- Prison Planet.com - http://www.prisonplanet.com -

Thanks To QE Bernanke Has Injected Foreign Banks With Over $1 Trillion In Cash For First Time Ever

Posted By admin On May 22, 2013 @ 4:52 am In Money Watch | Comments Disabled

Zero Hedge [1]
May 22, 2013

Two years ago, Zero Hedge first made the observation [2]that the bulk of Fed reserves (also known simply as “cash created out of thin air” because money is first and foremost fungible no matter what textbook theoreticians may claim, and the only cash allocation preference is the capital allocation IRR analysis) had been parked not with US banks, but with foreign banks with US-based operations. We followed that with more analyses [3], showing explicitly how the Fed was providing a constant cash injection to foreign banks courtesy of the rate on overnight reserves which is the amount Fed pays to banks that hold reserves with it, as the bulk of reserves continued to end up with foreign banks – a situation set to become a huge political storm some time in 2014-2015 when the IOER has to rise and the Fed is “found” to have injected tens of billions of “interest” not into US banks but in foreign banks operating in the US, and which then can upstream the “profits” to insolvent offshore domiciled holding companies.

So it was our expectation that while if not slowing down its rate of money-creation (i.e., reserve-production) – something that won’t happen for a long time as it would crash the stock market – the Fed’s reserves would at least revert to being accumulated at US-based banks. No such luck. In fact as the latest H.8 report [4] demonstrates, as of the most recently weekly data, the Fed’s policies have led to foreign banks operating in the US holding an all time high amount of reserves, surpassing $1 trillion for the first time, or $1,033 billion to be precise.

Thanks To QE Bernanke Has Injected Foreign Banks With Over $1 Trillion In Cash For First Time Ever QE%20offshore%201 0 [5]

This means that, as we expected several months ago, the only recipient of ongoing Fed money printing are not US banks, but foreign banks operating in the US. For those confused about the big picture, here is a chart showing the breakdown of cash held by big and small US banks as well as foreign banks, superimposed to total reserves created by the Fed since the start of the Great Financial Crisis. The correlation is 100%.

Thanks To QE Bernanke Has Injected Foreign Banks With Over $1 Trillion In Cash For First Time Ever cash%20balances%20vs%20reserves 0 [6]

And just to prove that ALL the unsterilized cash from both QE2 and QEternity has essentially gone to support offshore banks, here is the conclusive chart showing the change in Fed reserves and cash held by foreign banks:

Thanks To QE Bernanke Has Injected Foreign Banks With Over $1 Trillion In Cash For First Time Ever Foreign%20Banks%20vs%20QE 0 [7]

Finally, tying it all together, here is chart showing cash at US banks vs cash at foreign banks operating in the US. At $1.03 trillion in foreign cash, the Fed’s policies have once again led to more cash being held by foreign banks than all cash held by domestic banks.

Thanks To QE Bernanke Has Injected Foreign Banks With Over $1 Trillion In Cash For First Time Ever Foreign%20vs%20Domestic%20Cash 0 [8]

We are confident that we speak for all when we say: “Thank you Ben – insolvent foreign banks appreciate your ongoing QE2 and QEternity-funded generosity


Article printed from Prison Planet.com: http://www.prisonplanet.com

URL to article: http://www.prisonplanet.com/thanks-to-qe-bernanke-has-injected-foreign-banks-with-over-1-trillion-in-cash-for-first-time-ever.html

URLs in this post:

[1] Zero Hedge: http://www.zerohedge.com/news/2013-05-21/thanks-qe-bernanke-has-injected-foreign-banks-over-1-trillion-cash-first-time-ever

[2] first made the observation : http://www.zerohedge.com/article/exclusive-feds-600-billion-stealth-bailout-foreign-banks-continues-expense-domestic-economy-

[3] with more analyses: http://www.zerohedge.com/news/2013-02-11/how-fed-handing-over-billions-profits-foreign-banks-each-year

[4] latest H.8 report: http://www.federalreserve.gov/releases/h8/current/

[5] Image: http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2013/05/QE%20offshore%201.jpg

[6] Image: http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2013/05/cash%20balances%20vs%20reserves.jpg

[7] Image: http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2013/05/Foreign%20Banks%20vs%20QE.jpg

[8] Image: http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2013/05/Foreign%20vs%20Domestic%20Cash.jpg

[9] The Fed’s Bailout Of Europe Continues With Record $237 Billion Injected Into Foreign Banks In Past Month: http://www.prisonplanet.com/the-feds-bailout-of-europe-continues-with-record-237-billion-injected-into-foreign-banks-in-past-month.html

[10] Bernanke: “I Don’t Know” Which Foreign Banks Were Given Half a Trillion: http://www.prisonplanet.com/bernanke-i-dont-know-which-foreign-banks-were-given-half-a-trillion.html

[11] How The Fed, Courtesy Of Foreign Banks, “Grew” The US Economy By $146 Billion In The First Quarter: http://www.prisonplanet.com/how-the-fed-courtesy-of-foreign-banks-grew-the-us-economy-by-146-billion-in-the-first-quarter.html

[12] Bailouts Have Failed: Banks Are Still Hoarding Cash: http://www.prisonplanet.com/bailouts-have-failed-banks-are-still-hoarding-cash.html

[13] The Federal Reserve Is Bailing Out FOREIGN Banks … More than the American People or Economy: http://www.prisonplanet.com/the-federal-reserve-is-bailing-out-foreign-banks-more-than-the-american-people-or-economy-2.html

Copyright © 2013 PrisonPlanet.com. All rights reserved.