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The Fed injects liquidity by buying back mainly short treasuries. So
now the banks are sitting on alot of cash. The only way this is
distributed through the system is if the banks are willing to lend
this excess cash out and if borrowers see leveraged investment
possibilites. Japan loosened in the 90s but it didn't do the
domestic economy any good because domestic borrowers were perceived
uncreditworthy. I'm sure the borrowers and investors were already
drowning in a tide of debt and stock market losses. Initally the
liquidity went offshore to Southeast Asian ventures which pretty much
all bit the dust. Now all the money is parked in long Japanese
government bonds which last time I looked yielded about 1.4%. Who in
their right mind would buy long-term debt in the world's most
indebted nation suffering through a severe recession and doing
everything it can to weaken its own currency? Better off putting
your money under a mattress.
--- In realtraders@xxxx, profitok <profitok@xxxx> wrote:
> Hello
> Attach is the latest m3 money supply as reported by the fed
> ----- Original Message -----
> From: "STUART AUSLANDER" <u.stuart-auslander@xxxx>
> To: <realtraders@xxxx>
> Sent: Monday, October 01, 2001 10:05 PM
> Subject: [RT] Adjusted Reserves Sept 19, 2001
>
>
> > Adjusted reserves of the banking system which have varied from 60
to 70
> > billion for the last 3 years(except during Y2K) grew from 68 bil
on
> > September 5 to 107
> > billion on September 19. (These are the Fed StLouis measures of
the
> > required reserves need by the banking system to support their
> > deposits.) I would say the FED has taken out all the stops and
intends
> > to dramatically stimulate the economy with money.
> >
> > It is my feeling (I would love feedback on this) that money has
been
> > tight despite declining interest rates. Declining interest rates
do not
> > necessarily make money loose. I suspect we have just seen a major
> > change in FED policy.
> >
> >
> > To unsubscribe from this group, send an email to:
> > realtraders-unsubscribe@xxxx
> >
> >
> >
> > Your use of Yahoo! Groups is subject to
http://docs.yahoo.com/info/terms/
> >
> >
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