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Here’s The Real Reason Why Deposits Have Risen

And you can probably guess what it is.

It’s baldly obvious.

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This post is an excerpt from Beware of the Rub That Will Irritate Markets at Liquidity Trader. Subscribers can click here to download the report. Get the whole story of where this is headed in this report, and access to all past and future reports risk free for 90 days!

Bank deposits have surged as the Fed has pumped trillions into the system. This should be self-evident as there’s a direct and clear cause and effect. The Fed pumps money into the system via its Primary Dealer strawmen, and deposits go up.

Lately I’ve seen breathless articles in mainstream media about the surge in deposits as if it somehow shows that individuals and businesses are hoarding cash. And as if somehow that money didn’t enter the system via the financial markets and doesn’t circulate. To these morons the money is just a big blog of cash sitting in the banks.

My friends – and you are my friends, really – if you understand nothing else, please, please, please understand how this money got there, and understand that it is not a blob of cash just waiting to be invested. It is circulating in the banking system and the markets.

Look! When you pay a bill or buy anything, regardless of what it is, the money stays in the US banking system, unless you are sending that payment to a foreign seller with a foreign bank account. Another very short term, and very minor, exception would be when you pay Federal taxes or buy a T-bill, note, or bond, directly from the US Treasury. Then the money briefly stays in the US Treasury account. But that is minimal. And that money will also enter the system in due course.

The vast bulk of this money is circulating in the US banking system and financial markets. It’s not being hoarded. It’s not an inert blob of cash just waiting to be plowed into the stock market when the time is right.

That’s what the Wall Street bastards want you to think, and what its corrupt, wholly owned media handmaidens, concubines, harlots, shysters, shills, and Chippendale dancers want you to think.

But hopefully you know better.

The more money the Fed imagines into existence and funnels into Primary Dealer accounts, the more outrageous the growth of deposits. In fact, they should, and do, move virtually dollar for dollar. Since the end of February, the Fed’s total assets have grown by $3 trillion. Total deposits, checking plus savings, have grown by $2.7 trillion.

Where’s the rest of it, you say? In the US Treasury account at the Fed, which has ballooned by a trillion as the Trump regime amasses a pre-election war chest to spend when it sees advantage, or loot on the way out of town.

The dark red line is the Fed’s assets. The blue line is total deposits in commercial banks. Notice that the scales have the same increments. Each line is $400 billion.   Bank Deposits and The Fed's Balance Sheet

End of rant.

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Lee Adler

I’ve been publishing The Wall Street Examiner and its predecessor since October 2000. I also publish, and was lead analyst for Sure Money Investor, of blessed memory. I developed David Stockman's Contra Corner for Mr. Stockman. I’ve had a wide variety of finance related jobs since 1972, including a stint on Wall Street in both sales, analytical, and trading capacities. Prior to starting the Wall Street Examiner I was a commercial real estate appraiser in Florida for 15 years. I was considered an expert in the analysis of failed properties that ended up in the hands of bank REO divisions, the FDIC, and the RTC. Remember those guys? I also worked in the residential mortgage and real estate businesses in parts of the 1970s and 80s. I have been charting stocks and markets and doing analytical work since I was a teenager. I'm not some Ivory Tower academic, Wall Street guy. My perspective comes from having my boots on the ground and in the trenches, as a real estate broker, mortgage broker, trader, account rep, and analyst. I've watched most of the games these Wall Street wiseguys play from right up close. I know the drill from my 55 years of paying attention. And I'm happy to share that experience with you, right here. 

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