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I do agree that a lot of money printing is going on and that...

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    I do agree that a lot of money printing is going on and that it's insane.

    But this article about the dollar swap lines is misleading.

    The Bank of Japan cannot "buy US stocks with Fed printed money through the back door". It's rather an exchange of JPY against USD for a limited period of time.

    In general, these swaps involve two transactions. When a foreign central bank draws on its swap line with the Federal Reserve, the foreign central bank sells a specified amount of its currency to the Federal Reserve in exchange for dollars at the prevailing market exchange rate. The Federal Reserve holds the foreign currency in an account at the foreign central bank. The dollars that the Federal Reserve provides are deposited in an account that the foreign central bank maintains at the Federal Reserve Bank of New York. At the same time, the Federal Reserve and the foreign central bank enter into a binding agreement for a second transaction that obligates the foreign central bank to buy back its currency on a specified future date at the same exchange rate. The second transaction unwinds the first. At the conclusion of the second transaction, the foreign central bank pays interest, at a market-based rate, to the Federal Reserve. Dollar liquidity swaps have maturities ranging from overnight to three months.


    The balance sheets of the two central banks involved do not grow by this swap transaction (the Fed has less dollars but more yen and the Bank of Japan has more dollars but less yen). In this case there is no propping up of asset prices by expanding the balance sheets of the central banks.

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