LIQUIDITY WATCH. THE MADNESS CONTINUES
. Federal Reserve: "Factors Affecting Reserve Balances", November 5
- Fed's Treasuries holdings + loans: $1,388.0bn (+$154.1bn)
- Other central banks' Treasuries holdings: $1,587.8bn (+$16.6bn) (*)
- Other central banks' agency securities: $906.5 (-$8.5bn) (*)
- Global Dollar Liquidity Measure: $3,882.3bn (+$162.2bn)
(*) Off-balance-sheet items
When a key central bank states on its website that "the global banking system has experienced its most serious disruption for almost a century", you know that things look pretty scary. Presumably, in that context, you would do well to look at central banks' balance sheets with a grain of salt. You would assume, in other words, that some of the things they are doing are temporary in nature. Look at those incredible numbers from the last Fed weekly balance sheet. My proxy for the monetary base is increasing at a 75% annual rate in November. Let me say this again: SEVENTY-FIVE PERCENT! The Global Dollar Liquidity measure is growing at almost 38% (November 2008 vs. November 2007). Guys, it'd better be temporary. Trust me on this one.