Suddenly, I was jolted rudely awake by alarms ringing in the Mogambo Bunker Of Paranoid Delusions (MBOPD) at the news of a drop of $40 billion of Total Fed Credit last week. Wow! This is the “money” that magically appears, literally “out of thin air, as a new credit on the books of the banks, which they can then loan out some Huge Freaking Multiple (HFM) of that little bit of new credit, thus creating lots and lots of new money.
And this huge $40 billion downward swing of Total Fed Credit in one week is a Big Freaking Bunch (BFB), where the total effect on the banks is the reciprocal of the fractional reserve ratio, which is at least 10 times as much according to the classical textbook examples, but more likely a thousand times as much, seeing as how the Federal Reserve itself says that total bank assets are now a whopping $12.030 trillion and total bank liabilities are $10.780 trillion, against which the banks are only “required” to have $57.622 billion as reserves! Hahaha!
So what does that make the fractional reserve ratio? 187-to-one? Hahaha! We’re freaking doomed by out-of-control fractional-reserve banking!
And in that regard, the M1 and M2…Read more…
