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>there isn’t $200,000,000,000 cash sitting in ATMs and bank >branches at any given moment.

Right, nowhere close. Usually, bank reserves around $40 billion.

The TAF auctions were set up for a few reasons, one of which was to help banks remain solvent, not just overnight as the Discount Rate does, but for longer periods of time. As a result, from $40 billion in reserves the banking system went to (negative) $15 billion since December. Every penny that is in a bank, reserved for withdraw, is borrowed from the Fed at this point.

This is completely unprecedented. From what anyone can tell, the Fed is accepting mortgage debt, and other iffy collateral, in exchange for monetary injections. They are taking assets, which are really worth anywhere from 0% to 70% of their book value at full value and inserting money into the system to keep the entire system solvent.

This graph illustrates the issue. And it doesn't tell the whole story since the number extends nearly to the bottom as the current non-borrowed reserves level is about (negative) $15 billion. Or you can look at it from the other side and say borrowed reserves are at $15 billion.

If the Fed hadn't been on top of things and intervened starting in December, as far as I can tell, the banking system went insolvent in January.

>Run on the banks? That is a joke.

Actually, its already happening.

According to this NY Times author there is a bank run going on between banks, rather than individual depositors and banks.

"Soon afterward, however, a full-fledged financial panic began. Investors pulled hundreds of billions of dollars out of asset-backed commercial paper, a little-known but important market that has taken over a lot of the work banks used to do. This de facto bank run sent shock waves through the financial system."

The primary reason behind the emergency rate cuts and the TAF auctions, which seems to be a means to monetize mortgage debt, is to stave off a lack of lending between banks.

A bank in England recently underwent defacto nationalization in order to stop a bank run.

>>He covered all the bases so he can’t be wrong. I got to respect that.<<

If commodities go one way, I think it means one thing. If they go another, then it means something else. I’m not going to pretend to be smarter than the stock market. And I’m not telling people how to invest. Its entirely possible that I’m not understanding the situation and, as many of you wish, everything is totally fine. If I told you I knew what would happen, I’d be lying. All I can do is look at history, see how things played out in similar situations, and try to draw conclusions from the past experience of others.

I misspelled a word once, and correctly twice. So crucify me. I’m a computer programmer with an interest in current events and economic history, not an English teacher. Since the rest of you are obviously university professors of some sort, I’ll be sure to bring it up a notch next time.

I sincerely don’t understand the animosity being expressed over this article. I wouldn’t exactly say that what I wrote is entirely controversial. There used to be a time when conservatives cared about things like budgets, debt, inflation, and the soundness of money. I don’t get what happened. You may not care that a billionaire gets wiped out, but when you can’t get a car loan or a mortgage has a 15% interest rate on it, you certainly will. Contrary to popular belief, the business cycle has not be eliminated.

>Sorry. I have a really, REALLY tough time swallowing >“financial wisdom”

For starters, this is not financial advice. I’m merely reporting a summary of what many others are saying.

>fear mongerer

I forgot, the real thing to fear is terror. Nothing is wrong with the economy. Just keep moving along.

Reports are that tensions have worsened in the past few days between Russia and Estonia.

A plan to remove a Soviet World War II era statue commemorating the lives of a handful of Russian soldiers has sparked quite a controversy in Estonia and Moscow. The ethnic Estonian's have long-resented the statue, given the invasion of their country in 1940 by the Soviet Union (and later by Nazi Germany) and the subsequent decades long occupation by Russian dominated forces.

In further evidence of Russia's decline and its inability to influence the actions of nations previously within her sphere of influence, Estonians seem to be taking this statue issue seriously, despite the dipolomatic effects.

Due to pressure brought to bear on the Moscow government by ethnic Russians living in the former Soviet republic, Putin's government has cut oil supplies to Estonia's Baltic ports and cut off rail traffic between the nations. At the moment, the Estonian government has described this as a grave deterioration of relations with the EU. Military action, which I don't think anyone believes at the moment will happen, would bring NATO into what would become an issue of global significance. Will German, American and Polish forces guarantee the protection offered by the NATO alliance to Estonia? I don't believe this situation will escalate that far, but we do seem to be in a period of time where the periphery of Russian influence becomes ever-more fragmented and unstable. The consequences of that deterioration will soon, if it hasn't already, make itself felt much more profoundly.

This event has a lot of implications. But, for the moment, there is one particularly interesting passage from an International Herald Tribune article. It gives a lot of insight into what is happening in relations between the two nations:

In Estonia, officials blamed Russian hackers for shutting down government Web sites, while the country's president, Toomas Hendrik Ilves, called on Russia "to remain civilized" after days of protests in both countries over the removal of a Soviet-era monument in the Estonian capital, Tallinn, late last week.

A revolution ain't truly complete until people start getting uppity about architecture and statues. That's when you know its really over, when aesthetics become a matter of a life or death struggle. In the case of pulling down a "Soviet-era monument", its not so important that it is Soviet, so much as it is a monument to the struggle of Russian people against a foreign invader. This is really about WWII -- the defining event of Europe and Russia in the 20th century. The 1945 - 2001 world order revolves around the event the statue memorializes. Of course, that world order is no more. And so goes the statue.

Many Estonians wish not to preserve the statue, given lingering bitterness over previous Soviet occupation. But what this statue removal represents to the large population of ethnic Russians, well, that's a whole other story.

Modern analysis of 20th century Russian history indicates that the struggle of Russia vs. Germany in WWII was not a struggle for the glory of socialism. It was in defense of Mother Russia. This statue isn't so much about defiling the communist past. It is a direct assault on the very essence of what "Russia" and "Russian" is.

Russia, with large, flat, nearly defenseless frontiers, has struggled against Asian invaders from the east and European invaders from central Europe multiple times over the past several centuries. After nearly 400 years of territorial expansion, Russia is now following a steep, rapid decline in almost all demographic categories. Internally, Russia is a mess and things seem to be worsening. And now this -- being virtually kicked out of Europe and the loss of additional areas within their traditional sphere of influence.

This truly is a matter of national pride on both sides. Disregard for a 6-foot-tall statue of men whom gave their lives for Mother Russia (on conquered Estonian soil) may very well be yet another event in a long line that establishes a wedge between Europe and Russia.

What were our leaders doing while we lost Russia, whose totalitarian government we once feared and fought for decades, to authoritarianism once again?

For those of you who found problems with my piece, I thank you for helping me improve my writing. I hope what I produce may be of higher calibre in the future and I'll be sure to post in the appropriate forum from now on.

I usually read breaking news. I've never really participated fully in this before so I didn't know the rules. Sorry.

I have been a reader of FreeRepublic for about 4 years now. Only recently have I started writing on my own. Rather than read everyone else's debates and articles, I thought I'd attempt to write on my own and get involved in the debate.

I had no idea this was in the wrong forum. My apologies. I'll be more careful in the future.

Could someone actually debate me on this topic or are going to attack my character? I was under the impression that this was a debate forum. How exactly do you propose to advance a conservative agenda when legislation such as I describe is enacted?

Does anyone actually care to discuss this?

Could someone explain to me the difference between pimping a blog and sharing something I wrote with this community?

If you did not go to the blog, then how did you determine it looked dull?