The Federal Reserve says (//%22http://research.stlouisfed.org/fred2/series/NFORBRES?rid=19%22) that from about Jan 12, American "Depository Institutions" had $-13.68 billion dollars in non-borrowed reserve. Yes, that's a negative figure. At this point, they're being loaned money directly from the Fed, even though many banks may have already violated their reserve requirements.
Perhaps you'd like to see a pretty graph for your cliff-diving pleasure:
(http://research.stlouisfed.org/fred2/data/NFORBRES_Max_630_378.png)
Shamelessly cribbed from Metafilter (//%22http://www.metafilter.com/68626/But-if-the-vaults-are-empty-what-will-Scrooge-McDuck-swim-in%22), because it seemed like a good story to pass along.
Come on dude, half of us are already taking some sort of anti-depressant! [;)]
Pretty startling number, I would assume that has to do with the lending stupidity which is/was sub-prime mortgages?
I'm not sure what this means... Let me jump into this and try to figure it out on my own :D
The "non-borrowed reserve" of "Depository Institutions" - Does this mean the actual money that banks have to give out to people when they decide to take money out of the bank?
I have a rough understanding of fractional lending, which means there is only so much actual money that can actually be taken out of banks, versus the total money deposited in banks. Example, a bank has $10,000 that it can let people withdraw, but lets 15 people have bank accounts with balances of $10,000 each. It doesn't actually have $150,000 to let people take out, but this isnt usually a problem since the behavhiour of the masses generally sticks to certain mathematical formulas - The 15 bank customers would usually never have more than $10,000 taken out at one time without more being deposited from elsewhere.
So this means that the banks actually ran out of money for people to withdraw, so at this point the Federal Reserve has to directly print new money and loan it to the banks AS people take it out?
This means people are taking more money out of the bank than they are putting in. This means the banks didn't actually keep the money you deposited, but did something else with it on the faith that people would only take X amount out, but would also be depositing Y amount. And that X would always remain less than Y.
I have a pretty jaded view of the Federal Reserve, but ignoring HOW WE GOT HERE, I suppose the Fed actually serves a good purpose once the situation hits. Without the fed being able to print more money, the banks would simply run out of cash and a huge panic would erupt.
Question: What was the huge spike in 2001? I really can't imagine September 11th making people put all of their cash IN the bank. Was that the Bush tax rebates of 2001? If that was what the rebates did in 2001, perhaps that is the plan with the rebates this time as well, to bail out the reserve deficiency by hoping $15 billion of that $150 billion goes back into peoples' bank accounts. So the $150 billion would partly be a bailout for the banks with tax dollars, so the banks don't have to pay interest to the fed. Instead, all US citizens pay interest to the fed (since the government has to borrow it, as well) AND pay to fix the problem that banks created by violating reserve requirements. And of course we're paying THE FED to FIX the PROBLEM that was CREATED by... THE FED... pancakes?
Woops, our artificially low interest rates created a bubble. Now you need to borrow a bunch of money from us to bail out the banks, and pay us interest on it. Oh btw, we just create the money by devalueing yours, but you don't really have any choice do you? Pay up.
I would say the banks acted in anticipation of a rebate that would cause an influx of funds, but the rebates wouldn't arrive till May at best. I remember that recently Swiss banks announced they would not be opening any new accounts with American dollars. Seems there is a huge demand from wealthy American's hoping to protect their wealth from the anticipated failure of US banks. This was of concern to the Swiss. They not only don't want to do business with the fairweather investors, they don't have any confidence in the value of the dollar either. They snidely remarked that they also refused depositors from Venezuela and Nigeria. So much for patriotism and confidence in the economy!
I've written and deleted three times an adequate explanation of what the Reserves mean. I give up, read a few of these articles:
http://wfhummel.cnchost.com/index.html#2
and you will too. Haven given up on an adequate explanation, let me try a basic one. I'm no expert, but here is my try. PLEASE correct me if I'm off on portions.
A bank is required to keep approx. 10% of it's capital (NOT assets) in reserve. Capital really doesn't mean capital, it means "amount we determine by a messed up formula." They have to be able to cover a % of their deposits (which may be withdrawn) as well as back their loans (which may go bad, so they are weighted by risk: 1% for most .5% for mortgages). So they need to have money in reserve to insure they can cover withdraws and anything that goes bad - it adds a margin of safety.
Reserve means in cash or with the Federal Reserve ($ in a vault or $ with the fed). The bank can raise reserves by getting new deposits, selling assets, or borrowing from either other banks or the fed (at fed funds rate).
If they add money to the bank (mortgage proceeds, deposits, sale of assets, reduced liability) the Non-Borrowed Reserves rate goes up and the banks are more likely to borrow from each other (as they don't otherwise collect anything on reserves). If they are not getting new deposits, their liabilities increase, or loans go bad they need to increase their reserves (suffice to say bad loans messes up the capital formula and results in needing more reserves).
