Post by brosin on Sept 13, 2010 16:12:53 GMT -5
This is my post in Charts and Chats, but I'm not sure if everyone reads that thread.
I find this *supremely* significant.
Take a look (I will also post in Charts and Chats) at excess reserves: www.federalreserve.gov/releases/h3/current/
$20 billion had come out of excess reserves in the 2 weeks ending 9/9/10. What was the market doing for those 2 weeks?
This number will eventually reach 0 again as it always should be. That is still $1 trillion in funds that will need a home. They won't be going into Treasuries at historical highs soon to never be seen ever again. This is all money creation. $1 Trillion in money creation equates to roughly $5 trillion in actual money lent.
If we are to assume this is money lent on 2.5:1 leverage (most ordinary investors' leverage limits), that is $12.5 Trillion in buying power created. If we are to assume a sizeable percentage is lent to institutional investors who can leverage it to the moon if they want (let's say 10:1 [still a less than realistic number]), that is $50 Trillion in buying power that will soon be entering the economy.
The US stock market is valued at about $15 trillion total.
Hmm. Please note, excess reserves is the *#1* reason I remained bullish as of a few weeks ago when thinking everything through. This is money that will inevitably enter the system. Right now it remains in bank vault limbo with no multiplier / money creation effect.
Take a look (I will also post in Charts and Chats) at excess reserves: www.federalreserve.gov/releases/h3/current/
$20 billion had come out of excess reserves in the 2 weeks ending 9/9/10. What was the market doing for those 2 weeks?
This number will eventually reach 0 again as it always should be. That is still $1 trillion in funds that will need a home. They won't be going into Treasuries at historical highs soon to never be seen ever again. This is all money creation. $1 Trillion in money creation equates to roughly $5 trillion in actual money lent.
If we are to assume this is money lent on 2.5:1 leverage (most ordinary investors' leverage limits), that is $12.5 Trillion in buying power created. If we are to assume a sizeable percentage is lent to institutional investors who can leverage it to the moon if they want (let's say 10:1 [still a less than realistic number]), that is $50 Trillion in buying power that will soon be entering the economy.
The US stock market is valued at about $15 trillion total.
Hmm. Please note, excess reserves is the *#1* reason I remained bullish as of a few weeks ago when thinking everything through. This is money that will inevitably enter the system. Right now it remains in bank vault limbo with no multiplier / money creation effect.
