Nothing to worry about. Those experts surely know what they are doing. Right?

Today, however, as discussed in Tuesday’s GoldMoney News piece, the Fed is leveraged by over 50 to 1. It would take a mere 2% decline in the value of the Fed’s assets to wipe out its capital.

So the Fed is running out of ammo. It cannot keep printing new dollars (which count as liabilities on its balance sheet) to buy assets that no one else wants without destroying faith in its financial credibility. This is true regardless of whether or not the assets it ends up with are swaps, mortgage backed securities, or US Treasuries.

The Fed cannot rescue the world. This latest measure is merely a band-aid for the world’s financial problems. Other central banks and financial institutions will need to supply the “big bazooka” money printing effort for markets to enter any kind of sustained bullish phase.

via Gold price boosted by dollar swap news.