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Ron Paul On The Federal Reserve’s Bailout Of The EU

by @ 6:07 pm on May 10, 2010. Filed under Economics, Politicos & Pundits, Politics, Ron Paul

You might not be aware of it, but you just became part of the European Union’s bailout of Greece and other floundering economies:

WASHINGTON – The Federal Reserve late Sunday opened a program to ship U.S. dollars to Europe in a move to head off a broader financial crisis on the continent.

Other central banks, including the Bank of Canada, the Bank of England, the European Central Bank, the Swiss National Bank and the Bank of Japan also are involved in the dollar swap effort.

The move comes after the European Union and International Monetary Fund pledged a nearly $1 trillion defense package for the embattled euro, hoping to calm jittery markets and halt attacks on the eurozone’s weakest members. The ECB also jumped into the bond market Sunday night, saying it is ready to buy eurozone bonds to shore up liquidity in “dysfunctional” markets.

The Fed’s action reopens a program put in place during the 2008 global financial crisis under which dollars are shipped overseas through the foreign central banks. In turn, these central banks can lend the dollars out to banks in their home countries that are in need of dollar funding to prevent the European crisis from spreading further.

The Fed said action is being taken “in response to the reemergence of strains in U.S. dollar short-term funding markets in Europe,” and to prevent the spread of that strain to other markets and financial centers.

Congressman Ron Paul appeared on Fox Business Network today to discuss this latest Fed Bailout:

Not surprising since we are, after all, the lender of last resort.

The only question I have is who is going to bail us out when the time comes ?

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5 Responses to “Ron Paul On The Federal Reserve’s Bailout Of The EU”

  1. EJ says:

    technically this really isnt a fed bailout. What it did was make a currency swap agreement with the ECB in order to provide dollar liquidity. People wanted dollars from their euopean banks and to make sure that these banks could cover their dollar denominated deposits their, the fed made a short term currency swap program with the ECB where the ECB could take dollars and give the fed euros on a short term basis to in turn lend overnight dollars to their banks. This was done at the high of the last crisis in 2008. In a way i guess its a bailout in the sence that we are offering liquity but its not the fed giving money to Europe to bail out greece or other soverign debt. Its a short term liquidity loan to the european banking system. This in of itself I wouldnt worry about us taking a loss. I would be more worried about the US tax dollars going to the IMF that are being used to bail out greece and company.

  2. tfr says:

    There’s some good explanations over on mises.org:

    http://mises.org/Community/forums/t/16676.aspx

    BTW, mises.org is a good place to keep up on worldwide economics in general.

  3. I don’t like Mises.org very often for some reason, but I am a regular reader.

    Good stuff !

  4. tfr says:

    Yah, mises.org can be a little dry, and… how to say it… smug? Not light reading, but they do have some good insights into why the whole world has gone to hell over the last few years.

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