Dear Mr. Poole, you left the money spigot turned on

Just the other day I mentioned that the St. Louis Fed president, William Poole, did not see a weakening dollar as a precursor to inflation. Assuming we can agree on the definition of inflation as a relative increase in money supply, leading to a general increase in prices/decrease in purchasing power, then the continual increase in the rate of Repurchase Agreements should mean something to the tune of increasing the money supply. This measure was recorded in M3 money supply level. The government decided this statistic was not worth paying the people to update it. Very convenient, as that has been the major method to inject money into the system. Still can't fool the traders as witnessed by currency and commodity traders.




SFO Straight Talk:

Fed Injects Large Repo Of $16B
The Federal Reserve injected a very large $16 billion into the financial system Wednesday morning, as the central bank battled to get the federal funds rate back to its target level.

The Fed carried out a $16 billion overnight repurchase agreement, or repo. That was much larger than the $5 billion baseline estimate of Wrightson ICAP.

"The very large RPs of the past two sessions are the result of the Fed's decision to undersupply reserves last week," said Wrightson analysts said on the company's Web site. "Short-term efforts to prevent softness in overnight rates before the weekend have led to imbalances in the other direction in the final two days of the maintenance period."

In total, there was $59.25 billion submitted. Of the $16 billion accepted, $11.5 billion of it was in tranche two, which are loans made against collateral including Treasurys and agency debt.