGag fix. :>)

Hulk's picture

Note to Banzai: don't eat the paste, it makes old women mad...

Ancona's picture

What is truly frightening here is that the rest of the world just whistles as they walk past the graveyard, ignoring the fact that we have a worse balance sheet than many third world backwater countries.

When the music stops, and it will, the fireworks are going to be epic, and the crash will be biblical.

Time to put on your big-boy pants and buckle up!

John Law Lives's picture

Maybe The Ben Bernank knows there is no other way to service $1.5 Trillion in annual budget deficits, so the Fed is locked into QE.

So much blatant deceit.

Rogerwilco's picture

Yeah, all quiet on the western front. So much for that new Congress we elected to stop this bullshit.

AldoHux_IV's picture

Thus making the budget pitfalls that much easier to solve-- end the fed and you end the pains and slavery of debt.

Milton Waddams's picture

Brilliant strategy by The Fed to calm concerns over the parabolic increase in debt. You see, it's all good, we now owe it to "ourselves".

If we can muster the political will to expand the debt to a quintillion or even sextillion (sextillion, that even sounds sexy- let's run with it), given QE33, the Fed will be proud owners of well over 99.99% of it. And none of it will even matter as "we owe it to ourselves".

Charles Wilson's picture

"Economists across the length and breadth of the land were electrified by a theory of debt introduced in England by John Maynard Keynes. The politicians wrung their hands in gratitude. Depicting the intoxicating political consequences of Lord Keynes’s discovery, the wry cartoonist of the Washington Times Herald drew a memorable picture. In the center, sitting on a throne in front of a maypole, was a jubilant FDR, cigarette tilted up almost vertically, a grin on his face that stretched from ear to ear. Dancing about him in a circle, hands clasped together, their faces glowing with ecstasy, the braintrusters, vested in academic robes, sang the magical incantation, the great discovery of Lord Keynes: “WE OWE IT TO OURSELVES."

- William F. Buckley



pendragon's picture

it is a complete myth that rates could rise without unwinding the UST holdings. there is no way they could stomach the mtm losses

Greater Fool's picture

What are you smoking? Fed doesn't care about mtm on its Treasuries, and indeed unwinding their "position" (which is largely a financial fiction) would itself be the cause of a catastrophic rise in rates.

Boonie's picture

Let's stop calling it a Ponzi.  And let's not call it a Madoff.  Too insulting to those con men.  Instead, it's a Bernanke.

Rogerwilco's picture

After the dust settles, I don't expect we'll see any statues of Bernanke (or Greenspan) adorning public spaces. Their names will append discussions of the Tulip Mania, the Mississippi Company, and the South Sea Bubble.

John Law Lives's picture

<<< the Mississippi Company >>>

Now you're talking...

John Law Lives

gwar5's picture

Stiff the Fed.

If you stiff them, they will go.

Bansters-in-my- feces's picture

............"Federal"...????? Ya right. .............Reserves,????? Sure,what ever you say. Come now brethern Amricans,it's getting to be time to take back your Liberty.


Or your American Silver Eagle is full of shit.

Doubleguns's picture

When the Fed owns all the treasuries I say we just fold them up and toss in the circular file. Back to treasury bills, no more FRN's.

alfred b.'s picture

   Court jester Bernanke could not care less and will continue QE to infinity simply because, tru January legislation, mafiose Geithner has got his back in perpetuity...and the buffoon is well aware of this fact; but not necessarily the guy paying for it...i.e.: the UStaxpayer!

Buy gold and silver now !!

Oh regional Indian's picture

very interesting thought popped into my head.
If a massive dollar devaluation is imminent (I do believe it is), why hoard cash or park it? Why not move it to hard assets? Any hard assets? How can anything be worse than their current condition? Both financial and non-financial institutions. Lot's of collateral still out there in the world.

Something smells.


MachoMan's picture

This same thought is ultimately what causes hyper inflation...  The loss of faith in the currency causes people to purchase anything of perceived value because it will ultimately be greater than zero...  obviously some items will carry vastly more perceived value (food, clothing, etc.).

I already purchase food in bulk, such as meat, in order to cut down on costs...  but, I am planning on increasing my bulk purchases and increasing my days of inventory...  it's time to invest in a good vacuum sealer and rock and roll.

Basically, I have a dollar ceiling in my bank accounts...  once it reaches a certain level, I either pay down debt or purchase hard assets...  depending on the way the hair on my ass parts that day...  I have also implemented a purchasing policy of hard assets every month...  so as to smooth out purchases rather than be subject to market conditions when the savings of cash met the ceiling...   this could be food...  could be anything...  again, whatever I'm feeling like.

overmedicatedundersexed's picture

you are never insane if your fellow inmates tell you , "your as right as rain".

china watches and wonders "can they be that incompetent? that insane?"

so the game is played the chinese and the world are tricked into thinking" this is a master plan by the US, that there is some real genius behind what is being done."

so they wait. to avoid getting sucked in to the USA's scheme..when all along they were seeing the actions of insane men.