American Reality Check

Welcome to the Precious Metals Bug Forums

Welcome to the PMBug forums - a watering hole for folks interested in gold, silver, precious metals, sound money, investing, market and economic news, central bank monetary policies, politics and more.

Why not register an account and join the discussions? When you register an account and log in, you may enjoy additional benefits including no Google ads, market data/charts, access to trade/barter with the community and much more. Registering an account is free - you have nothing to lose!

2/25/21 - $7.638T (32B increase from week before)
3/4/21 - $7.606T (32B decrease from week before)
3/11/21 - $7.628T (22B increase from week before)
3/18/21 - $7.742T (114B increase from week before)
3/25/21 - $7.768T (26B increase from week before)
 
So remember back in February (post #358) when Powell said money printing doesn't lead to inflation? Turns out that Powell's testimony to Congress coincided with the Fed deciding to change the frequency of reporting on the M1 and M2 money supply.

The Federal Reserve recently discontinued updating the M1 and M2 weekly money supply series and is instead updating the series monthly.

Steve Hanke, professor of Applied Economics of Johns Hopkins University, said that this change reflects a change in attitude from the world's largest central bank on the importance of looking at money supply.

"Chairman Powell has very explicitly claimed that money doesn't matter in recent testimony. He's basically said that money and the measurement of money doesn't really matter because it's unrelated to inflation," Hanke said.

These money supply series have been published since the 1970s, and the fact that the Fed has changed the publishing frequency on M1 and M2 money supply from weekly to monthly demonstrates a change in worldviews, Hanke said.

"In principle, they don't think [this data] is important. They want to deep-six the monetarists, basically and push them off to the sidelines. They want to bury Milton Friedman once and for all and be done with it, and their preference would probably to not report any monetary statistics," he said.
Click to expand...

www.kitco.com

Is the Fed hiding something? Why weekly money supply data just got discontinued - Steve Hanke

www.kitco.com

The St. Louis Fed has this disclaimer on the M1 supply page:
...
Starting on February 23, 2021, the H.6 statistical release is now published at a monthly frequency and contains only monthly average data needed to construct the monetary aggregates. Weekly average, non-seasonally adjusted data will continue to be made available, while weekly average, seasonally adjusted data will no longer be provided. ...
Click to expand...

fred.stlouisfed.org

M1 (DISCONTINUED)

View a measure of the most-liquid assets in the U.S. money supply: cash, checking accounts, traveler's checks, demand deposits, and other checkable deposits.
fred.stlouisfed.org
 
4/1/21 - $7.737T (31B decrease from week before)
4/8/21 - $7.757T (20B increase from week before)
4/15/21 - $7.842T (85B increase from week before)
4/22/21 - $7.870T (28B increase from week before)
4/29/21 - $7.829T (41B decrease from week before)

Fed balance sheet still creeping up.
 
Back on page 12 of this thread, posts circa September 2019 tracked the Fed's overnight repo market indicating stress in the banking system. ZH reporting that the issue (or something similar) appears to be brewing (again):

... the biggest news of the day may not be the crash in cryptos or even the Fed Minutes, but what the Fed published at 1:15pm ET when it revealed that in the latest overnight repo, 43 counterparties parked reserves worth $294 billion with the Fed, a number which not only surpassed the March 2020 covid crisis highs, but was the highest since 2017!

As Pozsar noted on Monday, "use of the facility has never been this high outside of quarter-end turns, and the fact that the use of the facility is this high on a sunny day mid-quarter means that banks dont have the balance sheet to warehouse any more reserves at current spread levels."
...
Click to expand...