SO... if many banks are seeing a slow down in deposits OR are having bad loans and withdraws so they all need to increase reserves. All needing to increase reserves they are unable to borrow from each other so they will borrow from the Fed. Given a low funds rate and a slow sale of assets (T notes low, mortgage values depressed) there is little to discourage the borrowing. THUS, we have a current imbalance as banks try to make their require reserve ratios by borrowing money from the fed.
- - -
Try #4 and it's still a turd. I won't even bother pondering the meaning or implications of the imbalance, my brain hurts.
I think you described it pretty thoroughly, well done.
So I'm still wondering if the sharp plunge is from how bad things have gotten in the mortgage meltdown, or if waterboy is correct to assume the banks already factored in the rebates and declared a free-for-all on that projected flood of deposits. The former would mean the tax rebates are a bailout of the banks. The latter would be grossly irresponsible for the banks, as the senate has not even passed the final legislature for the rebates. The banks would in essence be saying "Well, we already spent the money, so you guys have no choice but to pass the legislature now".
Here's what I know of economics for certain, convoluted formula's aside:
"A fool and his money are soon parted."
[8D]
Money is the route to all evil. Send me $9.95 for more information.
All of our econimic statistics are skewed, or "republicanized."
quote:
Originally posted by FOTD
All of our econimic statistics are skewed, or "republicanized."
I thought we established, in great detail, that you have no economic knowledge what-so-ever, and thus - like most of your claims, no basis for this statement.
CF...I'll tell you again, don't believe everything you see and hear coming from this executive branch. I have fore warned all here before. Mr. Market's correction bears witness to my "claims" that the current regime will do almost everything to hide the truth. After all their prior deceit, how can you peep from your "little world" saying there is no basis for my statement?
Again, show me a basis?
You are indicating that the entire world financial markets are a shame because Bush is in the White House. I have never heard an accusation against the Labor Department, the Federal Reserve, the US Bureau of Economic Analysis, the Census Bureau's Economic Program nor any other economic agency. The markets trust those numbers will real money.
What information do you have that people trading TRILLIONS of dollars do not? Oh great one, honor me with some data.
OR... admit yet again that you have no basis for your claim.
quote:
Originally posted by cannon_fodder
Again, show me a basis?
You are indicating that the entire world financial markets are a shame because Bush is in the White House. I have never heard an accusation against the Labor Department, the Federal Reserve, the US Bureau of Economic Analysis, the Census Bureau's Economic Program nor any other economic agency. The markets trust those numbers will real money.
What information do you have that people trading TRILLIONS of dollars do not? Oh great one, honor me with some data.
OR... admit yet again that you have no basis for your claim.
Once again, HUH? "Entire world financial markets are a shame"....that's never been said by me. And "The markets trust those numbers will real money" makes no sense. The markets don't trust Bushco but do trust the free enterprise system.
There is plenty of basis to say the executive branch of this country lies and, what's further, has thrown the country into a no confidence mode. Here, lots of lies from as late as Mondaze newz: http://thinkprogress.org/?tag=State+of+the+Union
Waking up yet?
quote:
Originally posted by FOTD
CF...I'll tell you again, don't believe everything you see and hear coming from this executive branch. I have fore warned all here before. Mr. Market's correction bears witness to my "claims" that the current regime will do almost everything to hide the truth. After all their prior deceit, how can you peep from your "little world" saying there is no basis for my statement?
Sheesh dude, name one presidential administration which hasn't lied to the American public or the rest of the world. There's good precedent, especially in time of war.
quote:
Originally posted by Conan71
quote:
Originally posted by FOTD
CF...I'll tell you again, don't believe everything you see and hear coming from this executive branch. I have fore warned all here before. Mr. Market's correction bears witness to my "claims" that the current regime will do almost everything to hide the truth. After all their prior deceit, how can you peep from your "little world" saying there is no basis for my statement?
Sheesh dude, name one presidential administration which hasn't lied to the American public or the rest of the world. There's good precedent, especially in time of war.
Wow! You've almost convinced me! But there is no precedent for lying us into war.
So, you guys think it's ok that the President of the U.S.A. has no integrity? Neat.
AOX:
You said "Bushco" lies, you impling that the executive branches in charge of economic statistics are also lying and hence, we could not trust the numbers. I responded that no credible source, nor even yourself, has any evidence even suggesting that such is the case.
Thus, people with real money all over the world and other national financial institutions rely on our economic data. They trust the numbers given and trade on them accordingly. Hell, even the hint of news from one of our agencies sees world markets reacting in moments.
