Sunday, April 19, 2009

What Is The Fed Up To?

From the Federal Reserve statistical release H.4.1 (4/16/09):

  • Leverage
    • The Federal Reserve System holds $47.84 in assets for each dollar of capital

  • Securities Holdings
    • Holdings of U.S. Treasury Debt have decreased by $22.5 billion in 1 year
    • Holdings of GSE debt have increased by $61.4 billion in 1 year
    • Holdings of GSE /Agency MBS have increased by $355.6 billion in year

  • Liquidity Programs
    • Term Auction Credit totaled $455.8 billion
    • Commercial Paper Funding Facility totaled $238.4 billion
    • Other Loans totaled $111.2 billion (of which $45.1 billion is their loan to AIG)

  • Non Recourse, Secured Loans
    • Maiden Lane LLC: $26.4 billion
    • Maiden Lane LLC II: $18.2 billion
    • Maiden Lane LLC III: $27.4 billion

On the liability front: deposits from depository institutions (The Fed’s liability) totaled $894.9 billion, an $882.2 billion increase from a year ago.

Banks really have nothing better to do with their funds than to leave them on deposit with the Fed? This is why the economy will NOT turn around. There is no money expansion. The duo of the Fed & Treasury Department simply can't put enough money in the system to counteract the credit contraction being orchestrated by the banks. I will address the asset side of the balance sheet in another post.

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