http://en.wikipedia.org/wiki/Federal_Home_Loan_Bank

Apparently has $1 Trillion in assets.

So I'm guessing the Fed can use this entity as a back door to pump 'off balance sheet' fiat into the commercial banks?

Smell of hyperinflation.

Remember, inflation is an increase of the quantity of money in circulation exceeding the rate of growth of goods and services in the economy. Inflation causes price rises, not the other way round as govt and central banks would want us to believe.

There is a lag of 12 to 18 months between money supply and consumer prices. The price increases we are now seeing across the board in commodities, fuels, food are the effect of pre-crunch excessive money supply growth. This is nothing in comparison to what we'll see in about a year time, when the price spiral will really kick into high gear as an effect of the huge ongoing liquidity injections.

Also consider that central banks will be forced to step up liquidity injections even further in their hopeless attempt to prevent the $600 trillion derivative neutron bomb from going off.

This is why there is no excuse for not protecting yourselves.

FreeTrader

Thanks for the link, incredible.

So doesn't a credit crunch produce deflation?

Not when central banks are hell bent on inflating the money supply overtly and covertly in order to try and save the insolvent banking system.

So the credit crunch is a myth, or is it a distraction?

Credit crunch means there is no NEW credit.* But the EXISTING credit is so large that it is enough for three hyperinflations before Christmas.

EDIT: *To consumers, I should add. What happens to our friends the banks is a different matter.

I agree that the Fed and ECB appear to have been inflating their money supply... but I'm less sure about the BoE.

Can we quantify the extent to which the central banks have inflated their money supply in 2007?

I'm reading some fascinating stuff about how the BoE conducts its "open market operations" - and it seems to me that the money supply is constrained principally by assets acceptable as collateral to the BoE in addition to by interest rates.

To what extent have new assets been accepted? If the BoE holds these assets as collateral, what effect does this have on the institutions holding these assets?

Wasn't it such that the Fed, BoE, ECB made it very clear that they now accept a whole lot of new crap as collateral?

No, it is real.

Had central banks not initiated the huge, continued liquidity injections (both overt and covert), it would already be clear that the banking system is insolvent because many large banks would have collapsed already.

Liquidity has bought a bit more time for the banks, at an increasingly high cost in terms of loss of currency purchasing power.

Isn't existing credit already in the system per se?

Only three hyperinflations left before Christmas???? WTF is that?!

The BoE (the only central bank I've been watching) did say that they had widened the variety of assets against which they'd lend... however... I think... the values of those assets would be kept under constant review - and margin calls would be made if their market value dropped. There was also a suggestion that they would not be accepted for repurchase at their face value.

I'm wondering if the BoE _hasn't_ been inflating a lot. My impression of Greenspan's position is that he thinks the BoE is doing something rather different to the Fed/ECB. I'm not clear about what is so fundamentally different.

I'm struggling with the analysis - at least in part because I had no idea how a central bank goes about "Open Market Operations"... but I'm catching on slowly. I'd like to understand enough to be able to ask the right questions to establish what effect the credit crunch will have on Sterling.

...basically if credit is pulled overnight ...prices of basics will explode ...and continue in a series.....

Isn't that true of any point in history? Why would be credit be pulled overnight?

Why? I'd expect prices to collapse if credit is withdrawn.
I'd expect people to starve - or, at least, steal to eat.

...if you read some of the other threads and the press you will realise many people remortgaging are being refused by their lenders and recommended to sell their houses to recover their' s and the Banks' position .....this is due to the tightening of credit due to the lack of funding in the markets and the lenders basically have 'larders' which are running low....

Look at the $trillions that have been accumulated in Asia. It's all Western IOUs, i.e. debt or credit. What do you think is happening right now to the price of commodities, and in particular food? When China decides to dump their treasuries and quickly buy real stuff like oil, wheat and gold, it's GAME OVER.

No one in China will starve. The can use their $trillions to buy wheat and milk.

How many trillions does the BoE and the Treasury have in reserve to buy our wheat?

Yes, I've read Peter Schiff. You mentioned something about three hyperinflations before Christmas. i.e. in the next 13 days.

NOTE to everyone: In Weimar the strongest inflation phases where during times when there was actually not that much of growth in money supply.

In the end game, it's all getting psychological, uncontrollable.

That's what I say after several glasses of redwine. Admittedly, we might get only one hyperinflation BEFORE Christmas.*

* That's the one in Mince Pies, and I fear it the most of all.

But it's the hyperefflatus from the Brussels Sprouts (what do they cost this year?) that's really worrying.

...obesity control....

& good night.

Several comments.