All of the statics rendering by our government, as listed previously, are done by EXECUTIVE agencies. Those are headed by the president of the United States. That is George Bush. Thus, all the statistics relied on by the world come from GW Bush... and they are not seriously questioned. They come from "Bushco" not the free enterprise system. Executive Agencies are NOT the free enterprise system.
So show me where those numbers are being molded by Bush. Which, of course, you can't. In spite of your ability to follow every left wing news source on the web you STILL have no basis for most of your claims.
In summation:
Bush is the president.
The president is the head of the executive branch.
The executive branch issues economic statistics.
Those statistics are relied on.
Make sense? I can back up further and explain to you what an agency is.
So, with your newfound knowledge base do you have anything to back up your rhetoric or were you just making crap up again?
quote:
Originally posted by FOTD
Wow! You've almost convinced me! But there is no precedent for lying us into war.
- Revolutionary War ("Massacre at Concord" and many other atrocities that led to all out war were greatly exaggerated by the patriots)
-War of 1812 (we greatly over reported the harassment of US shipping in order to assert ourselves and try a land grab in Canada)
- Mexican American War (Overtly picked a fight for a land grab)
- Civil War (plenty of lying to go around)
- Spanish American War ("Remember the Maine..." whose boiler blew up but we ignored that fact for another land grab)
- WWI (constant promises to stay out of the "European War" were eventually ignored)
- Vietnam (Many claim the Gulf of Tonken was a setup, add to it our 'advisers' and continued promises of no escalation)
quote:
Originally posted by FOTD
Wow! You've almost convinced me! But there is no precedent for lying us into war.
Thanks again for showing your vast knowledge. Wars are usually started by lies. Some history sees as vindicated or can at least fuzz (civil war was to stop slavery), other's are not (largely Mexican American war is now seen as an overt land grab). Making a judgment short of 30 years is too soon to really know.
That is, of course, ignoring the entire premise of "he lied" for which you nor anyone else have actual proof. A lie being not a statement that turns out to be false, but something said known to be untrue at the time. With actual proof the Democrats and hopefully the Republicans would begin an impeachment proceeding like they did against Clinton.
quote:
Originally posted by FOTD
quote:
Originally posted by Conan71
quote:
Originally posted by FOTD
CF...I'll tell you again, don't believe everything you see and hear coming from this executive branch. I have fore warned all here before. Mr. Market's correction bears witness to my "claims" that the current regime will do almost everything to hide the truth. After all their prior deceit, how can you peep from your "little world" saying there is no basis for my statement?
Sheesh dude, name one presidential administration which hasn't lied to the American public or the rest of the world. There's good precedent, especially in time of war.
Wow! You've almost convinced me! But there is no precedent for lying us into war.
So, you guys think it's ok that the President of the U.S.A. has no integrity? Neat.
Uh, ever hear of "Bay of Pigs" or a little place called "Viet Nam"? Don't s'pose there were ever any exaggerations for Korea either. Maybe some flawed intelligence to base those "lies" on.
The U.S. lacking integrity in the eyes of the rest of the world is nothing new. There is no magic solution to improve our image to every other nation.
I'm trying hard to figure out what Carter and Clinton did to bolster our image abroad with complete unanimity, and I can't think of one thing.
CF....you are the most knowledgeable person at TNF. We all know that. No need to inflate yourself while cutting us down.
quote:
Originally posted by FOTD
CF....you are the most knowledgeable person at TNF. We all know that. No need to inflate yourself while cutting us down.
By "US" I assume you are referring to yourself. I frequently say "I don't know" or "correct me when this is wrong." If I don't know something I either look it up, ask a question, or abstain from making a stupid comment.
For some reason lacking knowledge doesn't discourage you from "informing" everyone. Above is a PERFECT example. "[N]o precedent for lying us into war." So I provide multiple precedents... and yet instead of admitting you were very obviously wrong you press your attack.
So while I'm glad I got your vote for mostest knowingest person, but I'm not running. Anyone with the internet should have been able to look that stuff up. Unless they just don't care to learn the facts.
quote:
Originally posted by cannon_fodder
quote:
Originally posted by FOTD
All of our econimic statistics are skewed, or "republicanized."
I thought we established, in great detail, that you have no economic knowledge what-so-ever, and thus - like most of your claims, no basis for this statement.
FOTarD
quote:
Originally posted by spoonbill
quote:
Originally posted by cannon_fodder
quote:
Originally posted by FOTD
All of our econimic statistics are skewed, or "republicanized."
I thought we established, in great detail, that you have no economic knowledge what-so-ever, and thus - like most of your claims, no basis for this statement.
FOTarD
Brilliant!
US=little devils
United in Spirit....and coming together to fight evil doers.
quote:
Originally posted by FOTD
US=little devils
United in Spirit....and coming together to fight evil doers.
FOTurDs would have been funnier.....
Name calling. How old are they?