[A-List] Re: Swaps

["Xxxx Xxxxxx" <xxxx.xxxxxx@xxxxxxxxxxx>]

Thanks Michael! Clarified a lot of things!

Louis forwarded this to me. There must be something wrong with the system.
Your reply did not reach to the list.

regards, Mine

----- Original Message -----
From: "Louis Proyect" <lnp3@xxxxxxxxx>
To: <xxxx.xxxxxx@xxxxxxxxxxx>
Sent: Sunday, February 22, 2004 6:39 PM
Subject: Swaps


> Swap agreements
> "In 1962  "The Federal Reserve entered into a network of swap agreements
with
> other central banks in order to obtain foreign currencies for short-term
> periods for use in absorbing forward sales of dollars by foreign central
> banks hedging exchange risk on their dollar holdings"
>
>
http://www.ustreas.gov/offices/international-affairs/esf/history/index.html
>
> This swap agreement is something which Europeans and Asians should be
using
> today. During the Vietnam War the U.S. Government wanted foreign central
> banks to supply gold to the London Gold Exchange, or at the very least
> wanted them not to cash in their surplus dollars for gold every month.
They
> didn't want to absorb more dollars. So the United States "borrowed" the
> gold, giving dollars in return as collateral.
> However, at this early date, the United States (I believe) gave a fixed
> guarantee as to the gold value, in case foreign central banks lost out as
> the dollar depreciated. The terms of this "swap" (which was more like a
> hedge) were that if the dollar depreciated, foreign governments would get
> back an equivalent amount of their gold at the pre-existing $35-an-ounce
rate.
> Today, they lose out in the euro-value or yen-value or yuan-value of their
> dollar holdings.
>
> Michael Hudson
>
>
> Louis Proyect
> Marxism list: www.marxmail.org
>
>