Thanks To QE Bernanke Has Injected Foreign Banks With Over $1 Trillion In Cash For First Time Ever

Tyler Durden's picture




 

Two years ago, Zero Hedge first made the observation that the bulk of Fed reserves (also known simply as "cash created out of thin air" because money is first and foremost fungible no matter what textbook theoreticians may claim, and the only cash allocation preference is the capital allocation IRR analysis) had been parked not with US banks, but with foreign banks with US-based operations. We followed that with more analyses, showing explicitly how the Fed was providing a constant cash injection to foreign banks courtesy of the rate on overnight reserves which is the amount Fed pays to banks that hold reserves with it, as the bulk of reserves continued to end up with foreign banks - a situation set to become a huge political storm some time in 2014-2015 when the IOER has to rise and the Fed is "found" to have injected tens of billions of "interest" not into US banks but in foreign banks operating in the US, and which then can upstream the "profits" to insolvent offshore domiciled holding companies.

So it was our expectation that while if not slowing down its rate of money-creation (i.e., reserve-production) - something that won't happen for a long time as it would crash the stock market - the Fed's reserves would at least revert to being accumulated at US-based banks. No such luck. In fact as the latest H.8 report demonstrates, as of the most recently weekly data, the Fed's policies have led to foreign banks operating in the US holding an all time high amount of reserves, surpassing $1 trillion for the first time, or $1,033 billion to be precise.

This means that, as we expected several months ago, the only recipient of ongoing Fed money printing are not US banks, but foreign banks operating in the US. For those confused about the big picture, here is a chart showing the breakdown of cash held by big and small US banks as well as foreign banks, superimposed to total reserves created by the Fed since the start of the Great Financial Crisis. The correlation is 100%.

And just to prove that ALL the unsterilized cash from both QE2 and QEternity has essentially gone to support offshore banks, here is the conclusive chart showing the change in Fed reserves and cash held by foreign banks:

Finally, tying it all together, here is chart showing cash at US banks vs cash at foreign banks operating in the US. At $1.03 trillion in foreign cash, the Fed's policies have once again led to more cash being held by foreign banks than all cash held by domestic banks.

We are confident that we speak for all when we say: "Thank you Ben - insolvent foreign banks appreciate your ongoing QE2 and QEternity-funded generosity"

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Tue, 05/21/2013 - 12:03 | 3584272 Headbanger
Tue, 05/21/2013 - 12:04 | 3584308 spankfish
spankfish's picture

Ben Bernanke doing his global Apocalypse Now, Ride of the Valkyries helecopter drop.

http://www.youtube.com/watch?v=30QzJKCUekQ

Tue, 05/21/2013 - 12:20 | 3584373 knukles
knukles's picture

There are NO Problems with the Banking System Overseas.
Just you little pecker-heads wait until we divulge our total (unnetted) swap lines and Other Assets

Tue, 05/21/2013 - 12:34 | 3584397 The Thunder Child
The Thunder Child's picture

"Thanks To QE Bernanke Has Injected Foreign Banks With Over $1 Trillion In Cash For First Time Ever"

What about the GAO audit which showed $16.1 trillion in secret loans were made by the Federal Reserve between December 1, 2007 and July 21, 2010 to both domestic and foreign banks. Does that not count or are we supposed to forget about that by now Tyler?

UK bank's Barclays PLC

$868 billion

RBS Group PLC

$541 billion

RBS PLC

$181 billion

Deutche Bank AG

$354 billion

Dresdner Bank AG

$135 billion

...

Tue, 05/21/2013 - 12:37 | 3584419 Divided States ...
Divided States of America's picture

Yup but my bank account gets less and less with low interest rates and a falling dollar. This fucker is a financial terrorist coz hes blowing up my hard earned life savings.

Tue, 05/21/2013 - 13:09 | 3584499 SamAdams
SamAdams's picture

The dollar, our number one export, followed by bombs and soldiers.  USA, USA, USA!!!

