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The Federal Reserve Is Bailing Out FOREIGN Banks … More than the American People or Economy

Posted By admin On July 29, 2013 @ 5:29 am In Money Watch | Comments Disabled

Washington’s Blog [1]
July 29, 2013

We’ve extensively documented that the Federal Reserve is intentionally locking up bank money so that it is not loaned out to Main Street [2]. Specifically – due to Fed policy – 81.5% [3] of all money created by quantitative easing is sitting there gathering dust in the form of “excess reserves” … instead of being loaned out to help Main Street or the American economy.

And we’ve extensively documented that large percentage of the bailouts [4] went to foreign banks (and see this [5] and this [6]). (A 2010 Fed audit also revealed that of the $1.25 trillion of mortgage-backed securities the central bank purchased after the housing bubble popped [7], some $442.7 billion -  more than 35% – were bought from foreign banks.)

It turns out that these themes are all connected.

Specifically, most of the Fed-created money which is gathering dust is actually being held by foreign banks.

The Levy Economics Institute noted [8] in May:

Excess reserves are the surplus of reserves against deposits and certain other liabilities that depository institutions (loosely called “banks”) hold above the amounts that the Board requires within ranges set by federal law. The general requirement is that covered institutions maintain reserves at least equal to ten percent of liabilities payable on demand. For the first time in history, there is statistical evidence that as much as one-half or more of excess reserves are held for United States banking offices offoreign banks.

Zero Hedge reports [9] today:

As per last night’s [Federal Reserve] H.8 update [10], commercial bank deposits rose by $94 billion in the week ended July 17: the fourth largest weekly increase in history …. This took total commercial bank deposits to an all-time high of $9.54 trillion.


The entire difference can be attributed to the $2+ trillion in excess reserves created by the Fed since the start of the [global financial crisis] .

The Federal Reserve Is Bailing Out FOREIGN Banks … More than the American People or Economy Commercial%20Bank%20Deposits%20and%20Loans 0 [11]

Speaking of Fed reserves with banks, the most recent number was $2.1 trillion, and its allocation breakdown by Domestic (small and large) and Foreign banks operating in the US is as follows:

The Federal Reserve Is Bailing Out FOREIGN Banks … More than the American People or Economy Reserve%20cash%20vs%20cash%20holdings 0 [12]

Foreign banks continue to be the biggest beneficiary of the Fed’s monthly $85 billion liquidity largesse, just as they were the biggest winners during QE2.

The Federal Reserve Is Bailing Out FOREIGN Banks … More than the American People or Economy Foreign%20cash%20by%20regime%20QE2%20vs%203 0 [13]

In fact, the total reserve cash distribution continues to favor foreign banks, which now have a record $1.13 trillion in cash, or $9 billion more than all Domestically-chartered banks, at $1.122 trillion. The notable shift of cash reallocation from domestic to foreign banks since QE2 can be seen on the chart below.

The Federal Reserve Is Bailing Out FOREIGN Banks … More than the American People or Economy cash%20domestic%20vs%20foreign 0 [14]

To nobody’s surprise, global liquidity (as created by the Fed) continues to be infinitely fungible, and increasingly benefits offshore-based (mainly European) banks.

(And see this earlier report [15] from Zero Hedge).

The Fed pays huge amounts of money to the big banks [2] to encourage them to park their money in excess reserves, which are stored at the Fed.  In other words, the swelling excess reserves of foreign banks are yet another type of bailout of foreign banks.

We’ve repeatedly noted that loose Federal Reserve policy benefits of the super-elite at the expense of [16]Main Street, the U.S. economy or the average American.

It now appears that the policy benefits foreign super-elite even more than the elites in the U.S.

The Federal Reserve – like many parts of the U.S. government – are sucking the prosperity out of America … and shipping it abroad [6].

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URL to article: http://www.prisonplanet.com/the-federal-reserve-is-bailing-out-foreign-banks-more-than-the-american-people-or-economy-2.html

URLs in this post:

[1] Washington’s Blog: http://www.washingtonsblog.com/2013/07/the-federal-reserve-is-bailing-out-foreign-banks-more-than-the-american-people-or-economy.html

[2] intentionally locking up bank money so that it is not loaned out to Main Street: http://www.washingtonsblog.com/2011/07/confirmed-federal-reserve-policy-is-killing-lending-employment-and-the-economy.html

[3] 81.5%: http://www.washingtonsblog.com/2013/06/81-5-of-money-created-through-quantitative-easing-is-sitting-there-gathering-dust-instead-of-helping-the-economy.html

[4] a large percentage of the bailouts: http://www.washingtonsblog.com/2011/06/ron-paul-one-third-of-fed-bailout-loans-and-essentially-100-of-ny-fed-loans-went-to-foreign-banks.html

[5] this: http://www.zerohedge.com/article/fed-releases-details-secret-855-billion-single-tranche-omo-bailout-program-just-another-fore

[6] this: http://www.washingtonsblog.com/2013/03/money-is-being-sucked-out-of-the-u-s-economy-but-big-bucks-are-being-made-abroad.html

[7] of the $1.25 trillion of mortgage-backed securities the central bank purchased after the housing bubble popped: http://www.federalreserve.gov/newsevents/reform_mbs.htm

[8] noted: http://www.levyinstitute.org/pubs/wp_763.pdf

[9] reports: http://www.zerohedge.com/news/2013-07-27/liquidity-update-record-high-deposits-fed-reserves-and-foreign-bank-cash-fed-owns-31

[10] H.8 update: http://www.federalreserve.gov/releases/h8/current/

[11] Image: http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2013/07/Commercial%20Bank%20Deposits%20and%20Loans.jpg

[12] Image: http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2013/07/Reserve%20cash%20vs%20cash%20holdings.jpg

[13] Image: http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2013/07/Foreign%20cash%20by%20regime%20QE2%20vs%203.jpg

[14] Image: http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2013/07/cash%20domestic%20vs%20foreign.jpg

[15] earlier report: http://www.zerohedge.com/news/2013-05-21/thanks-qe-bernanke-has-injected-foreign-banks-over-1-trillion-cash-first-time-ever

[16] benefits of the super-elite at the expense of: http://www.washingtonsblog.com/2012/12/quantitative-easing-benefits-the-super-elite-and-hurts-the-little-guy-and-the-american-economy.html

[17] The Federal Reserve Is Paying Banks NOT To Lend 1.8 Trillion Dollars To The American People: http://www.prisonplanet.com/the-federal-reserve-is-paying-banks-not-to-lend-1-8-trillion-dollars-to-the-american-people.html

[18] How The Fed, Courtesy Of Foreign Banks, “Grew” The US Economy By $146 Billion In The First Quarter: http://www.prisonplanet.com/how-the-fed-courtesy-of-foreign-banks-grew-the-us-economy-by-146-billion-in-the-first-quarter.html

[19] Everyone Knows that the Federal Reserve Banks Are PRIVATE … Except the American People: http://www.prisonplanet.com/everyone-knows-that-the-federal-reserve-banks-are-private-except-the-american-people.html

[20] Americans Have Been Bailing Out Foreign Banks for Years … And We’re Getting Ready To Do It Again: http://www.prisonplanet.com/americans-have-been-bailing-out-foreign-banks-for-years-and-were-getting-ready-to-do-it-again.html

[21] Thanks To QE Bernanke Has Injected Foreign Banks With Over $1 Trillion In Cash For First Time Ever: http://www.prisonplanet.com/thanks-to-qe-bernanke-has-injected-foreign-banks-with-over-1-trillion-in-cash-for-first-time-ever.html

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