Bernanke gives U.S. taxpayers' money to Europe
With another bail out using the taxpayers’ money, the world’s major central banks have launched a joint action to provide cheap, emergency U.S. dollar loans to banks in Europe and elsewhere.
The U.S. Federal Reserve, European Central Bank and other central banks took this coordinated too-big-to-fail action to support the global financial system as Europe’s rolling debt crisis continues to trouble markets.
This bail out doesn’t directly address Europe’s debt and woes. Instead, it is aimed at alleviating the impact of those troubles big investors on global markets.
Under the program, the U.S. Federal Reserve makes dollars available to other central banks, which in turn make the dollars available to banks under their jurisdiction.
Global central banks have given taxpayers’ money before. In March, they intervened jointly in currency markets to tamp down the rise in the yen following the earthquake and tsunami in Japan. In October 2008, leading central banks cut interest rates simultaneously to alleviate the shock to the financial system after the collapse of Lehman Brothers.
Over three years of crisis fighting, U.S. Federal Reserve Chairman Ben Bernanke and the world’s other leading central bankers have developed much closer ties.
Several U.S. Federal Reserve officials have made clear they are open to launching a new round of bond buying, known as quantitative easing, to bring down long-term U.S. interest rates. But they have reservations as the program has consistently failed.
Under the program, the U.S. Federal Reserve makes dollars available to the European Central Bank, which in turn lends the money to European banks (which then lend to wealthy investors and businesses).
The U.S. Federal Reserve faces a risk of political blowback at home for the move. Republicans in particular have attacked the U.S.
Federal Reserve for making dollars available to foreign banks. Fed officials say they don’t face much risk with this facility because the dollars are going to other central banks, and not directly to European banks. But isn’t that were our dollars wind up.
Obama’s man, Ben Bernanke, and the U.S. Federal Reserve continue to drive the United States, and its taxpayers, deeper into debt.