Every day I hear from someone how the Fed is “printing”. My typical reaction is to ask for proof. I never see any. I just looked again. I still don’t see any. Oh sure, people point to various Fed sponsored facilities like these as printing.

Recap Of Fed Sponsored Facilities

  • The TAF (Term Auction Facility) failed to restore liquidity.
  • The TSLF (Term Securities Lending Facility) failed to restore liquidity. See The Fed’s Swap Meet for more on the TSLF.
  • The PDCF (Primary Dealer Credit Facility) will be the next “facility” to fail. See Fed Fails To Halt Debt Meltdown for more on the PDCF.

However, none of the above is printing. Others point to rate cuts, but rates cuts sure are not printing. Still others point to the $30 billion (now $29 billion) guarantee of the JP Morgan take under of Bear Stearns as printing. However, as bad or illegal as that idea may have been (see Debate Over Bear Stearns: Hussman vs. Mauldin) that is not printing either.

Perhaps one can argue they expect the Fed to start printing, or the Fed will have to start printing once the crappy collateral the Fed is taking for the above swaps and bailouts heads south, but until that happens, let’s not say the Fed is printing when in fact they are doing the opposite, at least on a permanent basis.

The last 9 Permanent Open Market Operations, all this month, have been “draining” actions (the opposite of printing). A “printing” action is an Outright Purchase. A “draining” action is an Outright Sale.

Permanent Operations

Operation Date: 03/26/2008
Operation Type: Outright Bill Sale
Release Time: 10:45 AM
Close Time: 11:10 AM
Settlement Date: 03/27/2008
Maturity/Call Date Range: 05/01/2008 - 05/15/2008
Total Par Amt Accepted (mlns) : $9,000
Total Par Amt Submitted (mlns) : $30,285

Operation Date: 03/25/2008
Operation Type: Outright Bill Sale
Release Time: 10:30 AM
Close Time: 10:55 AM
Settlement Date:03/26/2008
Maturity/Call Date Range: 05/22/2008 - 06/12/2008
Total Par Amt Accepted (mlns) : $11,999
Total Par Amt Submitted (mlns) : $41,194

Operation Date: 03/24/2008
Operation Type: Outright Coupon Sale
Release Time: 10:45 AM
Close Time: 11:10 AM
Settlement Date:03/25/2008
Maturity/Call Date Range: 06/30/2011 - 09/30/2011
Total Par Amt Accepted (mlns) : $5,001
Total Par Amt Submitted (mlns) :$12,289

Operation Date: 03/20/2008
Operation Type: Outright Coupon Sale
Release Time: 10:44 AM
Close Time: 11:05 AM
Settlement Date:03/24/2008
Maturity/Call Date Range:02/15/2011 - 05/31/2011
Total Par Amt Accepted (mlns) : $4,957
Total Par Amt Submitted (mlns) :$9,884

Operation Date: 03/19/2008
Operation Type: Outright Bill Sale
Release Time: 10:18 AM
Close Time: 10:45 AM
Settlement Date: 03/20/2008
Maturity/Call Date Range: 06/12/2008 - 07/31/2008
Total Par Amt Accepted (mlns) : $14,999
Total Par Amt Submitted (mlns) : $53,672

Operation Date: 03/17/2008
Operation Type: Outright Coupon Sale
Release Time: 10:55 AM
Close Time: 11:30 AM
Settlement Date: 03/18/2008
Maturity/Call Date Range: 09/30/2009 - 01/31/2010
Total Par Amt Accepted (mlns) : $5,000
Total Par Amt Submitted (mlns) : $13,015

Operation Date: 03/17/2008
Operation Type: Outright Bill Sale
Release Time: 10:04 AM
Close Time: 10:30 AM
Settlement Date: 03/18/2008
Maturity/Call Date Range: 08/07/2008 - 09/11/2008
Total Par Amt Accepted (mlns) : $17,999
Total Par Amt Submitted (mlns) : $56,605

Operation Date: 03/12/2008
Operation Type: Outright Bill Sale
Release Time: 10:45 AM
Close Time: 11:15 AM
Settlement Date: 03/13/2008
Maturity/Call Date Range:05/08/2008 - 06/05/2008
Total Par Amt Accepted (mlns) : $15,001
Total Par Amt Submitted (mlns) : $57,065

Operation Date: 03/07/2008
Operation Type: Outright Bill Sale
Release Time: 10:31 AM
Close Time: 11:15 AM
Settlement Date: 03/10/2008
Maturity/Call Date Range: 05/08/2008 - 06/05/2008
Total Par Amt Accepted (mlns) : $10,000
Total Par Amt Submitted (mlns) : $52,595

Of course the Fed conducts temporary open market operations as well. On that score, a repo is a temporary injection of cash and a reverse repo is a draining action. “Temporary” is typically overnight to 28 days while “Permanent” is months or longer.

Every time there is a huge repo the conspiracy crowd goes gaga because they forget to include expiring repos. Here is a table of Temporary Open Market Operations.

I am not going to add it all up even though some meticulously keep track of such changes. Instead I am going to point to a chart of base money supply.

Base Money As Of 2008-03-12

click on chart for sharper image
The above chart courtesy of the St. Louis Fed

Someone wake me up when the Fed starts printing to a significant degree. In the meantime let’s not say the Fed is printing when it is perfectly clear the Fed is printing at close to a 0% rate.

Mike “Mish” Shedlock
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