where is hedgie?, page-16

Red,

With all respect but you are just pointing to another blog whose bias you obviously prefer. But it too is biased.

Zero Hedge can be very sarcastic and offensive at times and admittedly has had an extremely negative view for quite some time. Obviously not everybody's cup of coffee.

I would have preferred if you had attacked the post itself and pointed out the possible flaws rather then discredit it because you don't like the language the source is using.

Anyway, no need to go to any blog as the FED itself runs an excellent website.

http://www.federalreserve.gov/monetarypolicy/bst_frliabilities.htm

As for credit growth, which could be a possible reason for the discrepancy check out the G19 statistic on:

http://www.federalreserve.gov/econresdata/releases/statisticsdata.htm

As for the for the reserve accounts details you will find them in H41, first item under liabilities.

The point is that if this additional excess reserve liquidity is not used for loans, as G19 shows, the total amount should have increased by the net purchase amount of POMO's minus the securities the FED is currently offloading. And that is the problem as they have not.

The banks are paid interest on these accounts so that they are encouraged to keep their money there. But at the end of the day, they can do with it as they please. SFP was meant to offset the QE1 liquidity injection. With its retirement an additional 25 billion should every week (in theory at least) end up on the excess reserve accounts. The claim is that it won't.

So how much of this weeks gain can be attributed to this ... no one knows. Does the money really end up in asset markets? ..... million dollar question.

Anyway ... my take on this is that the bears can come out of their caves once the SFP is reintroduced. But for this to happen the debt sealing will have to be raised.