Saturday, May 23, 2009

U.S. Adjusted Monetary Base -> Uncharted waters

Over the last few days, the USD has been 'sliding' against most global currencies.

The FED has been working over-time, bailing out one bankrupt and insolvent institution after another. Maybe the state of California is next in line for the intensive care unit at the Fed/Treasury

The 'Adjusted Monetary Base' has exploded.
While the 'market meltdown' has resulted in a collapse of paper profits and wealth supported by debt, we may be setting up the foundations of a massive surge of inflation!

How exactly does the Fed propose to 'take away the punch bowl' at some stage in the future?
For now, rising Treasury yields will mean that the borrowing costs of the US government will rise just a time when its borrowing program steps into overdrive.
The Fed will have to step up its purchases of US Treasuries, so that it can stem the upward rise in Treasury yields

The quantitative easing/ money printing / 'Bailout everyone' experiment is getting more complicated by the day.

The charts below have been sourced from

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