Another reason to fasten your seatbelt

This one from the Saint Louis Fed. They say trend lines never go straight up or straight down, but there are some dizzying graphs posted at the Eighth District’s website where the trend lines do just that.

Here’s a one-hundred year history of borrowing by depository institutions from the Federal Reserve:


And here’s the flip side, non-borrowed reserves of those institutions:


Some argue that these graphs are misleading since the Fed has turned  itself into a supplier of reserves, and has promised to offset all infusions with sales and redemptions, but that strikes us as making a virtue out of necessity. The graphs accurately reflect a Fed forced onto a path without precedent by extreme stress in the markets, and surely it’s important that prior banking crises barely register against the current situation. And if banks are using emergency funding as a substitute for regular fed funds borrowing, that in itself is major news: banks don’t trust each other, and have to turn to Washington in a pinch (and a painful pinch it is!).