Fed Alert: Overnight Reverse Repo Usage Soars Above Covid Crisis Highs | ZeroHedge

ZeroHedge - On a long enough timeline, the survival rate for everyone drops to zero
www.zerohedge.com www.zerohedge.com
 
5/6/21 - $7.859T (30B increase from week before)
5/13/21 - $7.879T (20B increase from week before)
 
The Fed announced late Wednesday that it will unwind one of the most iconic bailout facilities of the Pandemic era, namely its holdings of corporate bonds, junk bonds, bond ETFs, and junk bond ETFs that it had purchased last year. The Fed said it will outright sell them.
...
The facility, set up in a Special Purpose Vehicle (SPV) that the Fed calls Secondary Market Corporate Credit Facility (SMCCF), was iconic not because of its size, which was endlessly hyped in the media at the time as a $750-billion bond-buying giant though it never got close; but because of its previously forbidden nature.
...
As small as this facility may be – $13.8 billion being small only by the Fed’s standards of money-printing and bailing out – unwinding these holdings is nevertheless another baby step toward removing support from the market.
Click to expand...


It never should have happened in the first place. Precedence set now.

5/20/21 - $7.972T (93B increase from week before)
5/27/21 - $7.952T (20B decrease from week before)

9/25/2020:
pmbug said:
...
If the Fed averages $30B a week increase, the balance sheet should hit $8T in about 29 weeks - just over half a year.
Click to expand...

It's 3 months past the date of speculation in my quote above. Almost there.
 
Last edited:
6/3/21 - $7.984T (32B increase from week before)
6/10/21 - $8.001T (27B increase from week before) [huzzah?? $8T reached]
6/17/21 - $8.113T (112B increase from week before)
6/24/21 - $8.151T (38B increase from week before)
7/1/21 - $8.126T (25B decrease from week before)
7/8/21 - $8.147T (21B increase from week before)
7/15/21 - $8.250T (103B increase from week before)
7/22/21 - $8.289T (39B increase from week before)
7/29/21 - $8.270T (19B decrease from week before)
8/5/21 - $8.284T (14B increase from week before)

More unfinanced government spending on the way with the >$1T infrastructure bill being hashed out in Congress. Sorry kids (future generations).
 
8/12/21 - $8.306T (22B increase from week before)
8/19/21 - $8.391T (85B increase from week before)
8/26/21 - $8.382T (9B decrease from week before)
9/2/21 - $8.398T (16B increase from week before)
 
9/9/21 - $8.406T (8B increase from week before)
9/16/21 - $8.498T (92B increase from week before)

$92B increase last week. FOMC meeting soon to push a taper narrative. Yeah, right.
 
9/23/21 - $8.539T (41B increase from week before)

We're tapering, right?
 
9/30/21 - $8.496T (43B decrease from week before)
10/7/21 - $8.513T (17B increase from week before)
10/14/21 - $8.530T (17B increase from week before)
10/21/21 - $8.614T (84B increase from week before)

Balance sheet still growing...
 
12/2/21 - $8.699T (85B increase from 6 weeks before)

The Fed says they are going to taper. We'll see how that goes.
 
1/6/22 - $8.815T (116B increase from 5 weeks before)

The Fed and other central banks are talking a lot about tapering, raising rates, etc. So far, the Fed's balance sheet is still growing.
 
1/20/22 - $8.917T ($102B increase from 2 weeks ago)
 
1/27/22 - $8.909T ($8B decrease from week prior)
2/3/22 - $8.922T ($23B increase from week prior)
2/10/22 - $8.927T ($5B increase from week prior)
2/17/22 - $8.960T ($33B increase from week prior)

It will be interesting to see how the Fed manages tapering (to temper inflation) with market turmoil from geopolitical events (Russia/Ukraine war, economic sanctions, etc.). It looks like they did slow down balance sheet expansion over the last few weeks.
 
2/24/22 - $8.977T ($17B increase from week prior)
3/3/22 - $8.953T ($24B decrease from week prior)
3/10/22 - $8.960T ($7B increase from week prior)
3/17/22 - $9.003T ($43B increase from week prior)
3/24/22 - $9.011T ($8B increase from week prior)
3/31/22 - $8.985T ($26B decrease from week prior)
4/7/22 - $8.987T ($2B increase from week prior)
4/14/22 - $9.014T ($27B increase from week prior)

The balance sheet is jumping around a bit, but more or less staying within a "narrow" $100B band it seems.
 
