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I believe the daily repos are simple window dressings.
They are so small relative to the problem, they have
literally no impact.
Non seasonally adjusted M3 is the item to watch.
Besides the actual non adjusted number, there is also
a formula that allows you to construct M3 from its
components. I'll find links to both at one of the
regional Fed web sites once I am done giving a CME
webcast today.
Tim
--- Code 2 <Code2@xxxxxxx> wrote:
> So you believe the repo auctions are intentionally
> short term to
> address the day-to-day bank capital weaknesses,
> without a permanent
> increase in the money supply?
>
> Assuming they are happy with a contracting money
> supply, isn't that
> inconsistent with the FOMC's inclination to reduce
> interest rates?
> That would just cause inter-bank rates to decouple
> from the federal
> funds rate.
>
> What indicators will tell us how this is playing out
> -- unofficial M3?
>
>
>
> From: Timothy Morge <timothymorge@xxxxxxxxxxxxx>
> To: realtraders@xxxxxxxxxxxxxxx
> Date: Tuesday, January 15, 2008, 6:46:29 PM
> Subject: [RT] Inflation
>
> I believe I cut my own reply off...long afternoon.
> Let
> me try again...
>
>
> Our current Fed Chairman spent more than 3 years
> behind the scenes advertising himself for the job,
> so
> when Greenspan decided 'the getting was good', he
> was
> in the right place at the right time. And his main
> selling point? Not since Paul Volcker [he claimed
> over
> and over nehind the scenes] would the Fed Chairman
> be
> as fiscally responsible as he would be, because he
> was
> a staunch monetarist--just what we would need to fix
> the coming crisis.
>
> Now, don't send me messages saying I said he was
> Paul
> Volcker reincarnated. HE said it, although Paul
> wasn't
> strictly speaking a monetarist [but he did apply
> monetarist medicineto cure the ills of hyper
> inflation].
>
> What does this bode for all of us? If you can
> believe
> when the curren chairman says, he may be doing
> window
> dressing, which is what the recent actions are, but
> in
> point of fact, he will be letting the money supply
> contract. There is only one way to go from 17
> percent
> inflation to something reasonable [2-4-6 percent]
> and
> that is to shrink the outstanding broad money supply
> and change prices.
>
> Is it gonna hurt? You betcha. Will we see 2 or 3
> large
> money center banks fail? Most likely. Jail time for
> some of these moron lenders? I hope so.
>
> By the way, someone [to remain nameless] sent me a
> wonderful book about the Austrian School Economist
> Mises. It was a great read and really helped pass
> the
> 2 1/2 weeks I was in the hospital in December. I
> heartily recommend the book if you like Economics or
> just are interested in one of the most influencial
> thinkers in the financial world in the 1900's...
>
> Just my 2 cents, adjusted for current inflation.
>
> I wish you all good trading.
>
> Tim Morge
>
>
>
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