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

Federal Reserve Policy Mainly Benefits Big Foreign Banks

We’ve extensively documented that the Federal Reserve is intentionally locking up bank money so that it is not loaned out to Main Street. Specifically – due to Fed policy – 81.5% 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 a large percentage of the bailouts went to foreign banks (and see this and this). (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, 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 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 of foreign banks.

Zero Hedge reports today:

As per last night’s [Federal Reserve] H.8 update, 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] .

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:

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.

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.

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 from Zero Hedge).

The Fed pays huge amounts of money to the big banks 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 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.

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  • failedevolution
  • Dbc

    The hilarity of the story of the fed is that 99 out of 100 americans still think it is a part of the federal government… know like federal express. It has no accountability to the government let alone the american people. That was obviously clear two years ago when the head of the banking committee asked bernanke to reveal the exact percentage of the various bailouts that went overseas and he looked him in the eye and said “I don’t have to tell you”. A private bank with private stockholders printing money (paper and digital) out of thin air and “loaning” it to the government at interest. The oldest racket around.

    Now they can “proudly” hand out these facts because the american people are, for the most part, numb to the consequences of what the fed is doing. People shake their fists at the white house and congress while the fed sits back howling at the ignorant “tax” payer who is oblivious to the source of their economic woes.

    Information that is given here will never make it to the main stream broadcast news. There is a reason they call it television “programming” and it has been working perfectly for over 60 years.

    • Blair T. Longley

      For sure, Dbc!

      Anyone who studies American history enough eventually discovers that the main theme has been the ways that the International Banksters, mostly originally European Banksters, were either losing control, or regaining control, over the USA. The only “new” thing is the ways that this has been on an exponential growth curve through most of American history, and especially since the 1970s.

      Unfortunately, the vast majority of North Americans HAVE been reduced to being Zombie Sheeple, and there are no good grounds to believe anything else than more genocidal wars, backed by democidal martial law, as the banksters attempt to consolidate their global hegemony.

      When I read this article above, I thought “OF COURSE.” The Federal Reserve Board was originally created by European Banksters, to benefit them. As this article says, the American elite have mostly been working for the European super-elite, for quite a long time. Both the American Dollar, and the American Military, actually work together to advance the agenda of a global elite, which are still primarily more European than American, although the definitions of those nationalities are becoming less and less relevant.

      I wish I could believe in something better, however, the future for North America appears to most probably be more successful divide and conquer, culminating in democidal martial law … which will be totally insane, and utterly unpredictable events in a country which has an abundance of weapons of mass destruction!

  • ken

    Abolish the federal reserve they are a giant scam when they create the money for the government we as tax payers have to pay for the money to be made. Then they “loan” the money out to the government at interest this is what you have to understand. So we pay to make the dollar then we have to pay back that dollar with interest so for every dollar made it comes with DEBT attracted with it. The federal reserve did this on purpose the federal reserve act was drafted bankers and is ran by bankers see the poblem here.
    Our income tax that never was ratified by the states is unconstitutional they use the money from the income tax to pay the interest on the dollar that they charge do you see the problem here……..

    • Dbc

      Yes sir, the act was passed in the middle of the night in 1913, same year income tax was introduced…..gee what a coincidence.

      • Sueychop

        Set up by JP Morgan. Woodrow Wilson said it was the biggest mistake he ever made but he had no choice. Probably got some cash and a nice threat to his family.

        • max

          The banksters had a letter he had written to a mistress. So they selected him to run for prez, bankrolled Teddy Roosevelt’s Bull Moose party to split the progressive vote, got Wilson in as president. The rest is history.

    • terry1956

      well, look at the preamble to the bill of rights, both the 16th and 18th amendments were null and void from the start even if enough states ratified because those two amendments violates the 9th and 10th amendments.
      The 18th has since been repealed anyway in large part because it was mostly not enforceable because most juries as John Adams said they should do exercised their authority, rights and duty to find the defendant no guilty despite the law.

    • KeyLimePie

      Um, that’s not actually how the Fed works, but nice try.

  • Danielvr

    “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”

    Well, that’s just what you get when 4.3% of the world’s population (Americans) insists on issuing and controling the worlds trade- and reserve currency. There’s a lot more dollars going around in Europe, Asia, etc. than in the USA.

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

    Funny, it always used to be the other way around! For the past 70-odd years it used to be that the rest of the world labors and toils to create the products and materials that Americans consume and ‘pay for’ in paper promises. In doing so, the US has run up a tab -nett debt position- of 2,400 billion US dollars. How about paying that off before you start talking this xenophobe drivel about being sucked dry by foreigners? What’s happening today was predicted 52 years ago by Belgian economist Robert Triffin and this is what your Council of Foreign Relations (speaking of elites..) has to say about it:

    • Dbc

      One minor point of contention. The federal reserve is not, has not, and will never be a part of the U.S. Government. They make it appear so in declaring the president “appoints” people like Bernanke. It is no more federal than federal express or any of the other thousands of u.s. businesses that have “federal” in their name. It is a private bank, with private shareholders and is a for profit entity. It is not the “foreigners” sucking the U.S. citizens dry, it is a private bank that is not held accountable to anyone. As a result they have the ability to tell the congress to “f” off when asked which of their “member” banks and institutions received “bailout” funds.

      The dollar index (US Dollars pegged against 7-9 other currencies) is a story in itself in how going from the biggest lender to the biggest debtor ruins a nation in a few short decades. In the mid 80’s the US dollar was indexed at around 200, today it hovers between 70-90. That results in inflation (that the government says doesn’t exist) that the average american pays for. That is also why the U.S. median middle income is ranked 27th in the world.
      As for the cfr…..thanks guys for Iraq, our newly found opium dollars in Afghanistan and the always popular read (penned by a few of your membership) the Project for a new american century.