4/21/22 - $9.005T ($9B decrease from week prior)
4/28/22 - $8.988T ($17B decrease from week prior)

Sure seems like the Fed has managed to stop growing it's balance sheet.
 
Some say assume crash positions
tightening whilst increasing interest rates, what could possibly go wrong ?
 
Well, I let this one slide for a good while. However, I happened to read this dispatch on gata.org today:
...
The extent of "quantitative tightening" reported by the Fed yesterday is still far below the Fed's initial claim that it would be running off $60 billion of government debt per month and $35 billion of mortgage debt. The Fed's assets appear to have peaked in the weekly reports on March 23 at $9,012 billion and yesterday's report was $8,924 billion. ...
Click to expand...

Robert Lambourne: Fed isn't tightening even close to the rate it announced | Gold Anti-Trust Action Committee | Exposing the long-term manipulation of the gold market

gata.org gata.org

So, I decided to have a look...

5/5/22 - $8.989T ($1B increase from week prior)
5/12/22 - $8.991T ($2B increase from week prior)
5/19/22 - $8.995T ($4B increase from week prior)
5/26/22 - $8.963T ($32B decrease from week prior)
6/2/22 - $8.964T ($1B increase from week prior)
6/9/22 - $8.967T ($3B increase from week prior)
6/16/22 - $8.982T ($15B increase from week prior)
6/23/22 - $8.983T ($1B increase from week prior)
6/30/22 - $8.962T ($21B decrease from week prior)
7/7/22 - $8.941T ($21B decrease from week prior)
7/14/22 - $8.945T ($4B increase from week prior)
7/21/22 - $8.948T ($3B increase from week prior)
7/28/22 - $8.939T ($9B decrease from week prior)
8/4/22 - $8.924T ($15B decrease from week prior)

They appear to be shrinking the balance sheet, but not nearly as fast as they had announced.
 
...
However, according to the latest report from Joe Foster, portfolio manager and strategist, and Imaru Casanova, deputy portfolio manager of the VanEck International Investors Gold Fund, the Federal Reserve could be closer to the end of it aggressive tightening cycle than markets currently expect.
...
... they said that the central bank could face growing political pressure to end its tightening cycle as rising interest rates will make servicing its debt more expensive.

The Federal Reserve's balance sheet, while falling, is valued at $8.8 trillion.

Quoting data from the Wall Street Journal, Foster and Casanova said that if the Fed raises interest rates to between 3.25% and 3.50%, it would cost the Treasury $195 billion annually to fund the U.S. central bank.

"As the targeted Fed Funds rate (currently 2.5%) rises above 3%, the interest it pays will exceed the revenue gained from its portfolio assets," the analysts said.
...
Click to expand...

www.kitco.com

There is a limit to how high the Fed will take interest rates - VanEck

Kitco News' general-interest stories takes a look at what is making headlines in the marketplace and how that is impacting precious metals prices
www.kitco.com

The Fed cannot "go full Volcker" raising interest rates to tame inflation because of debt service constraints. The article above focused on the Treasury Dept's finances, but there is a larger issue at play (from 2020):

...
Most of the $25 trillion in U.S. debt matures in one to five years and will have to be repaid by borrowing at higher rates if interest rates rise.
...
Click to expand...

thehill.com

Now is the time for Treasury to issue ultra-long bonds

Other countries have done it, but Treasury Secretary Steven Mnuchin is resisting, and for the wrong reasons.
thehill.com thehill.com
 
They have pretty well said that the low 4% range is it... the Ten Year is knocking on fours door... we should be topped out by Christmas. What then? Level flight until there is poo flying off the fans? Or do we break summin first? The UK situation seems to be indicating summin has already broken.
 
continuing from post #380...