* The trillions of *dollars* accumulated in Asia are bonds - and there is precedent for defaults.
* The one thing China has quite a lot of is farmers - so I doubt they'll want to buy all the world's food.
* If they want real stuff like copper, iron and oil (which they don't have) - then, sure, those things could get really,really expensive - and we, in the West, would have to cut back in our consumption.
* If they want gold... then you'll get rich... but I don't see an Armageddon in there... and I seriously doubt that China, for example, would value gold so highly when what it really wants is infrastructure and technology.

While it makes a good horror story, I can't see the benefit to China in crippling the west's economy... and if they wanted to buy stuff with their dollars, why wait until now?

Apologies? They know they'll serve a long time for what they've done.

http://www.washingtonpost.com/wp-dyn/conte...ml?hpid=topnews
On Wall St., Mortgage-Finance Chiefs Take Apologetic Tone

By David S. Hilzenrath
Washington Post Staff Writer
Wednesday, December 12, 2007; Page D01

The chief executives for two of the nation's dominant mortgage-finance companies traveled to Wall Street yesterday and delivered competing words of regret for having to take painful steps to shore up their businesses.

The two government-chartered firms recently cut the dividends they pay shareholders and borrowed billions of dollars of relatively costly capital to stay in compliance with regulatory requirements and ride out the turmoil in the housing market.

"We wanted to dilute the common shareholders like we wanted to shoot ourselves in the head with a gun," Richard F. Syron, Freddie Mac chairman and chief executive, told a gathering of investment analysts.

"I wanted to cut off both my arms, and both my legs, and my head and my kidney," Fannie Mae chief executive Daniel H. Mudd said later in the day.

Investors have punished the companies' stocks recently, and yesterday's presentations by the two executives at a Goldman Sachs conference did not appear to help. Freddie Mac's share price fell 10.6 percent, and Fannie Mae's fell 7.1 percent. Both stocks are down more than 50 percent from their high points over the past year.

...

Although many foreclosure notices have been issued, the public hasn't seen a lot of forced evictions or pictures of people standing in front of their houses with their furniture on the lawn, Syron said. When that happens, the effect on consumer confidence could inflict deeper damage on the economy, Syron said.

If home prices decline by 30 percent, as one noted economist has said could happen, "We're all going long apples and boxes to sell them in," Syron said, invoking an image from the Great Depression.

Bitter irony.

http://www.iht.com/articles/2007/12/12/business/12place.php

Bankers face grim truth: Worst is yet to come
By Michael J. De La Merced
Published: December 12, 2007

AS the credit crisis sweeps wildly through Wall Street, major investment banks face a grim truth about their already-slumping profits: the worst is yet to come.

Beginning with Lehman Brothers on Thursday, major investment banks and securities firms will begin reporting what are likely to be their weakest quarterly earnings in years.

The results will show how hard the recent turmoil in the financial markets continues to hit the even the mightiest Wall Street banks, and could cast doubt over the future of several chief executives. Multibillion-dollar write-offs have already prompted Merrill Lynch and Citigroup to replace their chief executives.

Some Wall Street stock analysts — many of whom rarely say sell — in recent weeks have turned bearish on their own industry. One analyst after another has cut earnings estimates for Wall Street banks, citing continued concern about the widening mortgage crisis. Some have placed sell recommendations on the shares of Bear Stearns, Citigroup and Morgan Stanley.

So, the US will default? What will the Dollar, the world's reserve currency, do then?


OK, so food inflation is at 2% and will stay there, I suppose?


And they want to keep all that paper, and love to watch it's value evaporate, like Japan. They also want to keep US paper to be always dependent on them, because what's the use of being financially independent if you want to be the next super power?


The Chinese are all stupid and subservant, exactly like the Japanese, and will suffer for us through a depression so we can buy cheap things on credit. Love it.

IMO, Prechter has been wrong too many times in the recent past. The above video linked to these Marc Faber videos, which are also worth a watch: http://uk.youtube.com/watch?v=isD2aj3wh20

OT, but there was also a link to this 'blowjob girl' video: http://uk.youtube.com/watch?v=0hm7pp_JFOs

Trying to inject more money through the back door to prop-up banks - this has a smack of despair to it. I can smell hyperinflation coming.

"We are not sure we believe in a magical central bank bullet -- the Fed would need to be prepared to pump out an unprecedented amount of liquidity to have a realistic chance of success," Steve Pearson, chief currency strategist, said in a note.

http://news.yahoo.com/s/nm/20071212/bs_nm/...Fsnx_BIx6IG1vAI

The FED is preparing to monetize even dead cows, but even that would only delay the unavoidable and of course make hyperinflation worse.

http://www.reportonbusiness.com/servlet/st...y/Business/home
Fed to start loan auctions: report

The Associated Press

December 12, 2007 at 7:43 AM EST

NEW YORK — The U.S. Federal Reserve may soon announce new support for banks in the form of loan auctions that would provide liquidity directly to the country's largest financial institutions, according to a newspaper report.

