tag:blogger.com,1999:blog-2761684730989137546.post4980050481295844779..comments2024-03-28T07:50:06.102-04:00Comments on Mike Norman Economics: Don't fear hyperinflation: Treasury sales are a powerful countervailing forcemike normanhttp://www.blogger.com/profile/03296006882513340747noreply@blogger.comBlogger5125tag:blogger.com,1999:blog-2761684730989137546.post-10459386282154878982009-05-07T10:52:00.000-04:002009-05-07T10:52:00.000-04:00Matt
Your logic about reserve adds/drains is corr...Matt<br /><br />Your logic about reserve adds/drains is correct. I haven't checked the numbers myself, but remember that the qty of reserves is COMPLETELY IRRELEVANT. Treasury bond sales are an asset swap, replacing an overnight account on the Fed's books (reserves) with a time deposit on the Fed's books (Treasury security, the records for which are kept on the Fed's book entry system) . . . it's the size of the deficit that matters. Whether you sell a bond or not, the contribution to net financial assets of the private sector is the same with a given deficit.<br /><br />ScottSTFhttps://www.blogger.com/profile/16261666934714196464noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-92113460189703564112009-05-03T14:25:00.000-04:002009-05-03T14:25:00.000-04:00Mike,
Thanks again for your insights.
So what I t...Mike,<br />Thanks again for your insights.<br /><br />So what I take from your statements is:<br />Xfers from depositaries: Drain<br />Xfers to Depositaries: Increase<br />(in reserves)<br />So if I again look at the DTS Table 2 for 30 April 09, there are 2 line items that are called just that.<br />On Withdrawl side there is ytd "Transfers to Depositaries: $225B"<br />and on the Deposit Side "Transfers from Depositaries: $1.123T". So if this is how it nets out, that is a reserve drain of $898B. So is it fair to say that so far in FY 09, Treasury Operations have resulted in a reserve drain of $898B? Wouldn't this be SEVERELY damaging for the economy by itself?<br /><br />Resp, MattMatt Frankohttps://www.blogger.com/profile/11978352335097260145noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-893611108527855272009-05-02T19:58:00.000-04:002009-05-02T19:58:00.000-04:00Any transfer from the public to the Treasury's acc...Any transfer from the public to the Treasury's account at the Fed reduces reserve balances. Transfers from the Treasury's acct at the Fed to depositaries increases reserves.<br /><br />Transfers from TTL accounts to the TReasury do not reduce reserves as they have already been debited.<br /><br />Treasury transfers of TTL account balances to the Fed also do not increase reserves.mike normanhttps://www.blogger.com/profile/03296006882513340747noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-89110333224555772192009-05-02T19:44:00.000-04:002009-05-02T19:44:00.000-04:00Matt,
Transfers from depositaries (banks) to the ...Matt,<br /><br />Transfers from depositaries (banks) to the Treasury's account at the Fed. That's any payment from the public to the U.S. Treasury. Transfers to TTL accounts are accounts of the Treasury held at commercial banks used for the collection of taxes.mike normanhttps://www.blogger.com/profile/03296006882513340747noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-2078007306916005452009-05-02T09:16:00.000-04:002009-05-02T09:16:00.000-04:00Mike,
When I look at the DTS for April 30,2009, I ...Mike,<br />When I look at the DTS for April 30,2009, I look at the Withdrawl (right) side of the statement as sort of Govt spending. As you say I can see the NASA/DOD/Medicare etc withdrawls (ie spending), then they show Treasury Security redemption (not really spending to me). Where Im getting a bit sideways is at the bottom of Table 2 with these items that are called "Transfers". They have "Transfers to Depositaries" for 225,223M FROM the Federal Reserve Account; and "Transfers to Federal Reserve Account" FROM Tax and Loan Note Account of 1,122,890M. I guess I am having trouble understanding where these funds came from and to whom they are going. They may be just intra-Govt tranfers of funds, but I am trying to figure out if they affect reserve balances, etc.<br /><br />Our leaders do not inspire confidence with some of the statements they make (as you have often pointed out (Walker/Jud Gregg etc...), and I (half) believe they could engineer the "potential for a financial collapse of unprecedented proportions" you point out above.<br /><br />Resp, MattMatt Frankohttps://www.blogger.com/profile/11978352335097260145noreply@blogger.com