8/11/22 - $8.928T ($4B increase from week prior)
8/18/22 - $8.899T ($29B decrease from week prior)
8/25/22 - $8.901T ($2B increase from week prior)
9/1/22 - $8.874T ($27B decrease from week prior)
9/8/22 - $8.872T ($2B decrease from week prior)
9/15/22 - $8.882T ($10B increase from week prior)
9/22/22 - $8.866T ($16B decrease from week prior)
9/29/22 - $8.844T ($22B decrease from week prior)
10/6/22 - $8.808T ($36B decrease from week prior)

Fed has been steadily shrinking their balance sheet over the last two months. We'll see if that continues or if they have to pivot to help contain systemic risks.
 
pmbug said:
The Fed cannot "go full Volcker" raising interest rates to tame inflation because of debt service constraints.
Click to expand...
Isn't it moreso a question of, how high can rates go for how long?

Imho, they can go substantially higher as long as they don't stay that high for very long.



pmbug said:
8/11/22 - $8.928T ($4B increase from week prior)
8/18/22 - $8.899T ($29B decrease from week prior)
8/25/22 - $8.901T ($2B increase from week prior)
9/1/22 - $8.874T ($27B decrease from week prior)
9/8/22 - $8.872T ($2B decrease from week prior)
9/15/22 - $8.882T ($10B increase from week prior)
9/22/22 - $8.866T ($16B decrease from week prior)
9/29/22 - $8.844T ($22B decrease from week prior)
10/6/22 - $8.808T ($36B decrease from week prior)
Click to expand...
At that rate it'll all be gone by Summer 2027
.....and how much of the reduction is from being sold, as opposed to simply maturing and not being replaced with new purchases?
 
There is no such thing as Free Money.

Credit has a cost. If it has no cost to the borrower, it has a cost to the lender. Or else the money is free because it cost nothing to create...to print off. Currency debasement.

What it leads to, is grotesque malinvestment. People do NOT save for future needs, such as retirement or legitimate big purchases. And the no-cost money is borrowed to use in schemes that would not be considered if there was a true credit cost to the borrowers.

The proper rate of interest is, what is agreeable to borrower and lender of money. That will vary depending on circumstances. A successful young man can often borrow a mortgage at a relatively low rate - he has money; he has proven he can use credit; the collateral is valuable.

A person with less means, looking to borrow to buy a flashy car, will pay more.

A credit-card revolving credit line will cost even more - it's far riskier.

NONE of this credit will cost NOTHING. And if the government is suddenly forced to live within its tax-revenue income, and cease its money-printing, credit cost through the Central Bank will suddenly jump. That shouldn't affect private loans, made from savers' assets, to borrowers' credit requests.

That it is in fact connected, shows where all this borrowed money is coming from and how we've completely screwed the pooch.

There is no shortcut. We have double-digit inflation and a crushing government debt burden. Raise rates, to quell inflation, and government has to print more to service its "debt." Keep them artificially at zero, and malinvestment and QE keeps on eroding buying power.

Powell should have stepped down when his term was up a year ago. For his own good...gone to Davos to sit with the smart kids.
 
10/13/22 - $8.808T (no change from week prior - 1st time I ever see this)
10/20/22 - $8.793T ($25B decrease from week prior)
10/27/22 - $8.772T ($21B decrease from week prior)
11/3/22 - $8.726T ($46B decrease from week prior)

So far, the Fed has been able to maintain a shrinking balance sheet.
 
pmbug said:
10/13/22 - $8.808T (no change from week prior - 1st time I ever see this)
10/20/22 - $8.793T ($25B decrease from week prior)
10/27/22 - $8.772T ($21B decrease from week prior)
11/3/22 - $8.726T ($46B decrease from week prior)

So far, the Fed has been able to maintain a shrinking balance sheet.
Click to expand...
At that rate, according to my back of the napkin arithmetic, (if it is correct, and it may not be lol), they'll have it all gone by mid 2029 or so.
 
