What will these actions Do?

[Mr. T]

*****Fed Planning 15-Fold Increase In US Monetary Base*****

 

The fed is planning moves that would more than double its balance-sheet assets by September to $4.5 trillion from $1.9 trillion. Whether expressing approval or concern over the fed’s intentions, most commentators fail to understand the real magnitude of the projected expansion of the US monetary base because they don’t take into account the amount of dollars circulating abroad.

 

At least 70 percent of all US currency is held outside the country, and this means the US monetary base is considerably smaller than the fed’s overall balance sheet. Take, for example, the true US domestic money supply at the beginning of September 2008, before the fed started its quantitative easing. From the Federal Reserve’s website, we know that currency in circulation was 833 Billion. This translates as 583 Billion dollars circulating abroad (70 percent), and 250 Billion dollars circulating domestically (30 percent). Since the bank reserve balances held with Federal Reserve Banks were 12 billion, that gives us a 262 Billion domestic monetary base as of September 2008. Now compare that to the projected US domestic monetary base for September 2009 which is 3,818 billion (4,500 billion – 583 billion (dollars circulating abroad) – 99 billion (other fed liabilities not part of the money supply)). The fed’s planned balance sheet expansion results in a 15-fold increase in the base money supply.

 

 

262 Billion = US monetary base as of September 2008 (minus dollars held abroad)

3,818 Billion = projected US monetary base in September 2009 (minus dollars held abroad)

 

3,818 Billion / 262 Billion =15-Fold Increase in US monetary base

 

 

This is a staggering devaluation of the US currency! It means that for every dollar in America in September 2008, the fed is going to create fourteen more of them! Below is a rough sketch of what this increase in US monetary base would look like:

 

 

http://www.marketskeptics.com/2009/03/fed-...ease-in-us.html

 

 

 

 

[choco]

kinda makes hyperinflation look cute, eh?

[calfoxwc]

Well, with a drastic devaluation of the dollar, a dollar won't be worth much, and it will take a lot of dollars

to buy... anything.

 

Thereby making most all of American families.... dependent on the gov(read: Obammy the Stalin) to help them survive.

 

Oh.... crap.