[CrudeAwakening]

I think the situation is a little less alarming than it first appears - the Fed has control over the level of non-borrowed reserves in the system. This is the basis of its permanent open market operations, which 'permanently' add or drain reserves via treasury buying or selling, respectively, unlike the TAF facility and repo activity, which are loans of reserves.

What has happened recently is the banks have been scrambling to get poorly performing assets off their balance sheet, thanks to the 'gracious' bail-out action of the Fed in allowing an exchange of reserves for low-quality collateral via the TAF.

If the Fed loaned all those TAF reserves without draining non-borrowed reserves, the Fed Funds rate would be lowered beyond their target rate. So they redeemed a bunch of treasuries, which reduces the amount of non-borrowed reserves in the system. So effectively there has been an exchange of borrowed reserves for non-borrowed reserves, but the banks have been temporarily relieved of some of their poor quality collateral, which the Fed is holding in cold storage.

[billg]

Correct me if I'm wrong...if the Fed continues to inflate the money supply doesn't that make banks runs less likely?

$this->bbcode_second_pass_quote('', '[')b]Federal Reserve Announces Bigger Auctions to Banks to Help Ease the Credit Crisis
Friday March 7, 8:59 am ET
By Jeannine Aversa, Associated Press Writer

WASHINGTON (AP) -- The Federal Reserve said Friday it is taking bigger steps to ease the nation's credit crisis, including increasing the amount of money it will auction to banks this month to $100 billion.

The Federal Reserve said it will raise its planned March 10 and March 24 auctions to $50 billion each, up from the $30 billion limits it had previously announced. The auctions serve as short-term loans to get banks the cash they need to keep lending.

Fed officials said in a statement they would move to even larger amounts at future auctions if necessary.

The Fed also announced another effort to combat the credit shortage -- a series of repurchase transactions expected to reach $100 billion.

The Fed has been working to pump billions of dollars into the nation's banking system to aid an economy rocked by the subprime mortgage crisis and the severe tightening of credit. The central bank started its new type of auctions in December to provide short-term loans to cash-strapped banks.

The Fed hopes that increasing their resources will keep banks lending and prevent the credit squeeze from aggravating the current economic slowdown. Economists say the nation is teetering on the edge of a recession, if one has not already begun.

Yahoo News

[DomusAlbion]

$this->bbcode_second_pass_quote('I_Like_Plants', 'E')ven our own Ben Franklin said "Neither a borrower nor a lender be". He had some choice things to say about the parasites too.

[Dukat_Reloaded]

Don't worry about Islamic banking, it's the same type of banking we have but wrapped up differently and mostly are a fixed interest rate. For example if you want to buy a house for $300k, an Islamic bank will lend you $300k but the amount you payback is higher. So the bank will say here's $300k, you pay us back $400k in 20 years time. But the same thing can be done using a fixed interest rate, calculate 2-3% interest over 20 years and you will be paying the same amount, no difference. The muslims just use a technically to sidestep interest payments, it's really a big joke.

[I_Like_Plants]

OK dukat, that sounds about right.

The only really radical loans are the ones where a friend lends you money and refuses to accept interest. Truly fundamentally Christian, because they're forgoing interest they could earn elsewhere to do you good. I've got a loan like that right now and I'll stand on a street corner with a tin cup or anything rather than not pay that one. Radically different from the cold calculation of a bankster loan.

[mmasters]

The bank runs will come in force when the markets stop being propped up.

[smallpoxgirl]

I usually think of myself as a doomer. After reading this thread, I'm starting to think I may be a moderate.

[bodigami]

$this->bbcode_second_pass_quote('I_Like_Plants', 'O')K dukat, that sounds about right.

The only really radical loans are the ones where a friend lends you money and refuses to accept interest. Truly fundamentally Christian, because they're forgoing interest they could earn elsewhere to do you good. I've got a loan like that right now and I'll stand on a street corner with a tin cup or anything rather than not pay that one. Radically different from the cold calculation of a bankster loan.

[I_Like_Plants]

I mean it in terms of, the basic, original, radical Christianity. Remember in Christ's time as well as ours, the Jews ran the money system and not charging interest even to a family member, was and is seen as odd.

In our society, each person is supposed to work to THEIR advantage and charge interest to family members if they lend them money at all. Jesus was the kind of radical who said, "Fuck this, people before moneylenders".

In any small, tribal, society, things run on mutual favors, everyone just kind of does stuff for others because they want to. The favors circulate around without coercion or things like interest at all.

[bodigami]

$this->bbcode_second_pass_quote('I_Like_Plants', 'I') mean it in terms of, the basic, original, radical Christianity. Remember in Christ's time as well as ours, the Jews ran the money system and not charging interest even to a family member, was and is seen as odd.

In our society, each person is supposed to work to THEIR advantage and charge interest to family members if they lend them money at all. Jesus was the kind of radical who said, "Fuck this, people before moneylenders".

In any small, tribal, society, things run on mutual favors, everyone just kind of does stuff for others because they want to. The favors circulate around without coercion or things like interest at all.

[eastbay]

$this->bbcode_second_pass_quote('zensui', '')$this->bbcode_second_pass_quote('I_Like_Plants', 'O')K dukat, that sounds about right.

The only really radical loans are the ones where a friend lends you money and refuses to accept interest. Truly fundamentally Christian, because they're forgoing interest they could earn elsewhere to do you good. I've got a loan like that right now and I'll stand on a street corner with a tin cup or anything rather than not pay that one. Radically different from the cold calculation of a bankster loan.

[bodigami]

$this->bbcode_second_pass_quote('eastbay', '')$this->bbcode_second_pass_quote('zensui', '')$this->bbcode_second_pass_quote('I_Like_Plants', 'O')K dukat, that sounds about right.

The only really radical loans are the ones where a friend lends you money and refuses to accept interest. Truly fundamentally Christian, because they're forgoing interest they could earn elsewhere to do you good. I've got a loan like that right now and I'll stand on a street corner with a tin cup or anything rather than not pay that one. Radically different from the cold calculation of a bankster loan.

[BigTex]

$this->bbcode_second_pass_quote('eastbay', 'R')eminds me. Many decades ago a family member dropped an unsolicited $10,000 on me during a very difficult period. The details are unimportant, but most here know what I'm talking about. It just showed up in the mail. He said he didn't want to be paid back. I can now do so without any pain and he still won't take the dough. He said loaning $$ to family is a terrible idea, won't ever do it, and keeps saying it's a gift.