Panic in the air?

MrBean · Light Sweet Crude Joined: Sep 26, 2004 Posts: 1048

Fed has called the major players in derivative trading to a meeting, causing mild panic on Wall Street:

meekoil · Heavy Crude Joined: Jul 11, 2005 Posts: 120

I highly recommend reading The Mogambo every week for the real truth about the US economy. And he's funny too.

I_Like_Plants · Posted: Wed Aug 24, 2005 6:21 pm Post subject: Re: Panic in the air?

Mogambo's funny as hell, and educational too!

ab0di · Heavy Crude Joined: Jul 03, 2005 Posts: 100 Location: Iowa

mgibbons19 · Light Sweet Crude Joined: Aug 20, 2004 Posts: 1050

I like Mogambo! But, where in a small midwestern city does one buy precious metals? Gotta be kind of expensive having Kitco send stuff through the mail every do often.

marko · Posted: Wed Aug 24, 2005 6:54 pm Post subject: Re: Panic in the air?

jimmydean · Heavy Crude Joined: May 05, 2005 Posts: 226

If the 1.6B buyback is true this is very scary. Any other sources that can confirm this?

OilsNotWell · Light Sweet Crude Joined: Aug 11, 2004 Posts: 1257

Meekoil-

That is the most sickingly funny avatar I have EVER seen. Laughed so hard, milk dribbled out of my nipples.. Wink

[Eeew...I know, I know]

Did you draw it yourself and then animate it?

Back OT:

The Mogambo has certainly helped me to understand Insanity Is Not Really Insane Government Economics (IINRIGE)....

trespam · Posted: Wed Aug 24, 2005 8:20 pm Post subject: Re: Panic in the air?

DantesPeak · Posted: Wed Aug 24, 2005 9:24 pm Post subject: Re: Panic in the air?

You may hav eto be a regular reader of The Mogambo to understand what he is saying.

The $1.6 billion he refers to means the size of additions to the Federal Reserve monetary base (further explained below) in one week.

The Fed has two main tools - controlling very short term interest rates and growing the monetary base. The grwoth of the monetary base usually has a direct relationship to the total money supply (including money in banks, money market accounts, etc.).

Anyway, $1.6 in one week is not much above the average growth rate of
$0.9 per week. If you see large upward changes in the money base, this sometimes called printing money, but in reality no money is printed. Just that governement debt is converted to Federal Reserve money, which is given to certain banks and brokers.

For more, you'll have to read a book on the subject.

The monetary base is mostly US Treasury bills and bonds the Fed purchases, plus temporary repos. A repo, short for repurchase agreement, is an agreement between the Fed and brokers from the primary group of 22 approved Treasury dealers. Usually one dealer sells the Fed a Treasury bill at a specified price with a commitment to buy the security back later for another specified price. The difference is based on the interbank interest rate, called Fed Funds rate. Most repos are overnight transactions, with the sale taking place one day and being reversed the next day. The Fed also makes occasional outright purchases of Treasury bills and bonds, which mostly occur during and after Treasury bond auctions. The monetary base is 'high-powered' money - sometimes called 'super-money' - which is pipelined directly back to Wall Street. It's used by major brokers and beyond to financial institutions on Main Street as a base for leveraged credit expansion, i.e. buying more US Treasuries, and stocks, mortgages, etc.

DantesPeak · Posted: Wed Aug 24, 2005 9:26 pm Post subject: Re: Panic in the air?

Long term chart of the problems discussed at top.

Ideally there should not be any mismatchs between buyers and sellers, except say because of 9/11, etc.

meekoil · Heavy Crude Joined: Jul 11, 2005 Posts: 120

meekoil · Heavy Crude Joined: Jul 11, 2005 Posts: 120