Posted on 11/30/2011 5:36:50 AM PST by TSgt
The U.S. Federal Reserve, acting with five other central banks, took steps Wednesday to boost the troubled global financial system by making it cheaper for banks to trade in U.S. dollars.
The Fed -- along with central banks of the eurozone, England, Japan, Switzerland and Canada -- announced a coordinated plan to lower prices on dollar liquidity swaps beginning on December 5, and extending these swap arrangements to February 1, 2013.
(Excerpt) Read more at bottomline.msnbc.msn.com ...
It means you will be paying higher prices because your dollar is worth less.
From http://inflation.us/ecbitalybailout.html
“...The extremely high levels of debt in both Europe and the U.S. need to be liquidated as soon as possible. If Italy can’t sustain itself with 7% interest rates, which is only average on a historical basis, think about how large the crisis will be in the U.S. when interest rates here reach 15% as price inflation spirals out of control. Less than three months ago Italy’s interest rates were below 5%. Fundamentally, Italy’s economy is the same as it was three months ago, but perceptions in the marketplace change quickly. Today, U.S. treasuries are still perceived to be a safe haven, but this will change 180 degrees in no time.
Just like how the U.S. government understates inflation when calculating COLA adjustments, they also understate inflation when calculating GDP growth. The U.S. recently reported 3Q GDP growth of 1.62% on a year-over-year basis, which used a price deflator of only 2.52%. If they used the real rate of price inflation, they would have reported negative GDP growth. The Federal Reserve just lowered forecasts for U.S. GDP growth in 2012 to between 2.5% and 2.9%, down from a forecast in June of between 3.3% and 3.7%. In order to ensure that we even meet the Fed’s new projections, the Fed will soon be launching QE3. NIA predicts that the Fed will use fears of contagion from the European Debt Crisis as their excuse for launching QE3 in the near-future. Combined with massive inflation from Europe as the ECB monetizes debt to save banks with exposure to Italian bonds, gold will soon skyrocket to new all time highs with silver likely beginning to once again outperform gold.” November 9, 2011
Don´t go so fast. If the Eurozone is in this trouble is because its central bank is NOT able to directly purchase government bonds like the Fed, BoE and BoJ do. The ECB was created on german anti-keynesian principles.
USA can afford a 10% budget deficit thanks to its central bank. Japan can afford a public debt of 200% thanks to its central bank. UK can afford a gigantic private debt thanks to its central bank. If those three countries were deprived of monetary autonomy, they would be in worse shape than Italy and Spain.
You mean ‘deflation’
Thanks...”sigh”...
The debt sodden Western nations are barely treading water in the middle of the ocean of economic reality. Each time they tear off part of their own floatation devices to give to the fat guy having the most trouble swimming (currently Europe) they decrease their own bouyancy.
There is not a boat on the ocean or a crew strong enough to pull them out of the water. There is only one conclusion to this absurd analogy.
By the way, we are the fattest guy in the water (and our government and the Fed) have already given away too much of our lifevest.
We are screwed.
“”There’s no reason for the huge move up in our stock market today. The action in our stock market looks like a blatant intervention by the Working Group (aka the “Plunge Protection Team”), in which they bought the S&P futures before the market opening to cause a big gap up opening and screw short sellers. This kind of intervention in the equity markets, besides being totally unethical, is dangerous policy because it inflates stock prices up to artificially high valuations, and that can cause a sudden disorderly collapse in stock prices when most buyers step back from the market at those artificially pumped-up prices.””
You’re exactly correct,this is the final set up before the big fall
Here is pretty good article from WSJ released an hour ago
Global Central Bank Action Sends Dollar Plummeting
http://online.wsj.com/article/BT-CO-20111130-717034.html
Remember the "liquidity" sophistry in 2008?
It is simple if you keep your eye on the ball. Remember that the right to call on goods and services from the economy is determined by the amount of money each player has. That call on goods and services can be devoted to capital investment (increasing physical or human capacity to produce future goods and services through training, education, research, or investment in physical plant, transportation, etc), or it can be consumed (buying food, housing, yachts, private island in the Caribbean and a private jet to get there).
So, the only question is, who gets first access to the additional calls on goods and services (credit or actual dollars created). If it goes to corporate investment in productive enterprise, that may be good if we all gain in the long term. It if goes into your pocket that is ok too. But if it goes to the super consuming class (government and welfare or high end playboys - and there are A LOT of these these days) then you lose.
I suspect you will find that little of Bernanke's slush lands in your pocket, and if this is the case, then guess what. Since printing and distributing dollars is a zero-sum game (for every winner there is a loser), it is really simmple. YOU LOSE! (Total dollars chasing the same goods increases, which means prices increase, but the dollars you have to buy them stays flat).
This works out the the same as the government's gross borrowing numbers, about $1T per year, over 1/3 of total annual spending. And you are right. We are hosed.
Income tax rates are indexed for inflation.
RICO operations, RICO groups that know they can operate outside the system with no consequences, with the NON-government individual, always the backstop and target. (as with the Phony-Care “work-camp” theft). i.e. Moral Hazaard breached with NO CONSEQUENCES for the players.
I see this piping through, margin pressures, leading to more business closings and unemployment, especially low end niche shops and businesses, BUT with Phony-Care “work-camp” in place.
The players, self-installed RICO, watch for their attempt to seize as many tangible assets they can get their hands on. Target: anything non-govt. like they tried in Iceland. Phony-Care is a type of government “work-camp”. Remember those?
The Fed loaning dollars to other central banks doesn't take on any debt.
The central banks will repay the dollars we lent them and in the mean time, we'll earn interest on the money they lent us.
It doesn't mean anything. When the swaps are repaid, the dollars we be extinguished. Nothing will change.
“When the swaps are repaid”
IF, they are “repaid.” and “how” they are repaid, and “when” they are repaid.
If? A swap with another central bank is about the safest loan possible.
I think that is probably true....it becomes like a “penny” stock....in other words....VERY risky
Witness this concerted worldwide effort to get Obama re-elected.
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