Ponzi: Follow The Money (oh wait — there isn’t any)

This one is by Edward Charles Ponzi Jr.

Some of you have heard me refer to Shadow Government Statistics.

SGS is a service founded by economist John Williams. They take government economic data and remove elements they believe are misleading, manipulative or distort results over time. Example: they offer a corrected CPI, GDP, etc.

A lot of data is available free on their site — but I am a subscriber and I recently received a bulletin from SGS containing a graph generated from FED data. Apparently non-borrowed reserves have gone negative for the first time in like 80 years.

The raw (readable) data they use is FRB: H.3 Release–Aggregate Reserves of Depository Institutions–January 31, 2008. (See the bottom of column that says “non-borrowed.”)

My understanding of this data is: all of the reserves in all of the member banks are borrowed from the FED — no bank money (actually negative) — down from ~$40 billion only recently. This explains a lot in terms of aggressive FED cuts and the prospect for future cuts (attempts at reflation). As we have a fractional reserve banking system — this is the ~10% that the banks don’t have — that one would think they would have!

As shocking as the condition of our banks might be — what I find interesting is the non-coverage of this issue. There are people in this world who are supposed to be reporting on the condition of our economy. I Googled some keywords and found only a few obscure blogs (gold bugs) discussing this. The lack of bank reserves and the lack of media attention that gets are both rather disturbing.


Edward Charles Ponzi Jr.
Hooverville Falls
The Republic of Vermont

This one was by Edward Charles Ponzi Jr.