Federal Reserve offers unlimited amount of dollars to foreign central banks

Federal Reserved offers unlimited amount of dollars to foreign central banks

money.cnn.com

NEW YORK (CNNMoney.com) -- The Federal Reserve announced Monday it will offer an unlimited amount of dollars to three other central banks in an unprecedented move to provide liquidity to the global banking system.

The U.S. central bank will lend dollars at a fixed interest rate to the central banks of England, Switzerland and the European Union, according to a joint statement from the banks.

(visit the link for the full news article)



[edit on 13-10-2008 by Parabol]

The other central banks will be able to borrow "any amount they wish" in exchange for collateral. The goal is to flood the financial system with much-needed dollars.

What??? What am I not getting about this situation? How is flooding the market with dollars helping our economy? Every time they cause inflation the purchasing power of my savings decreases. It might as well be theft even though they aren't stealing anything physical because there is no physical value to the paper we're given. I just don't understand what they are doing. Did the Fed have the power to do this before the bailout bill? And what collateral are we getting from the central banks? Well, not we, certainly none of it will end up in our pockets.

I'm beyond frustrated the more I learn about our monetary policy and economy. It's simply fake. It's like looking at a constellation, you can create patterns from the stars but in reality the stars have little relationship to each other. The significance of their placement is only due to our perspective and past choices. Sigh...

money.cnn.com
(visit the link for the full news article)

This is firefighting by using gasoline instead of water

For some reason they want to buy just some more time IMHO.

Hearing of last weeks global rate cut made me recall my intro macro-economics course. I thought I remembered learning central bank directors around the world keep in close contact with each other all under the leadership of the US bank. This collusion last week speaks to this but this is just ludicrous. Isn't this a job for the IMF or World Bank. It's like a bunch of ultra-rich, bulimic teens puking in each others mouths. --? Maybe not at all

I'd be interested to know what this "collateral" is? More bad housing loans? Actual companies, land, gold? If you ask me, this is yet another step at finishing off the world economy. Pump a ton of paper into the system, when the banks cant pay or their collateral proves worthless, the entire system completely falls apart and the taxpayer is again forced to bail everyone out. Eventually Joe Taxpayer simply wont be able to do it.

One bad policy followed by another bad policy, etc... etc...

They're attempting to combat certain deflation due to the credit freeze with inflation.

There is no easy or good solution to the situation the world's economy is in.

The banks will not lend to each other because no one truly knows which banks are solvent and which are insolvent. This is because it's far too easy to hide insolvency with accounting tricks. A bank's books may look balanced, but in reality they can be effectively bankrupt.

If banks won't lend to each other, many banks will not have the funds to lend to businesses and individuals. A continuation of that would result in the supply chain breaking down; grain can't be shipped without credit, grocery and retail stores can't get stock without credit, gas stations can't get gas without credit... we'll start to run out of supply down here at the end of the chain. Jobs will be lost in ever increasing numbers. Less money will be made all throughout the chain. Deflation will set in.

So in an attempt to prevent the above, various governments are lending to banks where banks won't lend. This will (or, it damn well SHOULD) work on the short term, and if it only lasts a few months I think we can get away without too much inflation as long as the credit money is paid back to the government with a quickness.

Unfortunately it doesn't address the core issue as to why the credit markets are frozen. If the banks won't make it clear that they're solvent - i.e. provide REAL numbers, without accounting trickery - then we're just going to repeat this exact cycle again and again.

The RIGHT solution would be to force banks to prove their solvency and make those requirements permanent. It's not a GOOD solution in that we would see a whole lot of banks go belly-up within days of it happening. That would hurt the economy in the short term. However, such a move would prevent this sort of CharlieFoxtrot from happening again...at least for a few decades, until the banks find another way to get the most for them at the expense of everyone else.

reply to post by salchanra

The heart of the current crisis is the quadrillion plus derivative market. Roughly half of these derivatives are listed on exchanges, but the other half are on the totally unregulated, totally opaque, poorly documented and mostly naked (no reserves or collateral given to secure performance) OTC derivatives market. The subprime and Alt-A mortgage debacles, and the soon to be recognized prime mortgage debacle, are little more than a side show with what will become their one to two trillion in losses which the Phony-Fraudie nationalization and the Paulson Ponzi Plunder Plan are meant to address, albeit futilely. However, the real estate derivative problems created by these debacles have been important catalysts leading to the loss of confidence that is preventing banks from lending to one another, because these problems, like a Zippo lighter on high flame, metaphorically speaking, have lit the fuse leading to the quadrillion dollar powder keg waiting to blow any day now, and Hanky Panky and Helicopter Ben are running around like raving, corporatist, fascist lunatics trying to stomp out the lit fuse before the whole world financial system goes up in a blaze of glory.

