Fed forex swaps increase by $28 billion in the latest week

In the Fed's weekly release of "Factors Affecting Reserve Balances", shows that the level of foreign currency holdings rose by $27.9 billion for a total of $573.9 billion as of November 5. So the Fed continues to supply dollars to foreign institutions (through a number of central banks). If this were not happening the dollar would be much higher. The Fed let Lehman fail, but it has helped foreign financial institutions to the tune of nearly $600 billion since June. That's nearly the size of the Treasury's bailout package. Unbelievable!

Commercial paper holdings rose to $226 billion, up $185 billion from the prior week. This is why the commercial paper market is "unfreezing." It's all Fed. Like I said in an earlier post, the financial sector is not necessary. The Fed can do it alone and the economy will do just fine, without the redundancy or ever present danger of these freeze ups.