http://www.lewrockwell.com/…

The Federal Reserve has released statistics showing a dramatic change in bank reserves in the two-week period September 10 to September 24.

Banks are now holding reserves that are 268% of requirements. Typically, and as recently as August, reserves are 4 to 5% over requirements.

Banks normally make overnight loans of “excess” reserves to other banks short of reserves. Now they aren’t. In times like these, bankers are like all conservatives: They start to worry more about return OF principal than return ON principal. If they make an overnight loan to the next bank to fail, they might not be repaid in a timely manner, or ever.

This could be the “lockup” that Congressmen have referred to when reporting on the sobering closed-door briefings from the Billionaire Bailout Boys.

There are many other things worth noting. As mentioned earlier, the monetary base had a VERY large increase. It went up by over 7.6% in two weeks!

The Mogambo Guru will be needing CPR!. That’s a very large creation of money, well into hyperinflation territory. Compounding 7.6% in two weeks for 26 periods gives a 680% increase per year.

I’d like to hope that the Fed will reduce the monetary base, but of course that is difficult, and this is an election year, and there are so many good reasons why creating ever greater amounts of money seems like a good idea at the time…

Lets hope they are smart enough to not to push things that far.

Setting up for hyperinflation? Find the source PDF here.

H/T LRC Blog

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For beetlbumjl: “Why don’t we just go home? What is our purpose here?” -Ron Paul, speaking about how the Fed has completely bypassed Congress.

http://www.bloomberg.com/…

Fannie Mae and Freddie Mac rose in Frankfurt after U.S. Treasury Secretary Henry Paulson said he will seek approval from Congress to shore up the mortgage finance companies by buying equity stakes and increasing lines of credit.

Fannie Mae gained 31 percent in German trading and Freddie Mac advanced 33 percent after Paulson said he would seek authority to buy unlimited amounts of equity. The Federal Reserve also agreed to lend directly to the two companies to help provide interim financing.

Paulson’s plan may put a floor under the shares, which dropped by about 50 percent last week on concern that shareholders would be wiped out if the companies collapsed or were taken over by the government. Concern that Washington-based Fannie Mae and Freddie Mac of McLean, Virginia, may collapse escalated last week, prompting Treasury, Federal Reserve and White House officials to forge a plan to rescue the companies should they be unable to fund themselves.

“Paulson said he would seek authority to buy unlimited amounts of equity.”

Hyperinflation, here we come?!

No wonder the stocks are up. Paulson is talking about turning all the cotton on the planet into FRNs.