Fed pumps 47.25 bln dlrs into US banking system

M3 is calculated and posted on a website called shadowstats it's about 14%

I am also intrested to know how much foreign credit american needs to sustain to pay the interest we owe on the national debt.

As the whole financial system becomes sick from the inside out , the body politic will begin to appear (even to those in la la land) increasingly fascist in tone, and authortarian in nature , in order to stem uncontrollable disorder as well as threats to current elite (revolution) emulating from dissent , which of course emulates from the pain many will face as the standard of living drops in our nation and others (while the elite get richer) and our rights are eroded.

one benefit may be the sheeple will no longer be as materialistic, with the options being a population with (less morals and more drug dependant) to build and sustain the last productive part of our economy (i.e the prison system i.e the revenue and employment) and the rest growing closer to family ties, and enjoying the more simple things in life, like loving "service to others" relationships (not buying trophy wives, or money hungry women looking for men) as well as better and more inter personal gatherings (maybe sports) vs. shopping sprees. I don't know, just trying to be optomistic, yet realistic.

[edit on 17-11-2007 by cpdaman]

well, I think now its going ..


down..

Sorry I took so long to respond in this thread but I was knocked offline yesterday and had some ensuing computer issues.

Some people have asked for some background. I'm not a financial expert and usually try to understand the big picture without getting too bogged down by the technical jargon but here goes. (please do your own research as it's infinitely better for your understanding and long term memory to work things out for yourself)

I'm betting that most people have heard the expression "the lender of last resort" when referring to the FED.

What we are witnessing is this exact principle in action. This is applied every day of every month of every year because there are always small banks in trouble or with poor credit ratings etc. What one has to keep in mind with a story like this is the scale of the operation and the banks involved.

What happened in August is that some big lenders got caught with increasing amounts of bad loans on their books. Other banks did not want to lend them money to refinance those loans because they were having trouble with high levels of toxic loans of their own to deal with and try to refinance.

The result was the blow-up of several large mutual funds held by the likes of Bear Stearns and some European banks (finance is truly international) who could not fund their obligations and had people trying to pull their money out of those funds as they tanked in value. This situation has continued to worsen with bank runs in Europe, increasing numbers of funds in trouble and all kinds of trouble for many types of financial instruments know as derivatives. These are basically different types of loans and "financial products" bundled together and sold (works like an index fund or mutual fund which contain several companies' stock but have a per unit value of their own that you pay to buy in).

The problem is that most derivatives have mortgage funds in them and there are some derivatives of derivatives. They are not regulated, are non-transparent and their value is difficult to ascertain. Most banks rely on the "reputation" of the institution selling them or the credit ratings agencies which ignore the toxic debt (or the "sub-prime" debt) and focus of the highest rated product in the bundle to give their overall rating.

So we have a situation where the banks are unsure of the value of their holdings, not sure to what extent they hold toxic debt, face other banks with the same problem and their unwillingness to lend without knowing the risks or want to charge a premium (via higher interest rates) for any loans made to refinance such debts.

You can see that in an economy built on debt financing this a major problem. Enter the "lender of last resort". The only way for the banks to get their hands on money to refinance their debt obligations at a reasonable rate is from the FED who simply "print" that money into existence (enter INFLATION). They lend to the big banks (Citigroup etc) and hope or encourage them to lend to the smaller banks. (you see here how the FED is "encouraging" even more debt into the system)

So the FED has been making tons of new money available at low rates (they've lowered the prime rate twice now - while some other countries have raise them to fight price inflation) in the hopes of keeping the whole debt financing economy afloat. The problem is that everybody is already in debt up to their eyeballs and not really in a position to absorb more debt.

The other problem is the supply of money. The laws of supply and demand generally dictate that the more there is of something the cheaper the price. Thus with all of this new money, each unit falls in value (hence the falling dollar). A vicious cycle is then set in motion where holders of the currency see it loosing value and want to trade it in for something not falling in value. It becomes a game of hot potato or musical chairs and nobody wants the music to stop.

So I hope that people can see that in a time where the price of oil is at all time highs, the the money supply is being inflated (two things that lead to price inflation eventually) the decision by the FED to lower rates (which is usually done to "stimulate" more economic growth i.e. inflation) and open the money spigot is a desperate attempt to keep the party going as long as they can while hoping that a new balance will eventually be reached. Also note they are doing it for the banks and existing economic paradigm, not for you.

