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Just to get a grip on the numbers being reported there, numan, if the Smirking Chimp has correctly quoted Reuters, and if Reuters has it right, US banks borrowed a total of $940 Billion last week?
Sorry, I have to see a link to the primary source before I'm buying that swampland.
Get out your wading boots:
Quote
NEW YORK/LONDON (Reuters) - U.S. banks and money managers borrowed a record amount from the Federal Reserve in the latest week, nearly $188 billion a day on average, showing the central bank went to extremes to keep the banking system afloat amid the biggest financial crisis since the Great Depression.
To make sense of these numbers, you must rember a few things.
The Fed is empowered to create money out of thin air.
The international credit system has seized up. Banks are hoarding their money. They are not lending to each other. In order to function from day-to-day, the banks have no recourse except to borrow from the Fed.
I emphasize the word borrow. These are loans.
Theoretically, $X out plus $X in equals $0, and does not debase the money supply. Of course, real life is much more messy.
Many of these loans are very short-term, and some or much of the money has already been re-paid to the Fed. Therefore, less money is involved than may appear at first sight. ________________
