Federal Reserve Injects $41 Billion into U.S. Banking System
Nov. 1, 2007 (EIRNS)The Federal Reserve, through three separate interventions over the course of the day, pumped a combined $41 billion in Federal funds short-term liquidity into the U.S. banking system Nov. 1. Of this amount, three-quarters of the Federal funds were issued against the security of housing- and mortgage-related paper, part of the Fed's five-month siege to liquefy the impaired mortgage market. This tactic has achieved no success in its ostensible objective; however, it is setting the ground for a Weimar hyperinflation.
While the Fed injected $41 billion of funds, the bids by banks for funds from the Federal Reserve totalled $262.45 billion; the issue was oversubscribed more than six times.
To this must be added the $163 billion that the Federal Home Loan Bank system (which is a government-sponsored enterprise) was compelled to lend, during August and September, to deeply troubled banks. As an end-run from borrowing from the Federal Reserve, which happens under the public glare, the banks are pillaging the lending authority of the little-known FHLB. Had the banks borrowed one- to three-month money in the amount of $163 billion from the Federal Reserve's discount window, as they did indeed from the FHLB, there would have been a public hue and cry.