All over the world as the global economy shuts down, the U.S. Federal Reserve has begun sending billions of dollars to central banks. Final thirty days, it opened up 14 “swap lines” to countries such as for example Australia, Japan, Mexico, and Norway. A “swap line” is like an urgent situation pipeline of bucks to nations that want them. The bucks are “swapped,” i.e., exchanged for the other nation’s money. The Fed in addition has started enabling around 170 international main banking institutions that hold U.S. Treasury bonds to temporarily trade them for bucks.
Delivering huge amounts of bucks abroad in the exact middle of a historic crisis that is economic appear crazy: As America’s economy crumbles, exactly why are we going our valuable dollars *out* of this nation?
The clear answer is because of the Fed’s unique place within the economy that is global. Bucks will be the lynchpin of international trade.