I first reported in January on a little-noticed report issued by the Federal Reserve showing that American banks were borrowing all of their required reserves. In other words, if the figures were accurate and I understood the chart, it appeared that borrowed cash was keeping America’s banks afloat.
As I noted, the numbers were so different from those recorded over the entire period of time since the Fed began compiling them in 1959 that I wondered if this is an event of historic proportions.
Well, since I last wrote about this six weeks ago, things have gotten worse:
|Reserves of depository institutions (in millions)|
To summarize: Since 1959, when the Fed started reporting this data, it’s rare to find a month in which the difference between the total reserves of the banks in the Federal Reserve system and their non-borrowed reserves is greater than about 7 or 8 percent. And suddenly, since December, those reserves have disappeared. Our financial institutions have borrowed all of their required cash reserves and over $100 million dollars more.
Maybe it’s just me, but I’d like to see the media report this story instead of feeding me more of the Hillary/Obama soap opera.