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US Fed Money-printing Is Salvaging London/European Banks and Securities — Again
22 May 2013
(EIRNS)—Helicopter Ben Bernanke’s "QEIV" is again salvaging British and European megabanks and their securities, just as with all the previous Fed "emergency liquidity" and quantitative easing schemes. The website www.zerohedge.com, which demonstrated in early 2012 that QEII’s $660 billion had gone almost entirely to prop up zombie banks in Europe through their U.S. branches, today published the same analysis for the ongoing, $85 billion/month QEIII-IV ("QEternity", as they term it). Excess cash reserves in banks in the United States have now gone over $2 trillion for the first time, to $2.2 trillion as of April 30 (they were a few billions four years ago), according to the Fed’s own flow-of-funds report. But $1.3 trillion, or 60%, of those cash hordes, is reported to be in U.S. branches of foreign banks, overwhelmingly those based in London and continental Europe. The Fed’s money-printing goes almost entirely and directly into large banks’ capital and liquidity reserves, as the new currency is printed in order to buy mortgage-backed securities and Treasury and agency securities from those banks. These banks’ immense cash reserves represent their failure/inability to lend, as they maintain the cash the Fed prints to protect their asset books against securities/bubble losses they know will hit them again very soon. Bernanke acknowledges this, and says QE money-printing is not inflationary because it does not get into the economy by lending! Zerohedge.com’s published charts also show clearly the complete temporal match between the outbursts of QE, QEII and QEIII-IV, and the spikes in bank excess reserves: from $200 billion to a trillion in 2009-10: from $1.2 trillion to $1.8 trillion in 2011: and from $1.6 trillion to $2.2 trillion since December 2012. The analysis is at |