The following information may be the most important we have ever published.
One of our Intel sources, highly placed in banking circles, tells us that on 1/1/10 all banks that have received TARP funds have been informed by the Federal Reserve that they must further restrict any commercial lending.
Loans have to be 75% collateralized, 50% of which has to be in cash, which is a compensating balance.
The Fed has to do one of two things: They either have to pull $1.5 trillion out of the system by June, which would collapse the economy, or face hyperinflation.
This is why the Fed has instructed banks to inform them when and how much of the TARP funds they can return.
At best they can expect $300 to $400 billion plus the $200 billion the Fed already has in hand.
We believe the Fed will opt for letting the system run into hyperinflation.
All signs tell us they cannot risk allowing the undertow of deflation to take over the economy.
The system cannot stand such a withdrawal of funds.
They also must depend on assistance from Congress in supplying a second stimulus plan.
That would probably be $400 to $800 billion.
A lack of such funding would send the economy and the stock market into a tailspin.
Potential For Fed To Hyperinflate - The International Forecaster
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