That's the way I understand a story like this and why it's important to note the scale of it and the fact they are still refinancing the previous injections of money.

At some point, the music will stop.

I still see lots of people talking about a future crash in the dollar or the "markets" (meaning the index of 30 companies on the DJIA) but if you look at the over 30% devaluation of the dollar over the last couple of years it's already crashed/ing. If it fell 30% in one day everybody would be running around in a panic having clearly seen/recognized the event for what it is, but having an "orderly" decline some people are still waiting for it to happen. Like the frog in the pot with the heat being turned up slowly, they are busy enjoying the warm bath (and even encouraging others to join them) without realising the fate that awaits them.
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This economy is too dependent on "financial services"

In other words, a bunch of people trying to make money by having money... and no one is doing the real work that needs to be done to keep a country running.

Our production and real service economies have all been outsourced overseas.

The problem is not the American worker, it's that the corporations which chase the dollar carrot have gone to countries which haven't industrialized yet so they can get more work for the money, because Americans as a general rule don't work as slaves.

Now, these problems could be solved if the benefits of modern technology were implemented in the US, such as infrastructure and local/renewable energy. The fact that we are weak in these areas is the result of what I think is a DELIBERATE attempt at weakening the foundation of our economy. The power elite have decided that America must be brought down, so that we don't have the economic strength to resist their plans as much in the future as we have in the past.

Investment in this country will go back up so long as investors don't see this nation pursuing self-destructive agendas, such as the ridiculous wars we are in, and the lack of any decision-making at the top which still retains a sense of allegiance to this country rather than allegiance to the dollar (or other currencies).


See talks by Michael Parenti. This is a man who really has his finger on the pulse of society.

I believe the first thing we should do to re establish value in the dollar is to get out of these damn wars.

Then close the military bases overseas. WAY too expensive for us to maintain. We have problems enough here at home.

Let's get the system right here, then we can lead the world by example, not by the barrel of a gun.

Fed chairman has had some very intresting comments in his last two speeches.

The market anticipates the fed will cut when ever their is turmoil, and past speeches have bernanke saying the fed will intervene to continue to enable market stability.

Now lately he has advocated a new focus on inflation. Alot of people and almost all economists, have scoffed at the Core price inflation numbers because they exclude food and energy, and they are designed to make inflation look artificially low. Lately in Bernanke's speeches he has conceded this perception and has said that he is more of a proponent of "inflation targeting" and this requires looking at total inflation which he admits has risen ( no duh) and he says going forward the total inflation figure will be looked at closely when deteriming performance in inflation targeting in the future. This now would make inflation numbers appear higher than the old method, which would make rate cutting more difficult (at least based on stats).

Bernanke may be sending the markets a message, that yes we are trying to save you but you need to smarten up and take a bit of a hit, and we can't let the dollar collapse, because world economies are feeling the inflation pinch, and the new inflation targeting measures are the same that the Bank of England (amongst other central banks use) and oh by the way the bank of england is raising rates.

Also if they keep cutting, (and there is still a credit crunch) the interbank overnite rate will probably keep straying more and more from the targeted fed funds rate (because banks have little confidence in each other's assets) , then the more money they (the fed) will have to keep injecting into the markets, and the more crap collateral that will have to accept (at least this is my understanding) . The Dec 11'th meeting will tell a bit more going forward regarding the fed's attitude and possibly changes in it's behavior. Also the yield curve is flashing red that investors are anticipating inflation (or announcing it is here)

But IF they don't cut, you can bet the markets will fall, rapidly and painfully.

It may be time for the fed to stem the dollar's fall, and the markets to take some painful medicine. most investors believe the fed will still cut, but there is growing uncertainty on the back of bernake's speech's that he will be targeting total inflation (making it look higher than it has) and thus making rate cuts (more difficult based on fundamentals)

* the ironic thing and the wildcard is how a stock market fall would effect consumer confidence ( most people still equate the economy with the stock market) even though their has been a disconnect of sorts, so giving the markets what they deserve ( no more cuts, and eventual rise) while saving the currency, may spook the sheeple into worry, and hurt consumer spending trends even more than a housing crisis and loss in house price ( and food and energy) prices already have.

In reality, the fed is between a rock and a hard place.

