The Fed is able to unilaterally lend (functionally unsecured) $30 million each to Mexico and Brazil?!?!
There are far more sensible ways to restore prosperity.
Last figures I saw indicate $522 billion in these loans that have been advanced so far.
It’s looking more and more to me like this massive USD lending to foreign CB’s who reloan it to entities with the slimmest of collateral, is both a transfer of real wealth away from the US and a highly inflationary bias.
For the moment it’s halting deflation, but once unleashed there’s no telling where it will go.
By Steve Matthews and William Sim
Oct. 30 (Bloomberg) — The Federal Reserve agreed to provide $30 billion each to the central banks of Brazil, Mexico, South Korea and Singapore, expanding its effort to unfreeze money markets to emerging nations for the first time.
The Fed set up “liquidity swap facilities with the central banks of these four large systemically important economies” effective until April 30, the central bank said yesterday in a statement. The arrangements aim “to mitigate the spread of difficulties in obtaining U.S. dollar funding.”