Daily Treasury Statement Charts

I monitor the daily treasury statements in order to get a feel for how much money is entering and leaving the coffers of the US Government. Below is a chart of the daily balance (blue) of the US Government against the S&P 500 inverted (red line). The individual accounts that make up the total operating balance are also shown. Simply put, when the blue line is going up, the US Government are – on a net basis – drawing money into their accounts. When the blue line is going down, the US government are – on a net basis – spending the money that is in their accounts.

Daily Operating Balance of the US Government

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What I find interesting is the behavior of the supplementary financing account. As far as I can discern, this is the true danger for profound debauching of money. It is a direct mechanism by which the government can fill its pockets with freshly created dollars. In this program, the Fed ‘requests’ that the US Treasury issues debt so that it may immediately buy it. The stated purpose is to ‘manage liquidity’ and ‘manage reserves at banks’. Should the political will come forth, this could change to ‘managing income streams’ or ‘boosting the economy’. That would be a baby step mechanistically (they could do that overnight), and yet it would be a giant step with regards to the future trends in currency debasement. That would set up a scenario akin to the German hyperinfation of the 1920s. The idea that killed the German mark was that a fall in the mark necessitated further discounting of treasury bills at the Reichsbank. Right now we don’t have a smooth and politically palatable mechanism for limitless treasury bill purchases by the Fed, the supplementary financing account is perhaps how we will get there.

 

Every Friday, the FDIC closes a few more failed banks. You can see the list here. Below is a chart that shows the withdrawals the US Treasury makes in order to contribute to the deposit insurance fund. Simply put, high levels of withdrawals can be a red flag for high expected levels of bank failings.

 

Deposit Insurance Fund Withdrawals

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Check out the daily treasury statements here. If you’re interested in seeing a time series of something, just post a comment below and I’ll try to get round to it.
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Posted Feb 26, 2011