This is the truest measure of Fed liquidity. While Reserve Bank credit has peaked it still remains high and well above trend. This series needs to be watched closely. It is likely that the market will experience a sharp correction when the Fed starts to take out this over abundance of liquidity.
Is the market strong, or is what we are seeing being caused by this aggressive liquidity injection on the part of the Fed. In other words, are we seeing a real case of excessive exuberance?
Reserve Bank credit is the sum of securities held outright, repurchase agreements, term auction credit, other loans, net portfolio holdings of Commercial Paper Funding Facility LLC, net portfolio holdings of LLCs funded through the Money Market Investor Funding Facility, net portfolio holdings of Maiden Lane LLC, net portfolio holdings of Maiden Lane II LLC, net portfolio holdings of Maiden Lane III LLC, float, central bank liquidity swaps, and other Federal Reserve assets.
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 Bob DeMarco is a citizen journalist and twenty year Wall Street veteran. Bob has written more than 700 articles with more than 18,000 links to his work on the Internet. Content from All American Investor has been syndicated on Reuters, the Wall Street Journal, Fox News, Pluck, Blog Critics, and a growing list of newspaper websites. Bob is actively seeking syndication and writing assignments.
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