On Sat, 11 Oct 2008 13:13:03 -0500, Ignoramus18605
wrote:
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Keep in mind that M2 is also expanded by these "non-bank banks".
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Was just watching one of the talking heads stock market shows and
one of the panelists made a telling point, which caused the other
panelists to have a "hissyfit."

Basically he observed that although the FRB is injecting
liquidity into the M1/M2 money pools with several fire hoses, the
Treasury department is using a high speed sump pump on the other
end of the M1/M2 money pool to drain liquidity into Treasury
securities such as T-bills/notes and bonds. This liquidity is
then transferred to the FRB.

A classic case of the government standing [hard] on both the
brakes and gas and wondering why the speed is not changing,
although the motor is roaring and smoke is billowing.

Explains two things:

First why the outrageous sums being injected into M1/M2 are
having no overt effect [M1/M2 money supply and bank (under)
capitalization remains about the same], and Second, why they just
had to add two digits to the national debt clock....


Unka' George [George McDuffee]
-------------------------------------------
He that will not apply new remedies,
must expect new evils:
for Time is the greatest innovator: and
if Time, of course, alter things to the worse,
and wisdom and counsel shall not alter them to the better,
what shall be the end?

Francis Bacon (1561-1626), English philosopher, essayist, statesman.
Essays, "Of Innovations" (1597-1625).