A Scary Trend: Lies Are Becoming Truth

Here is the last post I wrote before taking the two month break from the Blog. I did not post it, but as a way of getting back into the fray, here it is.

I have previously claimed that it was me who brought Non Borrowed Reserves to the attention of Wall Street with my Monterroza Research blog. I will admit that I had help from Mish’s Global Economic Trend Analysis who introduced me to Net Free of Borrowed Reserves, but I was pointing out how much non-borrowed cash banks had in their accounts. So I looked for the number and found that the trend was was literally off the charts. Immediately after my first blog post Wall Street began it’s offensive to dismiss the number as irrelevant and as the writer as a conspiracy theorist. Unfortunately for them, the number is neither irrelevant and the writer was an accounting major, economics minor and investor. Shortly after, there was an announcement that the Bush administration was shutting down a website that aggregates major sources of economic indicators from many federal websites. I thought nothing of it at the time but I thought that the reason for shutting down the website was ridiculously idiotic: the website was shut down due to budgetary constraints. However, when I went back to check my favorite data series, Non Borrowed Reserves, I was startled at what I found: the series was altered.

If you check the Fed of St. Louis website right now what you will see is a series entitled Total Non Borrowed Reserves and Term Auction Funds. What is amazing is that the two phrases, “Non Borrowed Reserves” and “Term Auction Funds” are a conundrum when put together. Non Borrowed Reserves are just that non borrowed, while the TAF loans are temporary loans that were invented three months ago. Non Borrowed Reserves have since the 1960s never included any type of borrowing, not even discount window borrowings. If someone does not call the government out on this small data manipulation who knows what they will be inventing next and what crap we’ll be accepting next.

I analyzed the difference between total reserves and non borrowed reserves since the 1960s in excel last month but I did not bother to post the charts since I thought people would get the point. Since people have not, I will release the data and excel soon. It is important to note that I made this during the beginning of February.

I have not blogged about many things that I have followed in the market simply due to time restraints. The truth is I read and analyze a lot more than one post a day of market news. The market is way too complex to accurately analyze properly with minimal analysis, but just simple enough to meaningfully predict profitable trends. With that said, there has been a sad trend that I have followed but not really talked about because I thought it was unimportant to the market. However, this past week I was proved wrong.