The trend this graph indicates may a be cause for concern.
Non-Borrowed Reserves of Depository Institutions
That the "collateral" that the Fed is taking for these "borrowed reserves" is bundles of subprime mortgages, which have no value.
It is essentially an "under the table" transference of the liabilities from the banks to the taxpayer.
Now, we're "on the hook" for all the subprimes, and the "borrowed reserves" are lent out fractionally, with essentially nothing backing even the fraction.
Keep in mind the scale of the graph you're looking at. It shows less than 10 billion in negative reserves...which we've known was going on since August 2007. This is part of the liquidity crisis we've heard about for almost a year.
Less than 10 billion dollars out of roughly 10 trillion in real money and almost 100 trillion in fractional reserve money is barely a blip on the radar. It's a symptom of our dishonest money system, but to a person uneducated in economics, it looks like a cliff dive.
It really isn't time to panic...this will resolve itself without too much pain.
Lesson to be learned? Don't do it again.
ya, everything will be fine. There is no problem. There is nothing wrong with the economy. Gas will drop in price because the government stops all those evil speculators. LOL. It's like roasting marshmallows as you watch a nuclear bomb coming down from the sky.
But it not a catastrophe...you're comparing our economy to a nuclear bomb falling from the sky??? What is going to precipitate this massive crash I keep hearing about? Please, enlighten me. I've been asking this question for months, and i've gotten nothing but vague references to Weimer hyperinflation and stock market crashes being imminent.
Don't get sarcastic with me if you can't tell me what the problem is...you believe the crash is coming? Tell me why.
first you should look at this: http://blogs.wsj.com/economics/2008/02/08/non-borrowed-reser...
and this: http://research.stlouisfed.org/fred2/series/NONBORTAF?cid=123
to draw a better conclusion. Still looks bad to me, just not -90bn bad...
Matt Harrington, Grants Pass, OR
gives one the impression that something is a bit awry, doesn't it?
Amero, here we come!
The graph goes from positive and stable for years then all the sudden this year is goes negative? I didn't see that negative at first I thought it just went down. I am shocked.
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