The true money supply in March has grown slightly to $2,202 billion in March:
The annual growth rate has, however, dropped to 3.85% now:
Fed & Treasury Revive Supplementary Financing
For a little while the Treasury has been winding down its mysterious supplementary financing program.
Now, after Congress has, as always, made way for more public debt by raising the ceiling, the program is being revived:
The Treasury Department announced Tuesday that it is expanding its Supplementary Financing Program to help the Federal Reserve manage its enormous balance sheet. In a statement, Treasury said it will boost the SFA to $200 billion from its current level of $5 billion. The fund had been up to $200 billion but was scaled back when Congress delayed passage of an increase in the debt limit. Now that an expansion of the debt limit has been signed into law, the department is able to resume the program. Starting on Wednesday, Treasury will conduct the first of eight weekly $25 billion 56-day SFP bills to restore the program. The department said it will then roll the bills over. “We are committed to work with the Fed to ensure they have the flexibility to manage their balance sheet,” a Treasury official said.
I’m not sure if this really means anything to anybody. Maybe I am just not getting something here. But I would love for somebody from the Treasury or the Fed to explain to me what precisely they mean by working “with the Fed to ensure they have the flexibility to manage their balance sheet”.
Obviously something shady is going on here when they have to use such complicated constructs and fuzzy terminology.
Credit and Loans
What has been most noteworthy recently was the following development in the supply of credit and loans during the last week or March:
The last time such a severe spike occurred was in October of 2008, to no avail as credit relapsed afterwards along with a severe market crash … a pattern which is only too likely to repeat itself at this point.
Update: I just chatted with Mish about this and he told me that this recent spike is likely to be just a technicality that is due to some reclassification of some student loan.