In the continuing saga of "What are they up to now?", comes this story from Huffpo about the Fed pumping foreign currency into the US money supply. In this way, US banks can pay their foreign obligations in foreign currency.
This is a new wrinkle in the regular currency swaps the Fed performs with foreign banks. Until now the Fed has held the foreign currencies on its balance sheet while the foreign banks pass the swapped US dollars to their financial institutions. According to the minutes of the March FOMC meeting, this is just a precautionary move and not indicative of other countries having any trouble meeting their foreign currency obligations.
The minutes also show that the Fed will be increasing their currency swap limits with the Bank of England, European Central Bank, Bank of Japan and Swiss National Bank. Here's what Jamie Galbraith had to say:
It is basically either an extension or increase of the existing lines, and raises suspicion that massive losses have been incurred in the previous round of supposedly 'temporary' swaps, as the return to dollar-supply-normalcy that these geniuses pretended to expect would have happened by now, did not.
Rep. Alan Grayson (D-Fla.), after reading the minutes, describes the Fed plan as "a massive transfer of wealth from the American people to who knows where," calling it a "round-about bailout."
Read the whole article which includes excerpts from the FOMC minutes. Mere words are inadequate in describing the reckless audacity of the financial fools now in charge.
I don't quite follow on this shell game
My first impression is it seems like a round about to deal with the money printing press, exchange rates and the U.S. dollar as a reserve currency.
New York Times is saying it gives the Fed another $287 billion in "liquidity".
So, I guess the answer is the Fed and the Treasury are so busy robbing the people blind they realized they had some extra bucks lying around by holding onto the foreign currency instead of loaning that out too.
You are not alone.
Willem Buiter has a long discussion on his blog about what is or may be going on. His radar went up when there were simultaneous announcements by the Fed, BofE, ECB, BoJ, and SNB.
The article is typically Buiter thorough and concludes:
And he came up with the appropriate word to describe the financial fools . . . Machiavellian! Yep, that says it all.