[edit on 17-11-2007 by cpdaman]

To destabilize an economy and crash the market is simple. Infuse so much cash that the interest required to be paid will cause bankruptcy. They did this to sheer perfection in the 1930's. Its mass distraction at its most vile and effective.

My hunch is the Amero will be introduced sooner than later. Thus the dollar will crash and the new money will matter. Remember the civil war folks- these guys are not messing around- they want it all.

[edit on 18-11-2007 by dk3000]

Originally posted by theRiverGoddess So all these BILLIONS of dollars dumped into our system, I will bet you is just some printed cash and is not backed by gold in any way...........I wonder how they think money with no backing is going to help?

[edit on 16-11-2007 by theRiverGoddess]

My question is ... when the Federal Reserve "pumps cash" into the system, does this mean that this cash is in the form of loans , or are they simply printing the bills (via paper or electronic funds transfers) and the "cash" is simply given to the banking system(s) ..

Is there someone here with some knowledge who can answer this?

Elaine

reply to post by radiotrish



Could be any combination of electronic transfer, checkbook money, cash, investments, bonds, securities, or loans.

As usual with the Fed, information is vague and detail is not available to the public.

You know they're working hard for you because they're keeping everything so hush-hush.

It's in the form of loans.

They create the credit to make the loan (with interest), so it would be more proper to say that they "pump credit" into the system.

The net effect is the same, more available "funds" for the banks to refinance their operations.

Here's some background reading on "money creation". I'm sure you can find thousands of articles with a good search, and as some members have already pointed out, there are some great videos as well.
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reply to post by Gools


In addition to money and credit being created out of thin air, the real laugh is that money "is backed by the goods and services of the United States". That's the hilarity of it because with all of the financed mergers and acquisitions that have steadily been taking place since the Reagan era, once one understands that money is created out of thin air, one also understands that money isn't backed by anything. It's the greatest ruse of them all.

Money is all fake anyhow and the liberty dollar that is actually backed by silver is in trouble imagine that.....

Forex charts show the Euro:Yen cross down to 161.1

the dollar is down , the yen is up in a big way

and the market will be WAYYYY down this morning, will monitor any forex changes , or any large story's (like yesterdays freddie mac) news

reply to post by cpdaman


I wonder how bad is going to be for black Friday the biggest holiday sale of the year.

Gools and Cpdaman...

the commentary you guys have provided in this thread has been awesome

Both of you have done really well in explaining some complicated stuff which is going on in financial markets right now so that every member of ATS can follow and understand

Kudos to you both, and also to all posters on this thread...We've got some great info in here that explains the situation well for anyone

Nice one

Originally posted by Beachcoma

Originally posted by theRiverGoddess
I wonder how they think money with no backing is going to help?

I'm wondering about that, too. OBE1, where are you? We need your wisdom!

Bigtime agreement here for OBE1's wisdom. Wisdom as such would be warmly welcomed.

Originally posted by radiotrish

Originally posted by theRiverGoddess So all these BILLIONS of dollars dumped into our system, I will bet you is just some printed cash and is not backed by gold in any way...........I wonder how they think money with no backing is going to help?

[edit on 16-11-2007 by theRiverGoddess]

My question is ... when the Federal Reserve "pumps cash" into the system, does this mean that this cash is in the form of loans , or are they simply printing the bills (via paper or electronic funds transfers) and the "cash" is simply given to the banking system(s) ..

Is there someone here with some knowledge who can answer this?

Elaine

Elaine-

The Federal Reserve makes their money on the interest which you and I pay on this cash in circulation. All interest is definitely considered a loan by the Federal Reserve- whom also regulates and determines the interest- which is among many things an enormous conflict of interest...So to peak.

It would be far easier to just call it a scam!

Originally posted by radiotrish

Originally posted by theRiverGoddess So all these BILLIONS of dollars dumped into our system, I will bet you is just some printed cash and is not backed by gold in any way...........I wonder how they think money with no backing is going to help?

[edit on 16-11-2007 by theRiverGoddess]

My question is ... when the Federal Reserve "pumps cash" into the system, does this mean that this cash is in the form of loans , or are they simply printing the bills (via paper or electronic funds transfers) and the "cash" is simply given to the banking system(s) ..

Is there someone here with some knowledge who can answer this?

