A new report from the Federal Reserve has confirmed the non-borrowed reserves of U.S. banks plummeted to a negative $18 billion at a recent accounting, reflecting an apparently worsening situation from the negative $8.8 billion reported at the end of January.
Jerry quotes John Williams of ShadowStats.com as writing that while this shouldn’t be cause for alarm, but it is cause for concern.
If the crisis in the subprime mortgage market was over, the Fed’s lending at the discount window would be near zero instead of near $60 billion. With real inflation ramping up and the money supply inflating at an annual rate of nearly 15%, we’ve got some really lousy economic factors coming to a head in 2008.
The dam probably won’t give until after the election. My guess is that the Fed has been told to prop up the house of cards by any means necessary until November. After that, Katy bar the door.