• 4 minutes Is The Three Gorges Dam on the Brink of Collapse?
  • 8 minutes The Coal Industry May Never Recover From The Pandemic
  • 11 minutes China Raids Bank and Investor Accounts
  • 5 hours In a Nutshell...
  • 7 hours During March, April, May the states with the highest infections/deaths were NY, NJ, Ma. . . . . Today (June) the three have the best numbers. How ? Herd immunity ?
  • 10 mins Why Wind is pitiful for most regions on earth
  • 9 hours Is OilPrice a cover for Green Propganda
  • 13 hours Putin Paid Militants to Kill US Troops
  • 2 days Victor Davis Hansen on Biden's mental acuity " . . unfit to serve". With 1 out of 5 Democrats admitting it. How many Dem's believe it but will not admit it?
  • 1 day Putin Forever: Russians Given Money As Vote That Could Extend Putin's Rule Draws To A Close
  • 7 hours Joe Biden to black radio host, " If you don't vote for me you ain't black". That's our Democratic Party nominee ?
  • 1 day Happy 4th of July!
  • 2 days Tesla Model 3 police cars pay for themselves faster than expected, says police chief
  • 1 day Apology Accepted!
  • 2 days The Political Genius of Donald Trump
  • 3 days Per most popular Indian websites it was Indian troops not Chinese troops breach of LAC that caused the clashes. If you know any Indian media that claim to the contrary please provide the link
Dave Forest

Dave Forest

Dave is Managing Geologist of the Pierce Points Daily E-Letter.

More Info

Premium Content

Return of the Dollar Cavalry

The world is in distress. The economic future looks bleak. Who can the citizens of our great planet turn to, to save them in this time of need?

The Federal Reserve, apparently.

In emergency meetings yesterday, the European Union and the Bank of Japan did just that. Both groups moved to re-open dollar swap lines with the Fed.

The dollar swaps were first implemented in the wake of the Lehman collapse in fall 2008. Governments found that many buyers who do business globally in dollars were having trouble getting access to the bucks they needed.

The strain in the dollar-denominated market was threatening to touch off a fresh round of credit problems.

So the Fed leant Europe, Canada and Japan all the dollars they needed. At the peak, more than $500 billion in swaps were issued. The receiving governments then re-leant these dollars to businesses.

As of a few months ago, these swaps had been unwound. All of the dollars were returned to the Fed, and everything seemed to be good again.

But apparently after last week's market squiggles, dollars are getting hard to find again. Both Japan and Europe are once again "turning on the dollar spigots", taking new loans from the Fed to help supply borrowers.

This is a major about-face on a program that looked like it was headed out to pasture. And also a sign that dollars are still the "go to" currency when times get rough. Lack of dollars in the markets means holders are hoarding and unwilling to sell. When the chips are down, it seems investors would rather hold greenbacks.

We'll see how much ends up being issued under the new swap lines (today's announcement of a $1 trillion bailout for Europe may alleviate some of the liquidity problems). And just how effective the dollar cavalry will be the second time around.

By. Dave Forest of Notela Resources


Download The Free Oilprice App Today

Back to homepage





Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News