by Dan Denning, coauthor, The Bill Bonner Letter
The U.S. Federal Reserve has now become a central bank to the entire world. That’s how broken the world’s financial plumbing is.
A huge surge in demand for U.S. dollars is causing foreigners to sell the only assets they have (stocks, U.S. bonds, and gold) to get those dollars.
A couple of weeks ago, the Fed stepped in again with another fix.
Foreign central banks and other Foreign and International Monetary Authorities (FIMA) can now post U.S. Treasurys as collateral to get much-needed U.S. dollars through the “repo market.”
(The repo market is where, typically, banks go for short-term loans.)