The big news hit Wall Street this morning. The Federal Reserve has extended for another year a program that lets major economies around the world all borrow money from our Federal Reserve bank (at 0.25% interest or less).
Europe, the UK, Switzerland and Canada all participate in this program.
The official terminology is “extending dollar swaps.” The physical reality is that our Federal Reserve bank is funding national deficits throughout Europe. As you can see from the above graphic, everybody in the EU is in serious debt, and several nations have debt equal to or greater than our own national debt-to-GDP ratio (we have $16 trillion in debt for $12 trillion in economic output equals 133%).
The problem here is that our Fed doesn’t have any money. Yesterday they pledged to keep buying $45 billion in U.S. Treasury bills each month or $540 billion a year until at least 2015, maybe for a lot longer – as long as our unemployment rate is below 6.5%. They literally print money to buy these T-bills.
So, any money we loan to the EU or Canada or the UK we have to print. If we don’t print it then we have to borrow it from China. So we sell T-bills to China and pay them 3% interest, then turn around and loan it to the EU and they give us 0.25% interest? All in the name of “liquidity.”
The U.S. is currently running an annual deficit of $1 trillion. Half of that deficit is funded by monopoly money printed by the Federal Reserve. The other half is borrowed.
This past year, the Fed has loaned $250 billion to France and Germany, $125 billion of which went to Greece, the most indebted nation in the world. This will no doubt continue in the next 12 months, to bail out Ireland, Portugal, Spain, Italy and whoever else the Fed wants to bail out.
Economists swear there is no risk at all in our loaning this money to Greece. Hello?
The Fed is a totally autonomous organization. Congress has no control over it. The Fed is run by the big U.S. banks. It’s one thing to cook the books to keep our own economy going. What gives them the right to do the same for the rest of the world?
Ron Paul was right. The Federal Reserve is Washington’s whore.
