October 6, 2008 (LPAC)--The Federal Reserve took another giant step into Weimar Germany-style hyperinflation today, increasing to $900 billion the lending limit in its Term Auction Facility programs, and deciding to begin paying banks interest on their reserves this month. These moves represent the total failure of the various bailout plans to halt the collapse of the banking system, and accelerate the hyperinflation which is already under way.

The Term Auction Facility, which was established late last year with a $40 billion cap in loans outstanding, was doubled to $300 billion from $150 billion just a week ago, on Sept. 29, and the same day a pair of additional forward TAF auctions were announced for November, for an expected $150 billion, the Fed said. Today, those limits were raised significantly, with the twice-monthly TAF auctions raised to $150 billion each, or $300 billion in total. At the same time, the Fed announced that the two forward TAF auctions would be for $150 billion each, or $300 billion in total. Given the mix of 28-day and 84-day loans in the TAF program, the Fed said the changes announced today would result in an additional $900 billion being available by year's end.

The Fed also announced today that, under authority granted by the bailout bill, it would begin paying interest on the reserves the banks are required to keep with the Fed. The interest payments had previously been scheduled to begin in 2011.