Oct. 13 (Bloomberg) -- U.S. equity futures gained after the worst week for stocks in 75 years, boosted by the Federal Reserve's pledge to ``consider every option'' to restore investor confidence and a government plan to buy stakes in banks.Well, the balance sheet of the Fed has almost doubled the last 3 weeks only up to about 1.6 trillion USD (trillions do not scare anyone anymore, we use the words many times a day...) and what has been the result? Do we have any more confidence? Of course not, and that's the reason why they are showering the markets with "liquidity" measures which are obviously useless, since there is no liquidity shortage, but hidden losses on the balance sheets and several skeletons in every closet you open.
All the options have been tested to restore confidence except the single, very simple, zero-dollar one: forcing US financial institutions to show their books and force transparency on the markets. Why? (WHY?).
At the same time, you can see on these charts from the Fed itself that the Financial System is insolvent, and also remember that they are lagging, so things are probably far worse than what these charts show. I have been showing them every month now, but the singularity and the exponential rise that they show month after month scare me to the guts.
The Fed has also started the stagflation of the US economy at best (which is very likely to be exported worldwide because of the various currency pegs and puppy behavior of the European policy makers) and maybe hyperinflation if we are unlucky enough. The silverlining is that at least if we end up with hyperinflation, we will get rid of the Fed and maybe start over with a sound currency. I will write a post about sound currency very soon.
"Our financial system is safe and sound"
inflation unleashed (look at the major jump at the current month!):