      • KeyLimePie

        Correct, it is a for profit entity. However, the profits go to the U.S. Treasury.

  • gozounlimited

    European Banks Haven’t Been This Cheap Since 80s……”The concern that we have is obviously on tail risks that the banks still have; they still have significant legacy assets on their books, and are still significantly leveraged,” Aspin said. “If you compare them with U.S. banks, the U.S. banks have been declining leverage now for quite a few years and are in a far better situation.”…..

  • Gorak

    It seems to me that the main purpose of the Fed in the first place is to serve the interest of foreign, or rather international, capital. I mean, a government like that of the U.S. should be able to fund itself with taxation and settle international trade with its vaunted surplus wealth.

    It makes you wonder if private central banks are the dues countries pay for an international trade protection racket: No central bank, no trading status. And of course nowadays any country that stands up to the mob gets a visit from NATO.

    It’s interesting that before Libya was invaded and Gaddafi was executed in a clearly legal and above-board fashion, it was about to invest more than enough in Greece to have avoided Greece’s (and subsequently Europe’s) meltdown and the imposition of austerity measures. Makes you wonder indeed.

    • Dbc

      Gaddafi’s mistake was the same as Hussein’s….mumbling about trading in anything other than U.S. dollars. It will only be a few more years until Brazil, China, Russia, and India devise a common trading unit (a settlement currency) and then it’s going to be very interesting to see what happens to the U.S. economy.

      • jo6pac

        South America has already moved off the dollar thanks to the late Hugo and I wish I could remember how it’s done but I think its done with commodes prices at the moment the trade is done. This idea came about in the 1800 but with computers it easily done.
        Russia and China use their own currency to trade no dollars and at this time China is working with the paper tigers to move away from the dollar that why Amerika now has a plan for Asia called TPP and it’s scary.
        India use gold to trade for oil with Iran.

        • Dbc

          You are correct.

  • Steffi

    Those very same Banks are sucking out the blood of Europe, too!

  • jadan

    QE is Bernanke’s admission that the Fed fucked up. It failed to discipline its members as the shysters came out of the woodwork. It stepped in to soak up all that toxic paper at home and abroad. Europe bought up those MBS and CDOs so what could Bernanke do but offer some QE to salve the wounds of overseas colleagues? Not only is the Fed not a part of the government, it is not even American, that is to say, it does not have a nationalist or patriotic purpose. It is internationalist, it serves a clique of central bankers first, and it may or may not do something nice for the people of this country. The very existence of the Fed is an act of treason.

  • amerikagulag

    How many of those “foreign Banks” are Rothchild owner Central Banks? How many are Rothschild owned?
    The IRS is the collection arm of the Federal Reserve, and the Federal Reserve is the collection arm of the Rothschilds.

  • Citizen

    The $7.5T USD held as foreign bank reserves and the $2.1T USD held as domestic bank reserves are preventing hyper- (price) inflation in the US economy. The US is using the fact that the US dollar is the global reserve currency to export its inflation to the rest of the world. Any other country so dramatically inflating its money supply would have collapsed in hyper-inflation because they have no means to prevent all that fiat currency from immediately entering circulation, and that circulation would be limited to their own domestic economy. Not so the US federal government, which enjoys the benefits of newly created dollars while the rest of the world suffers price inflation in their economies.

    The massive recent increases in the US money supply are also being used to maintain liquidity in the global banking system. All the heads of every nations’ central banks are members of the board of the BIS, the Bank for International Settlements, with headquarters in Basel, Switzerland. The most important members, US, ECB, Germany, England, China, etc. meet every 2 months in Basel to coordinate policy with the goal of preserving the global banking system.

    Do your own research on the BIS. Wikipedia is a good place to start.

  • Citizen

    The US Treasury publishes a regular “Report to Congress on International Economic and Exchange Rate Policies”. This links to the April 12, 2013 report.
    On page 10 is a table listing “Foreign Currency Reserve Accumulation: Major Holders”. The total is approximately $7.5T

    From the website of the Federal Reserve, Aggregate Reserves of Depository Institutions and the Monetary Base – H.3 (as of July 25, 2013) it can be seen that current bank reserves held by the Federal Reserve are $2.1T, US Monetary Base is $3.2T and Currency in Circulation in the US is a ‘mere’ $1.2T.

    From the website of the San Francisco Federal Reserve we learn that M1 and M2 money supply figures include foreign and domestic bank reserves. Though the official money supply figures are very large, only about 10% of those dollars are currently circulating in the US.

  • Michael McNew

    When are people going to realize that they are being run by psychopaths?
    These people do not, I repeat do not, share the empathy and sense of guilt that most people do. Once you understand the characteristics then it all makes perfect sense…government and economic policy today.

  • RichL

    The reason that US branches of foreign banks are holders of the excess liquidity created by QE is because they aren’t subject to FDIC charges for holding these reserves, as domestic banks would be.
    It would be minimally or not profitable for a US bank to hold these reserves.
    The foreign banks provide a very low profit service that keeps US bank reserve capacity open for domestic loans.

  • RichL

    The reason that US branches of foreign banks are holders of the excess liquidity created by QE is because they aren’t subject to FDIC charges for holding these reserves, as domestic banks would be.
    It would be minimally or not profitable for a US bank to hold these reserves.
    The foreign banks provide a very low profit service that keeps US bank reserve capacity open for domestic loans.

  • JosephConrad

    Jewish bankers saving their friends, relatives and allies. The Wall Street thugs and thieves are rivalled only by the Rothschilds. It’s time to indicte at least one Wall Sttreet Banker CEO and then imprison him!