Tue, 05/21/2013 - 15:28 | 3585099 imaginalis
imaginalis's picture

Wall Street says Greed is Good.

 

But they really mean to say Cheating is Good.

 

Cheating Fucks are still Greedy

Greedy Fucks are still Cheating

Tue, 05/21/2013 - 20:08 | 3586070 King_of_simpletons
King_of_simpletons's picture

Just Buy The Fucking Dip (BTFD) and Sell Before Shit Hits (SBSH)

Wed, 05/22/2013 - 19:35 | 3589276 Shocker
Shocker's picture

We are pumping money everywhere.

Is this really going to help the current situation?

-

Tue, 05/21/2013 - 13:25 | 3584559 SafelyGraze
SafelyGraze's picture

the fedRes has been bailed in by foreign banks

cyprussed before cyprus

Tue, 05/21/2013 - 12:21 | 3584380 Ruffcut
Ruffcut's picture

The fed has to feed its own. Using that license to print and enjoying every minute of it. Buying all assets, getting more control, thus more power. Its great when a plan comes together.

Make all checks payable to: the feDerAL reSerVe

Tue, 05/21/2013 - 12:35 | 3584415 optimator
optimator's picture

To all those dummies that tried to conquer the world through military power and failed:

Your could have done it with a few printing presses.

Wed, 05/22/2013 - 01:57 | 3586773 nc551
nc551's picture

To be fair the reason the printing presses have so much power is because of our military might.  I believe it is somewhere around 900 bases in around 150 countries.  We did take over the world and the presses are used to extract wealth.

Tue, 05/21/2013 - 12:19 | 3584367 Aeternus
Aeternus's picture

They will never stop printing, they can't, not now, not ever. Position your finances accordingly.

 

http://www.youtube.com/watch?v=deuC8GPr31A

Tue, 05/21/2013 - 12:59 | 3584472 illyia
illyia's picture

So, that means: 1T down 6xxT to go?

Kill the bad derivs regardless...Like lessening the deficit v. debt: Just stop creating moar.

Makes a person wonder what's really going on behind the scenes... i.e. are they really doing that?

Really?

Tue, 05/21/2013 - 11:58 | 3584278 101 years and c...
101 years and counting's picture

i still think ben has the best job in the history of the world.  burn down the current financial system because of blatant ignorance and then try to fix it by simply creating money on a laptop.  lying to congress and getting away with it.  AND GETTING PAID TO DO SO.

Tue, 05/21/2013 - 11:59 | 3584286 ApollyonDestroy
ApollyonDestroy's picture

..and getting a sweetass fallout shelter in the meantime 

Tue, 05/21/2013 - 11:59 | 3584282 PiltdownMan
PiltdownMan's picture

And thank Bennie and the Fed for pumping tons of air into the California housing market. Bubbles Bernanke? This guy has a good analysis of housing and The Fed.

http://confoundedinterest.wordpress.com/2013/05/21/zillow-california-phoenix-and-nevada-house-prices-booming-philly-fed-sees-coincident-growth-in-45-states/

Tue, 05/21/2013 - 12:08 | 3584323 GMadScientist
GMadScientist's picture

Sometimes you need to pay attention not only to what is being bought, but by whom.

Speculation ain't growth.

Tue, 05/21/2013 - 13:34 | 3584602 DosZap
DosZap's picture

And thank Bennie and the Fed for pumping tons of air into the California housing market. Bubbles Bernanke? This guy has a good analysis of housing and The Fed.

http://confoundedinterest.wordpress.com/2013/05/21/zillow-california-phoenix-and-nevada-house-prices-booming-philly-fed-sees-coincident-growth-in-45-states

Great, the question is HOW long will the buyers have a job to pay for them?.At the rate we are currently seeing, I am betting Melt Down part deaux'.