www.rense.com...

psst you must not have been up to see the breaking european version about it. it is for ALL of the national banks anywhere ,any company can can take as much as they want, no regards to us at all... its based on the juristiction and collateral they stick out there...ummmm who or what exactly is the collateral for unlinited US dollars? everyone here is broke remember. whats the "fixed rate" and who exactly came up with it? well being the US GOV hadnt yet signed off on it either really makes you wonder who exactly sold us....but hey like the cnbc reporter said this morning or should we say mourning, its working so I guess we have to do this now too.
well i was just trying to find the first release of it at 830am on rueters but its gooonnnneeeee. what a surprise.

imf, fed, world bank, UE central bank

the banksters are striking hard again,

i call that a global hold up ! (after the local-us one of the 700billions)

if we were spending as much energy trying to save the one that are starving or dying of aids on this planet (or to protect a city from a cyclone, etc) as we spend to save our dear fascists speculators that nobody needs (but they need us !)

we would live now and since many many years in such a beautiful society...

Ah yes, First the Bailout(10-6) and now the Blowout(10-13)

If you are a fan of the Hegelian Dialectic then this is problem, reaction solution

If you are a fan of the Mob, then this is when you go into business with Tony Soprano, he runs up massive debt, then torches the place for the insurance money

NWO / OWN fans will enjoy watching the FED dollars injected by the PPT(Plunge Protection Team). This injection will prop the market up long enough for the market makers to re diversify their equity from the financial paper market to commodities or even temporarily to foreign currencies(the Euro is doomed as well)

This will be followed shortly by the the treasury announcing the insolvency of the US dollar. This is when the treasury cannot make the minimum payment due on the interest on its foreign held debt.

Finally a new currency will be introduced... and the game begins again !

basically its a redistribution of the perception of wealth, or as I like to call it the middle class reset button.

The US / world economy will be like NYC in the 70's no money, lots of duress, but what a creative period for music and film. I can almost smell the realness, or maybe that is the uncollected garbage on the street.

Thankfully I am already used to being creatively poor

Even the live commentators on CNN Money were cracking at this. (monday afternoon EST) They kind of "paced out" the dialogue during the story as if in disbelife. And at the end (main announcer guy) goes...."just WHERE is all this money going to come from" and was openly insinuating the fed was astounding us with the unlimited loaning abilities.

Now, call me crazy but..... I have to question while watching a station such as this seeing them deliver cracks like these. (I would be suprised if they have open authority to drop innuendo into reports about the FED) While I value the editorial opinion and all, I can't help but think those comments were strategically placed for me to relate to. (?) (To somehow aid in boulstering the public discontent)

Good posts.

I just turned on CNN and there was Peter Schiff and some guy named Siegel who were finishing a little debate - and Siegel's just laughing at Schiff saying something like "well, we'll see who's right in six months from now".

Interesting how the proponents of gov't and Fed intervention all laugh, smile, and smirk the same way when Peter Schiff, Ron Paul, Prof. Morici of Maryland U., etc. (the guys who know how real-life economics work and know exactly how to temper the disaster in progress but will only be laughed at because their policies won't greatly benefit the power structure) speak because their huge ego's are in mass denial.

Originally posted by Terrapop
This is firefighting by using gasoline instead of water

For some reason they want to buy just some more time IMHO.

Well put!!

NWO is working harder. IF they get parts of OTHER BANKS, they further their influence. I cannot believe how insidious this is.

reply to post by Terrapop


That allows more time for all of us. The longer they keep this charade up, and the longer concerned citizens spread the word, the better we all will be prepared for what is about to happen.

The dollar is going to tank after gas prices bottom. Food prices are rising for the most part, at least that's what I am finding. I am trying to stock a diverse pantry. I have enough to scrape by for 1-2(maybe 3-4 with supplements from garden and gleanings) months provided I get my water taken care of. I think this is going to be bad for millions of people but I have seen this coming for 4 + or - years so I feel prepared. The beginning is near!

They are talking about new money, in other words they will print up or compute an unlimited amount of new currency. This will effectively desimate the value of the dollar. The real question is why would they want to do this? All of a sudden those theories about the Amero and a new global currency don't sound so far fetched do they?

the affect again will be a devaluation in the dollar, and therefore the intendid effect a rise in oil prices.