Pragmatic Capitalism

Capital for Living a More Practical Life

Batman, thanks for the data

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Thank you so much for posting all these graphs and data. This helps me inform my opinion much better than mere rhetoric. Sometimes a graph can scare the crap out me. Here is one that I still sweat — eight years later.

“By definition, nonborrowed reserves are equal to total reserves minus borrowed reserves. Borrowed reserves are equal to the sum of credit extended through the Federal Reserve’s regular discount window programs and credit extended through certain Federal Reserve liquidity facilities. Total borrowings from the Federal Reserve are presented in table 1a of the release. Over much of 2008, in order to maintain a level of total reserves consistent with the Federal Open Market Committee’s objective for the federal funds rate, increases in borrowed reserves were offset through a nearly commensurate decrease in nonborrowed reserves, which was accomplished through a reduction in the Federal Reserve’s holdings of securities and other assets. The negative level of nonborrowed reserves was an arithmetic result of the fact that borrowings from the Federal Reserve liquidity facilities were larger than total reserves.”

When the number went negative and all our banks were broke, the Fed opened the “window” and the economy was saved — that time. This graph was copied in real time. I looked at this graph often in 2008 and 2009– too often. What is going to happen? Then something did. Obama bailed out the auto industry and our economy came back from the death spiral. Thanks to you, I put my $tash back to work after that.

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Posted by Dennis
Posted on 08/16/2017 8:02 PM
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Cullen Roche Posted by Cullen Roche
Answered on 08/17/2017 11:45 AM
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