Tue, 05/21/2013 - 17:25 | 3585528 IrritableBowels
IrritableBowels's picture

^^^SnakeEyes

Tue, 05/21/2013 - 12:25 | 3584287 Kaiser Sousa
Kaiser Sousa's picture

thats right...pay ur taxes like good little american serfhoes...

the bankers need their paper like a hog needs slop...

over here though - THEY CAN KISS MY MOTHER FUCKING ASS CAUSE I AINT GIVING THEM "NATHAN".....

no bitch ass banker slaves over here!

Tue, 05/21/2013 - 12:00 | 3584290 Dollar Bill Hiccup
Dollar Bill Hiccup's picture

Viva El Bernank!

Tue, 05/21/2013 - 12:00 | 3584291 FXWulf
FXWulf's picture

Im gonna go Pain and Gain style on ben... right after the dude who won the 600mln in florida gets revealed.... im a do'er

Tue, 05/21/2013 - 12:06 | 3584313 GMadScientist
GMadScientist's picture

Nice cheap talk.

Tue, 05/21/2013 - 12:16 | 3584355 FXWulf
FXWulf's picture

thanks brother, its really all i got left

Tue, 05/21/2013 - 12:02 | 3584293 Cognitive Dissonance
Cognitive Dissonance's picture

"You ain't seen nuttin' yet." - Benjamin S 'Benny Bucks' Bernanke

<They must keep the EU 'experiment' alive bro.>

Tue, 05/21/2013 - 12:02 | 3584297 Cdad
Cdad's picture

Thank you, Ben Bernanke, for this financial and economic wasteland which you have made for me and all of my Average Joe brethren.  We thank you for suppressing our purchasing power.  We thank you for your overhang over the corporate landscape.  We thank you for continuing to fuel DC's spending insanity.  Mostly, we thank you for your continuous bailout of the criminal syndicate known as Wall Street and its zombie banks...who continue to pervert and break our free markets.

A grateful nation awaits...for your resignation...although your prosecution is preferred.   

Tue, 05/21/2013 - 12:03 | 3584303 TrustWho
TrustWho's picture

At least we know POTUS Obama DOES NOT KNOW anything about this.

Tue, 05/21/2013 - 12:10 | 3584332 Hedgetard55
Hedgetard55's picture

Pesident Pakalolo does what he is told, they reward him with choom, it's all good.

Tue, 05/21/2013 - 12:04 | 3584309 Dr. Engali
Dr. Engali's picture

The foreign banks will take the liquidity now, but once the trading blocks are all firmly in place they are going to shove that shit right back down the Bernank's throat.

Tue, 05/21/2013 - 12:45 | 3584443 kralizec
kralizec's picture

Did Ben at least get a cool T-Shirt?

 

Tue, 05/21/2013 - 13:04 | 3584485 Dr. Engali
Dr. Engali's picture

Spider-Man towel.

Tue, 05/21/2013 - 13:13 | 3584507 waterwitch
waterwitch's picture

Benema

Tue, 05/21/2013 - 12:58 | 3584469 buzzsaw99
buzzsaw99's picture

they aren't foreign banks they are jpm counterparties that must keep paying

Tue, 05/21/2013 - 12:06 | 3584314 cloudybrain
cloudybrain's picture

they can burn money papers when it get colder

Tue, 05/21/2013 - 12:06 | 3584315 TrustWho
TrustWho's picture

I told you, Daddy Bernanke cares so much for the little people of USA he will stretch the law until it breaks for the good of all the stupid people.

Tue, 05/21/2013 - 12:14 | 3584318 Ham-bone
Ham-bone's picture

I don't know what "foreign" even means anymore?  Domestic, foreign?  All these reserve holders seem to inhabit the same place and it's a very different place from where I live.  They have their own laws, their own rulers, and seem sovereign entities to me. They make money from nothing, tell me what money is, and tell me how much I owe.  They "swap" currencies in the trillions...and tell me their asset is my liability.  It's all very foreign to me. 

