posted on Mar, 20 2012 @ 11:00 PM
Today Fox News reportedly got a hold of a transcript of Federal Reserve Chairman Ben Bernanke saying that he believes there is little risk of the
European economic crisis taking out our recovery. Here is a link to the story.
MSNBC - Economy Watch - Bernanke warns
of possible European 'contagion'
Bernanke's Transcript - The European Economic and Financial
Here is what is really going on, as Mr. Bernanke states in his transcript, he doesn't think a Euro default would hurt the United States because we
have lent them billions of dollars and traded an untold amount of dollars for foreign currencies in order to stabilize their currencies and provide
them liquidity. This is gobblygook for they are holding trillions of dollars in our currency and our security is their soon to be worthless paper, how
does this not effect us?
Bernanke says, "I would add that the swaps are very safe from the perspective of the Federal Reserve and the U.S. taxpayer. They present no exchange
rate or interest rate risk; each drawing has a short maturity and must be approved by the Federal Reserve; they are collateralized by the foreign
currencies for which dollars are swapped; and our counterparties are the foreign central banks, not the foreign commercial banks that receive the
What he said was not completely true. What he failed to say was that those same foreign central banks were allowed to loan those dollars to the
foreign commercial banks. He sort of left that out and for good reason. If those commercial banks (think Goldman Sachs) loaned those dollars out and
cannot buy them back then the central banks don't get them back and we don't get them back. We just end up with a lot of worthless Euros and our
dollar also becomes worthless.
Now what will be the solution to this impending problem. Nigel Farage knows, it will be greater international control over the setting of currency
values. Hyperinflation would result in all debt being eliminated and cataclysmic deflation would result in all debt being eliminated because nobody
would even be able to pay the interest. While both may sound attractive, the solution of international control over currency valuation means a loss of
sovereignty as occurred in Greece. Dostoyevsky once said that people will trade their freedom for comfort and they will. In this case we will trade
our freedom for debt relief and that is the real purpose behind all of this.
edit on 20-3-2012 by AQuestion because: No edit made