LIQUIDITY WATCH. WHAT A MESS!
. Federal Reserve: "Factors Affecting Reserve Balances", October 30

- Fed's Treasuries holdings + loans: $1,233.9bn (+$50.5bn)
- Other central banks' Treasuries holdings: $1,571.2bn (+$15.9bn) (*)
- Other central banks' agency securities: $915.0 (-$8.4bn) (*)
- Global Dollar Liquidity Measure: $3,290.4bn (+$58.0bn)

(*) Off-balance-sheet items
agustin_mackinlay@yahoo.com
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The weekly Fed balance sheet is a complete mess. (Other words that come to my mind: chaos, confusion, anarchy). New items are being added every week. And we're talking hundreds of billions of dollars. Literally. My new Global Dollar Liquidity measure, which (hopefully) reflects the impact of all recent liquidity programs, now reaches almost $3.3 trillion. The numbers are trully mind-boggling. Monthly average figures (not displayed here) show a 46.5% increase in my proxy for the monetary base. Think about it: prior to the Lehman Brothers collapse, we were dealing with a 2.6% contraction. This is by far the greatest balance sheet expansion in the history of the Federal Reserve Bank. The Global Dollar Liquidity is growing at the phenomenal rate of 29.6% per annum. Totally unheard of!

Ladies and gentlemen, it's not that complicated after all: the massive delevarging efforts by the private sector are being matched by an equally massive releveraging process from G7 central banks. Keynesian economics, anyone?