Tue, 05/21/2013 - 12:07 | 3584320 847328_3527
847328_3527's picture

Americans are very generous peoples, aren't they. They don't mind retiring a few years later so their friends in Europe are comfortable.

Tue, 05/21/2013 - 12:08 | 3584324 kurzdump
kurzdump's picture

Ben does what he has to do to keep the US afloat. How else should the huge negative trade balance of the US be balanced if not by inflating bubbles? Seriously, what whould happen if Ben stops pressing the buy / print buttons?

Tue, 05/21/2013 - 12:10 | 3584339 Hedgetard55
Hedgetard55's picture

Kaos.

Tue, 05/21/2013 - 12:13 | 3584345 LawsofPhysics
LawsofPhysics's picture

Well, for one thing, all those dollars would retain some purchasing power, in fact, they might coming roaring back into the U.S. economy to purchase all kinds of real assets!  Boyah!  Oh wait...

Tue, 05/21/2013 - 12:36 | 3584384 Dr. Engali
Dr. Engali's picture

Exactly why this will end badly. The Bernak must print to make up for our lack of production. To support our consumption the major export nations need a steady stream of debt. The problem is the Bernank is destroying the debt's buying power in order to fund our duel deficits. Eventually it will get kicked rejected by the suppliers.

As an empire the U.S. loots the wealth of it's citizens to support the system where Rome looted the wealth nations it conquered.

Tue, 05/21/2013 - 12:51 | 3584454 kralizec
kralizec's picture

Ben's way of saying he would rather face barbarians at home rather than barbarians from abroad?

Uhh, what's the diff?!

The end for Ben & Co is the same, poor insane bastard.

Tue, 05/21/2013 - 12:56 | 3584467 kurzdump
kurzdump's picture

It will end in totalitarian police states with forced labour before it eventually collapses to pure chaos after a few decades. Warlords and failed states will emerege everywhere all over the planet. Some nations might seal off and survive for a while. There will be wars, starvation, plagues. Its gonna happen - theres no way around it. 

Tue, 05/21/2013 - 13:02 | 3584475 Dr. Engali
Dr. Engali's picture

There are ways around it, but it would require bravery and people doing the right thing. Two traits that unfortunately can not be found in a dying empire of hedonism and self-absorption.

Tue, 05/21/2013 - 13:05 | 3584491 kurzdump
kurzdump's picture

Well said.

Thu, 05/23/2013 - 15:40 | 3593322 MeelionDollerBogus
MeelionDollerBogus's picture

Don't be mistaken, the looting of other nations did take place here. The looting of citizens is merely cream on top.

Tue, 05/21/2013 - 12:12 | 3584336 IamtheREALmario
IamtheREALmario's picture

The BIS tied central banking system which the Fed belongs to and is beholden to above all else is a global empire looking for a way to more perfectly control and subjugate the masses for its benefit. The global banking system instigated the wars in Iraq, Afghanistan, Libya, now Syria and in the future Iran as the means to have EVERY country of the world subjugated by a BIS tied central bank. Those countries had previously been free of the evil bankers.

Given that as the frame of reference rather than the frame of reference that the Fed is somehow a sovereign US or sovereign US government entity makes it easily understandable.

The two questions are:

1. Should something be done about it? Maybe it is actually right and good to be subjugated and controlled by slimey, self serving bankers.

2. If something should be done about it, then what?

To actually fight it, the paradigms of warring governments, warring religeons, warring races and warring social classes have to be cast aside as just dialectic manipulation (by the powers that guide the banks) designed to keep the human population of the this world divided and unable to see past the immediate crisis.

Tue, 05/21/2013 - 12:14 | 3584348 LawsofPhysics
LawsofPhysics's picture

"designed to keep the human population of the this world divided and unable to see past the immediate crisis." - precisely why those who don't see a crisis are often targeted first.

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