Graph: Government Borrowing

These Graphs courtesy of East Coast Economics. Link: http://eastcoasteconomics.wordpress.com/

The Graph above shows the money borrowed by US banks from the Fed through Dec 2007; the spike marks the Savings & Loan Crisis at the end of the 1980s with borrowing maxing out at $8b.

Now take a look at the 2nd chart. It is the same graph as above, but updated through the beginning of November ‘08.
This might be less scary if the Fed wasn’t creating money out of thin air and at the same time accepting assets of questionable - and deliberately undisclosed - quality as collateral from banks.

This is why so many investment professionals are longer term quite pessimistic on interest rates and most goverment bonds. .