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Friday, May 24, 2013

The Fed’s $1 trillion foreign bailout

By Bill Wilson, 23.05.2013

In a recent eye-opening piece by, “Thanks to QE Bernanke has injected foreign banks with $1 trillion in cash for the first time ever,” the highly trafficked financial blog notes that as quantitative easing has increased, so have foreign bank cash assets.  In fact, since 2009, as the Fed has loaded up on U.S. treasuries and mortgage-backed securities, foreign bank cash assets have moved up pretty much in tandem, now totaling more than $1 trillion.

In short, the Fed is printing money to prop up foreign banks and the chart proves it. Bottom line: At least $714 billion of the Fed’s $1.329 trillion balance sheet expansion — nearly 54 percent — since QE began in Jan. 2009 has gone to foreign banks.
Moreover, emergency programs implemented beginning in Sept. 2008 resulted in an additional $242 billion ballooning of foreign banks’ cash assets.
All told, foreign bank cash assets have risen from $59 billion then to $1.033 trillion today. It’s the Fed’s foreign bailout.........The whole episode vindicated the fears of Andrew Jackson, who in 1832, when he vetoed recharter of the Second Bank of the United States, warned that a central bank and a government in debt to foreigners would first serve their interests before that of citizens. So, while Americans were suffering through high unemployment and resultant foreclosures on their homes, foreign banks were made whole with a printing press....To Read More....

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