Total Reserves Hit All Time High
Total Reserves of depository institutions hit an all time high, just shy of $1 trillion. Who says the banking system isn't lending. Oh wait...At least, one can hope all that money is not being used to buy CIT stock. Alas, we will never know.
The total Monetary Base presumably rose by $62 billion, yet all of its was based on the $64 billion reserve increase from two weeks prior. So yeah, actual money in circulation dropped by $2 billion, even as banks used all that extra cash to purchase something.
What is curious is that as Total Borrowings have hit almost one trillion, the net number has declined, which is a function primarily of the Non-borrowed Reserves component skyrocketing, and hitting $692 billion. Why the increase? According to the latest H.3, TAF declined to $173 billion, TSLF was relatively flat at $43 billion, and Primary and Secondary Discount window borrowings were in line with historical numbers. Furthermore, required reserves was also flat in the low $60 billion range.
And the circular definition of Nonborrowed reserves provided by the ever useful Fed is: "Seasonally adjusted, break-adjusted nonborrowed reserves equal seasonally adjusted, break-adjusted total reserves less unadjusted total
borrowings from the Federal Reserve." Well, that's helpful. However what would be more helpful is to find out just what it is that banks are using this nearly $1 trillion in excess reserves for? Is it merely to buy Treasuries? Are they buying stocks? How about OTC.BB stocks? Is this one of those questions where the Fed is "protecting" us by not telling us the answer or by lying outright?