Elaine

Elaine good question because the financial headlines are usually misleading especially when the banking elite own controlling shares in reuters. The Federal Open market committee (F.O.M.C) is actually doing Repo's when you read "Fed pumps 47.5 into banking system" these repo's can either be temporary (which are loans) or permanent.

for the temporary loans the fed accepts whatever it deems good enough collateral for these loans to banks, and then when the loan expires (usually less than 2 months) the collateral is exchanged for the money back.

The repo's the fed has been doing are temporary, even though when ever they expire, the fed just loans the money again, because the banks are doing any better (sometimes) worse. This is a structural problem resulting from the structured finance and is spread around the world to institutions everywhere, from school pension funds, to who knows what, people are losing big money, because they were pressured to make investments they didn't understand , and these investment were "graded" low risk by the company's i.e moody's who have conflict of intrests when rating assets.

OK now the markets. Stop reading here if you don't want anything that is not optomistic (when was the last time i posted something about financial's that was, although i really will try to.

Alot of Money managers follow something called the Dow theory, without getting into too much detail, money managers are claimed to manage a large amount of equities (stocks) , circa 80%. The current dow charts have (had) a level of support at 12850 . this number, if tested by markets (but not broken below) or if the market (closed above but near this level for a few days ) would have given a signal to money magers that a decent uptick would likely be in store. However today the close (and the level of support was not for intra day trading, but the closing number) was 12799. This signaled a Bear market to those money managers that subscribe to the dow theory. Basically you can anticipate lower lows with a continuation of a falling market at least to the low 12,000's, maybe worse.

this means that those buying the dips (for this time) will LIKELY have bad results (Historically)

also European Intra bank bond markets have suspended trading at this time, (which is not good) because china the global engine for exports may be able to survive a U.S economic slow down, but not the U.S and Europe (where a housing bubble smaller but similiar is rumored to be headed downward) along with banking problems.

Who knows, i say enjoy your turkey day, have some fun, live within your means, and enjoy the simple pleasures in life, those chasing material goods will have quite a game to play because they will never find the happiness they have been led to believe they provide (wealth= success=happiness or something like that the story goes) , but as anyone knows some people who don't get the results they want, are so "determined" they just pound their head against the wall harder, thinking this will do the trick, because they want to win the game , never thinking they can try harder but no matter how hard they try they are playing the WRONG game, one rigged to be unwinnable. On a side note i heard that a long harvard study said that if you are in poverty money will increase your "level of happiness in life" up to the point where you have a roof over your head, and food on the table, but only up to that level. Makes sense to me and certainly doesn't mean money is evil but it does tempt and test character.

latest trends suggest money is flowing from high risk moderate reward stock markets to lower risk lower reward bond markets.

This is a result of the credit crunch and hundreds of trillions (yes you read that correct) in dervivatives sloshing around in the market.

Many analysts are predicating multiple rate cuts and further agressive measures from the fed, with fed funds rate going down toward 3.5 percent (at least) by the middle of next year.

With the credit markets having trillions of derivative bombs exploiding and mortage ARm's resetting (along with consumers being squeezed) you can bet stock market investors will go to "safe" havens.

while stock markets feel the pull of gravity , the buying opportunity of a life time that i keep refering to from "the carlyle group memo" should occur at the end of this asset price deflation which now is just started, along the way prices for all assets will be taken down including GOLD and SILVER, however the metals drop should be short lived, as everyone and their mother will start seeing it as the obvious safe haven for a store of wealth after the asset price crash, till then bonds and 5% fixed rate of return are the rule, as well as holding cash (which is depreciating but not fast enough in comparison to inflation to compare to the high risk of how fast other asset values will have the rug pulled out from under them. If you keep your job and aren't in deep debt you should make it through this mess.

all of the above is obviously just my opinion but the more time and energy and open my mind remains (looking at analysts, economic forums, bond investors, stock investors, and patterns in history, etc) while learning increases my confidence that the above scenario will be reality.

Originally posted by cpdaman
latest trends suggest money is flowing from high risk moderate reward stock markets to lower risk lower reward bond markets.

Many analysts are predicating multiple rate cuts and further agressive measures from the fed, with fed funds rate going down toward 3.5 percent (at least) by the middle of next year.

Wouldn't the rate cuts make the 'lower reward' of bonds dip into a negative when factoring in the inflation of said cuts?

I see gold and silver through the roof and government confiscation (1933 style) not far behind.