"Our Children and Grandchildren are not merely statistics towards which we can be indifferent" JFK

Sunday, January 17, 2010

Federal Reserve Balance Sheet Hits Record

The Federal Reserve Balance Sheet Hits a Record $2.274 trillion for the week ending January 13th. The prior week balance sheet checked in at $2.216 trillion. Ben Bernanke added another $58 billion to the balance sheet this past week.

Helicopter Ben is basically the lone purchaser of mortgage backed securities in town. The government’s objective is to keep interest rates artificially low in an attempt to stimulate home buying and mortgage refinancing. We can only imagine the garbage the Federal Reserve deems an “asset” as their transparency window remains foggy.

Bernanke states the prior extended period of low interest rates was not the cause of the housing bubble. He should know; he does have a PhD. This is the same bureaucrat (with no experience out of educational institutions) that did not recognize the tsunami of financial carnage even while his waders were taking in water.

You and the balance sheet are out of control. Ben and the Board of Governors continue to spew that a plan is in place enabling an orderly unwind of this swelling balance sheet. Ben, Ben, Ben, do you really suppose we are that naïve to believe that you are simply going to reposition a 154.2 mile high stack of $1,000 bills and no one will be subjected to any consequence?

Let’s convert your stack to $10 bills as I for one never placed a $1,000 bill in my wallet. Your current balance sheet now represents a stack roughly 15,400 miles high. Laid on its side, the length of $10 bills is the equivalent of a round trip from Omaha, NE to Sydney, Australia.

I urge you and your Board of Governors to have grandchildren present at your next strategy meeting and for once, incorporate their needs while drafting policy.

You desire re-confirmation the end of the month? Invite the kids to your January 26th and 27th FOMC meeting.

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