Massive Cash Influx Backing Synthetic QE3

Aaron Krowne of ML-Implode.com, Russ Winter of Winter Watch, and the Wall Street Examiner’s Lee Adler discuss the mysterious slush fund on the Fed’s balance sheet and the massive wave of cash entering US banks backing Bernanke’s “synthetic QE3.” For bears short term risk may represent long term opportunity.

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Note to subscribers: We have received direction from the Fed to a definition of the “Other” Deposits. They are: Other deposits at Federal Reserve Banks include balances of international and multilateral organizations with accounts at FRBNY, such as the International Monetary Fund, United Nations, International Bank for Reconstruction and Development (World Bank); the special checking account of the ESF (where deposits from monetizing SDRs would be placed); and balances of a few U.S. government agencies, such as the Fannie Mae and Freddie Mac.

The simple, most benign explanation is that these are deposits of Fannie and Freddie as they receive massive prepayments of loans being refinanced. For those of you who believe in darker conspiracies, see the part I have put in bold.

5 comments for “Massive Cash Influx Backing Synthetic QE3

  1. don
    August 31, 2011 at 12:09 pm

    Lee,

    Here is the explanation of “other”. To get to the depth of this you have to click on the Spellman note/link very near the end of this piece. Very near the end of this video, Spellman goes into “other” and continues with this on the next video, which will follow automatically. The first video up to 11:30 where Spellman addresses “other”, he puts forward the background big picture, which you are very familiar with so not much up to 11:30.

  2. don
    August 31, 2011 at 12:10 pm
  3. August 31, 2011 at 5:09 pm

    He’s talking about the Asset side there– The alphabet soup programs. This is not related to Other Deposits. They are as defined above.

    The explanation of the capital constraint on lending is excellent. It’s why I keep screaming that the banks cannot and will not deploy these reserves regardless of whether the Fed cuts the rate to zero. Which it won’t.

  4. August 31, 2011 at 5:25 pm

    Wow. He’s clueless as to how the Fed actually buys the Treasuries from the Primary Dealers, crediting their accounts directly. He said that the Fed was buying the Treasuries from insurance companies and institutions like the University of Texas. That’s flat out wrong. The Fed only buys them from the Primary Dealers, who had bought them the week before from the Treasury. I’m shocked. He was good up to that point, then went totally off the rails.

  5. August 31, 2011 at 5:26 pm

    The amount of misinformation out there is mind bending.

Comments are closed.