Liquidity, Liquidity, Liquidity

The chart below is only a few days old and can be found on the St Louis Federal Reserve website (stlouisfed.org). It shows a very clear historical picture of how much liquidity is being pumped into the system. At some point, this liquidity is going to have unintended consequences.

It should be noted that this chart represents assets issued directly by the Treasury or Federal Reserve Bank and the monetary base figure changes only if the Treasury or Federal Reserve take action to permit the change.

The little blip on the chart just before the year 2000 was the Federal Reserve pumping billions of dollars into the system over fears of Y2K.


(double click on chart for bigger image)