Joe King said:
At that rate, according to my back of the napkin arithmetic, (if it is correct, and it may not be lol), they'll have it all gone by mid 2029 or so.
Click to expand...

8.726T / 25B = 349 easy payments / 12payments/year = 29 years + 2022 = November 2051

Adjust 25B rate as you like, but the Fed isn't going to QT to zero, so it's just fun with numbers.
 
pmbug said:
8.726T / 25B = 349 easy payments / 12payments/year = 29 years + 2022 = November 2051
Click to expand...
In your post I quoted, their balance sheet was reduced by $92B in 22days. Isn't that approx $4.3B/day? So where you getting the $25B/Month number at? They refuced by that much in just the week of the 20th per your post.


Edited to add: $4.3B per day = $130,791,666,666.66 per Month.
 
Ah hell. My bad. It's actually $25B per week, not month. The Fed publishes their data every Thursday afternoon.

That's what I get for doing math first thing in the morning.

8.726T / 25B = 349 easy payments / 52payments/year = 6.7 years + 2022 = mid 2029 as you said.
 
pmbug said:
Ah hell. My bad. It's actually $25B per week, not month. The Fed publishes their data every Thursday afternoon.

That's what I get for doing math first thing in the morning.

8.726T / 25B = 349 easy payments / 52payments/year = 6.7 years + 2022 = mid 2029 as you said.
Click to expand...
I'm glad to see I'm not the only one here that has that problem sometimes. Lol
 
Total household debt balances continued their upward climb in the third quarter of 2022 with an increase of $351 billion, the largest nominal quarterly increase since 2007. This rise was driven by a $282 billion increase in mortgage balances, according to the latest Quarterly Report on Household Debt & Credit from the New York Fed’s Center for Microeconomic Data. Mortgages, historically the largest form of household debt, now comprise 71 percent of outstanding household debt balances, up from 69 percent in the fourth quarter of 2019. An increase in credit card balances was also a boost to the total debt balances, with credit card balances up $38 billion from the previous quarter. On a year-over-year basis, this marked a 15 percent increase, the largest in more than twenty years. ...
...
In conclusion, the aggregate data in our Quarterly Report on Household Debt and Credit point to large increases in credit card balances, accompanied by increases in other types of balances as well. New purchases adding to the credit card balance reflect robust demand amid higher prices of goods and services. The CCP sheds light on the more rapidly increasing debt burdens and delinquency of the younger and less wealthy card holders, and may suggest disparate impacts of inflation. However, though delinquency rates are rising they remain low by historical standards and suggest consumers are managing their finances through the period of increasing prices.
Click to expand...

libertystreeteconomics.newyorkfed.org

Balances Are on the Rise—So Who Is Taking on More Credit Card Debt? - Liberty Street Economics

Total household debt balances continued their upward climb in the third quarter of 2022 with an increase of $351 billion, the largest nominal quarterly increase since 2007. This rise was driven by a $282 billion increase in mortgage balances, according to the latest Quarterly Report on Household...
libertystreeteconomics.newyorkfed.org
 
Last edited:
The media keeps saying the $USD is safe, but I'm no gambler. Sure it may survive an eventual implosion, but what will it purchase?

Do you think or imagine that in 10 years the $USD could be worth 50% less than it is today? If the current state exisits it will happen. It will also take down the EU, although they are doing even dumber stuff at an accelerated rate.

Consider all the Third World countries like Panama and Ecuador that use the $USD. They will experience revolutions.
 
nickndfl said:
Do you think or imagine that in 10 years the $USD could be worth 50% less than it is today?
Click to expand...
Ten? It's nearly done that in the last two years.

I don't know what others are seeing, but the stuff I buy at the grocery store has all increased by 30-50% already.

In ten years, I think people will be wishing the dollar iwas only 50% less valuable than it is today.
 
You must log in or register to reply here.
Back
Top Bottom