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Central Banks Currency Swaps

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for how much longer though

even some congressman can see it (in addition to ron paul)

http://www.marketoracle.co.uk/Article12340.html

Bernanke Upside Down and Backwards: Is Central Banking at Death’s Door?

In a rare lucid moment, British Prime Minister Gordon Brown recently quipped,

“Technology means that foreign policy will never be the same againâ€

Elaborating before a group of leading thinkers at the TED global conference in Oxford, England, Brown further explained,

The power of technology - such as blogs - meant that the world could no longer be run by "elites"

While Mr. Brown didn’t exactly enunciate it, he might as well have said, “the advances in technology [read: the internet] also mean that our system of fractional irredeemable fiat currency [read: backed by NOTHING] practiced by Central Banks like the Federal Reserve may also soon be passé too.†This is largely due to the masses becoming informed about the world’s biggest ponzi scheme, namely, irredeemable fiat currency – forget about the warm-up acts like Madeoff and sub-prime.

Earlier this week, Federal Reserve Chairman, Benedict Benjamin ÇÊžuÉuɹÇq appeared before lawmakers to give sworn testimony about the state of the nation’s monetary policy. In one of his most telling pieces of testimony, Sir Benedict attempted to explain to Congressman Alan Grayson [D- Fla.] the significance of ½ TRILLION in currency swaps which recently appeared on the Fed’s balance sheet:

In his concluding remarks, Grayson asks Mr. ÇÊžuÉuɹÇq if he felt the creation of these “currency swaps†had anything to do with the $U.S. Dollar’s strengthening immediately after or whether this temporary strengthening in the Dollar was coincidental?

ÇÊžuÉuɹÇq responded that it was his opinion that the Dollar strengthening [at the time] was just a coincidence.

The questioning concludes with Congressman Grayson laughing in s,ÇÊžuÉuɹÇq face.

Under oath, you can listen to Benedict Benjamin ÇÊžuÉuɹÇq make the claim that these currency swaps were made for the benefit of ‘customers’ of foreign Central Banks.

We note how the U.S. Dollar finally displayed ‘temporary strength’ on the back of these currency swaps completed by the Axis of Central Banks:

The charts are suggestive that the “real unstated†reason for the foreign currency swaps was to provide the Federal Reserve with “dry powder†[foreign reserves] to defend against a MASSIVE run-on-the-BUCK.

We’re seeing anecdotal evidence, with the renewed breakdown in the Dollar, that much vaunted “green-shoots†of early spring have wilted and turned brown with the summer heat. The Fed has all but exhausted their initial salvo of currency swaps [fantasy finance] and the U.S. Dollar has endured two negative MACD crossovers - in both April and July 09 at “lower lowsâ€:

Central Bankers on the Other Hand….

Of course, Sir Benedict of ÇÊžuÉuɹÇq will never admit that this was the true reason for the foreign currency swaps, nor should we be surprised. Remember folks, it was none other than former Vice Chair of the Federal Reserve, uÉ×ŸÉ É¹Çpuıןq, years ago, who told the world on the PBS Nightly Business Report,

"The last duty of a central banker is to tell the public the truth."

Ladies and gentlemen, it would appear that the esteemed Chairman of the Fed has the art of obscuring the truth down to a finely tuned, ‘nuanced’ art form. Do you think that Ken Lewis over at Bank of America would agree? How about ÊžuÉÉ¥ uosןnÉd?

Watch for the next round of Central Bank currency swaps as the Federal Reserve chews through their initial installment of foreign currency swaps / reserves before the snow flies.

The fact that ALL Western Central Banks have hitched their wagons to the sinking fortunes of the profligate, money printing, deceitful Federal Reserve doesn’t bode well for their near term prospects either.

Western Central Banks have stood united and together they will fall. Unfortunately, we are going to have to live with the consequences resulting from the upside-down and backward policies and lies they’ve inflicted on us all.

Got physical Gold and Silver yet?

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I thought that the point of the currency swaps was to meet the demand for dollars in money markets outside the United States. (The Fed lends dollars to central banks outside the United States and takes their currencies as collateral).

For the currency swaps to have been used to prevent a collapse in the dollar, surely they should have been used to mop up an excess supply of dollars (reverse currency swaps) in markets outside the United States.

I must have missed something here ......

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I thought that the point of the currency swaps was to meet the demand for dollars in money markets outside the United States. (The Fed lends dollars to central banks outside the United States and takes their currencies as collateral).

For the currency swaps to have been used to prevent a collapse in the dollar, surely they should have been used to mop up an excess supply of dollars (reverse currency swaps) in markets outside the United States.

I must have missed something here ......

The fed is using political pressure to "create" demand.

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I thought that the point of the currency swaps was to meet the demand for dollars in money markets outside the United States. (The Fed lends dollars to central banks outside the United States and takes their currencies as collateral).

For the currency swaps to have been used to prevent a collapse in the dollar, surely they should have been used to mop up an excess supply of dollars (reverse currency swaps) in markets outside the United States.

I must have missed something here ......

what does it do with the collateral

These foreign currency swaps supplied the U.S. Federal Reserve with as much as ½ Trillion worth of foreign reserve liquidity. The Fed cannot print Euros, Yen, Cad., Francs, Pounds etc. - TO SELL – to defend the DOLLAR. Prior to doing currency swaps with foreign CBs the Fed could only RAISE interest rates, or, SELL gold to defend the Dollar.

Raising interest rates was clearly OUT OF THE QUESTION.

