Central banks collaborate to counter worsening Euro crisis

The Fed, ECB, Bank of Canada, Bank of England, Bank of Japan, and the Swiss National Bank announced earlier today a plan to increase non-Euro credit to Europe to stave off a credit crunch. The plan includes bilateral liquidity swaps.

http://www.federalreserve.gov/newsevents/press/monetary/20111130a.htm

DodgeFB said:

It will be interesting to see how this kettle of global stew works for us.

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Markets are always connected. Larger markets have more advantages due to naturally unequal distribution of resources and comparative advantages in different regions. Sure that means contagion will spread further, but even in a closed market a failing segment can create a contagion within that entire closed market. The net gains of trade are still positive.

This is the Fed and other central banks just trying to make sure the Euro crisis doesn't come to their respective countries in a sense.

CatholicCrusader said:

The Fed needs to be abolished, and this sort of stupdity is why. They have no business propping up Europe. They have no business even existing!!

Thats one of the few things that Ron Paul is spot on about.

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They aren't doing this to prop up Europe. They are doing it to stop a contagion which would affect American businesses that hold Euros (hence the Wall St. rise after its announcement). This is not a bailout, it is essentially a low-rate loan that will be repayed with interest at a specified time without exchange rate risk (this one was 90 days I believe).

As for being against the Fed's existence, I used to be with you, but now I am not sure. What would you replace it with? Giving Congress an unlimited purse where it can secretly inflate all it wants is far from logical. The Treasury perhaps? And in that case the President might have too much power though- do you want Obama controlling the purse? Also who would ensure monetary stability? Congress wouldn't be able to act fast enough in that. Abolishing the Fed might only work with free banking, something Paul supports, but I am not sure of.