The Fed, under a plan that could be announced as early as Wednesday, would provide loans against a wide range of collateral, allowing banks to avoid the stigma of existing discount window loans, the Financial Times reported.

That would be a problem for those with currency reserves. There would need to be some spectacular diplomacy...



No, and why should it be? Food inflation has, until recently, been below the rate of RPI inflation. Food inflation at 10% for 10 years in the western world wouldn't be impossible to cope with.



It is because other nations have an interest in their reserve currency holding value that they have an interest in avoiding a melt-down in the US economy.



No, I think the Chinese have a different structure of governance... and, as such, they are less likely to do something rash - especially as those at the top seem to be benefiting by copying western economic models.

The market says no.

http://www.iii.co.uk/news/?type=afxnews&am...;action=article
(AFX UK Focus) 2007-12-12 13:38 GMT:
UK interbank lending rates continue to rise beyond 1-month contract

LONDON (Thomson Financial) - The cost of borrowing between banks in the UK continued to rise beyond the one-month maturity level, suggesting liquidity in the financial sector remains tight.

The daily fixing of the London Interbank Offered Rate (Libor) rose to 6.75 pct on a one-month basis from 6.74 pct yesterday.

Meanwhile, rates on three-month contracts remained at 6.63 pct, and fell on an overnight basis to 5.690 pct from 5.709 pct.

The interbank lending rates remain far above the Bank of England's benchmark rate, cut last week to 5.50 pct, suggesting banks are hoarding cash on fears that the credit crunch will persist well into next year.

This is the mark of the derivative beast.

http://uk.reuters.com/article/hotStocksNew...12?rpc=401&
Wachovia drops on loan loss view
Wed Dec 12, 2007 1:34pm GMT

NEW YORK (Reuters) - Shares of Wachovia Corp WB.N dropped more than 2 percent to $41 before the bell on Wednesday after the fourth-largest U.S. bank said it would put aside as much as $1 billion to cover mortgage-related losses in the fourth-quarter.

Bank of America Expects Profit to Be `Disappointing' (Update2)

By David Mildenberg
Last Updated: December 12, 2007 08:59 EST

http://www.bloomberg.com/apps/news?pid=206...&refer=home

Lewis said writedowns for debt instruments known as collateralized debt obligations, or CDOs, is ``unknowable.''

ALERT

http://www.bloomberg.com/apps/news?pid=206...&refer=home
Fed, ECB, Central Banks Coordinate to Add Liquidity

By Scott Lanman

Dec. 12 (Bloomberg) -- The Federal Reserve plans to ease ``elevated'' short-term funding pressures by injecting cash to banks through auctions and providing $24 billion in currency swap lines to the European and Swiss central banks.

The Fed is coordinating the measures with the European Central Bank, Bank of England, Bank of Canada and Swiss National Bank, the Fed said in a statement in Washington. The Fed will auction term funds to banks against a ``wide variety of collateral.'' All ``generally sound'' institutions can participate, the statement said.

I suppose that means if the lights are on and someone's home.

The Fed's first auction of term funds will be $20 billion on Dec. 17. The second auction will provide up to $20 billion, taking place Dec. 20. The central bank plans two more auctions, Jan. 14 and Jan. 28, with possible additional operations thereafter, the Fed said.

This is scary. It spells NWO to me and a coordinated effort to screw the small guys through inflation. Expect massive currency swings.

They are trying to shore up the dollar, but they can't.
They are trying to save the system, but they can't.
They are trying to prevent gold from going ballistic, but they can't.

THIS IS UNPRECEDENTED, CO-ORDINATED, DESPERATE, HOPELESS AND DELIBERATE WORLDWIDE HYPERINFLATION ON A GRAND SCALE


This is 100% correct, guaranteed.

Could someone expand on what they think this last bit is all about ? For exchange rate management ?

Pent

A coordinated act of desperation, ordered from the heart of the Empire, and all vasals follow duly. Except for Japan, I see. What the heck do THEY think? They should inflate a little more as well.

ECB, BoE, BoJ and others just bought a boatload of useless dollars crap

The DOW is splurging/crashing upwards on the 'good news'.

Another manifestation of inflation as people flee the dollar in anything tangible.

MUHAHAHAHAHHAHAHAHHAHHAHAHAHHAHAHHAHAHHAHAHAH

http://www.youtube.com/v/r38_GS-3B9o&rel=1

Great Scott! It's true,It's all true I tell Ya!

another failed attempt to inject liquidity?

it would appear so with my limited knowledge, but bloomberg are spinning it......saying that everything is better now.....

more like sticky plaster over massive dam wall crack.

Wow, that's bold of you admitting limited knowledge of BJs on a public forum, GOM.

Sorry - couldn't help reading your post that way.

... They couldn't pump 'n dump either.