Swapping currencies between countries has become commonplace in our global economy. The exchange of one type of currency for another allows one country to pay interest to another at the difference between their current interest rates.
Currency exchanges between the United States and the Europe illustrate how covert bailouts can be accomplished between economies while losing countries hoodwink their citizens. Swap agreements arranged between countries work like this:
The European Central Bank accepts credit from the Fed, and then provides inexpensive money to beleaguered European banks. In turn, these banks use the resulting cheap financing to purchase high-yield bonds from European countries. Voila! European banks make more money, as American taxpayers are left holding the bag, and average citizens are none the wiser.
This technique even eliminates most of the pesky propaganda created by simple loan deals. The financial news excitedly reports the improvement in European credit conditions. Precious metals investors are the only ones who will eventually benefit, as inflation drives their investments to new highs and billions of worthless dollars are added to US balance sheets.