As for selling gold, let’s just say that you would be required to possess physical gold to do so. Perhaps this is why the U.S. Treasury / Fed has stonewalled GATA’s freedom of information requests regarding the true state of sovereign American gold reserves which have not been verifiably audited since the Eisenhower Administration in the 1950s.

It seems that the true state of “declared†sovereign gold stocks is a highly questionable matter. There is compelling new insight [or questions, perhaps?] on the state of sovereign Swiss gold stocks in the subscriber portion of this article.

We note how the U.S. Dollar finally displayed ‘temporary strength’ on the back of these currency swaps completed by the Axis of Central Banks:

The charts are suggestive that the “real unstated†reason for the foreign currency swaps was to provide the Federal Reserve with “dry powder†[foreign reserves] to defend against a MASSIVE run-on-the-BUCK.

We’re seeing anecdotal evidence, with the renewed breakdown in the Dollar, that much vaunted “green-shoots†of early spring have wilted and turned brown with the summer heat. The Fed has all but exhausted their initial salvo of currency swaps [fantasy finance] and the U.S. Dollar has endured two negative MACD crossovers - in both April and July 09 at “lower lowsâ€:

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what does it do with the collateral

Collateral is held in a segregated account.

While the US is not always known for acting in good faith under international law (understatement), they have no claim on the collateral unless other central banks fail to return the dollars that they have borrowed to the Fed on the previously agreed date.

I can see how this might set off the consipracy theorist but, I think that unilateral action by the Fed would be a nuclear option. I can't see that they would want to push that button.

If they do, it will be the least of our problems.

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coincidence

greenspan_27_3.gif

So they're propping up the dollar, in order to ensure the inflation figures don't reflect the weakening currency. Therefore enabling low IR for even longer.

Is that the kinda thing they're doing?

Edit: I only spot spelling mistakes after posting!!

Edited by Khayl

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So they're propping up the dollar, in order to ensure the inflation figures don't reflect the weakening currency. Therefore enabling low IR for even longer.

Is that the kinda thing they're doing?

Edit: I only spot spelling mistakes after posting!!

My opinion is the US are aiming to become a zombie country, they've just taken the Japanese model one stage further.

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coincidence

greenspan_27_3.gif

A lot of money has been lost because of the assumption that correlation = causation.

In the period between the collase of Lehman and the March market lows, the scarcity of dollars on the money markets meant that people had to sell other currencies and buy dollars to meet redemptions which pushed up the dollar index.

Once the panic lows in the market passed and the Fed created a lot of offshore dollars through the currency swaps, the dollar started to weaken again.

The one thing that the US cannot afford at the moment is a strong dollar. In my view, they are doing everything that they can to weaken the dollar and welcome the current test of support.

They are stuck in a deflationary quagmire and welcome anything that will reflate their economy including a weaker dollar.

The situation is so dire that they are happy to push out the consequences of their actions which will be worse than their current problems to get through this month.

They are a bit like a crack addict who will break into a house to-day to get money to buy drugs within an hour and will worry about their 5 year jail term if and when they get caught.

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A lot of money has been lost because of the assumption that correlation = causation.

In the period between the collase of Lehman and the March market lows, the scarcity of dollars on the money markets meant that people had to sell other currencies and buy dollars to meet redemptions which pushed up the dollar index.

Once the panic lows in the market passed and the Fed created a lot of offshore dollars through the currency swaps, the dollar started to weaken again.

The one thing that the US cannot afford at the moment is a strong dollar. In my view, they are doing everything that they can to weaken the dollar and welcome the current test of support.

They are stuck in a deflationary quagmire and welcome anything that will reflate their economy including a weaker dollar.

The situation is so dire that they are happy to push out the consequences of their actions which will be worse than their current problems to get through this month.

They are a bit like a crack addict who will break into a house to-day to get money to buy drugs within an hour and will worry about their 5 year jail term if and when they get caught.

You mean devaluation by stealth.

I have been thinking that the US wants to devalue to compete with China, it can't do it publicly so it would have to be sneaky, have they found a way of doing it?

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Guest absolutezero

Is there a reason why "Bernanke" is written upside down and backwards?

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You mean devaluation by stealth.

I have been thinking that the US wants to devalue to compete with China, it can't do it publicly so it would have to be sneaky, have they found a way of doing it?

Yes.

Being the world's only reserve currency gives them a lot of flexibility. I can certainly see why China are pushing so hard for a viable alternative to the USD.

As many have pointed out already, you can't have simultaneous global competitive devaluations. I think that the US are trying to get ahead of the EUR, CHF, CAD, AUD, NZD, JPY, SGD etc. Looking at their currency swap "partners" on LRYMS's graph reveals their thinking.

I am not sure that they can afford to devalue too much relative to the CNY as they rely too much on the vendor financing from China.

The UK are one of the few countries keeping pace with the US in terms of their own competitive devaluation.

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Is there a reason why "Bernanke" is written upside down and backwards?

Surely Shakerbaby isn't Bernanke .......

Edited by LuckyOne

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>our system of fractional irredeemable fiat currency [read: backed by NOTHING]

Our currency is fully backed by armed police officers and prison cells for those that do not pay their taxes. You must earn (or convert to) £'s to pay your taxes.

Governments find it cheaper this way so they dont have to worry about digging upm moving and storing lumps of yellow metal.

VMR.

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>our system of fractional irredeemable fiat currency [read: backed by NOTHING]

Our currency is fully backed by armed police officers and prison cells for those that do not pay their taxes. You must earn (or convert to) £'s to pay your taxes.

Governments find it cheaper this way so they dont have to worry about digging upm moving and storing lumps of yellow metal.

VMR.

You think this state of affairs would last if everyone, including the police, realised it?

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