How will U.S. Treasury/Fed swap lines used to support oil states and others during the Iran war affect the value of my US dollars?
Example: Kuwait
- Lots of assets
- Lots of U.S. Treasuries
- Sudden cash squeeze because they have not been able to sell oil since the Strait of Hormuz was shutdown.
As I understand it:
- They tell the U.S. Treasury/Fed that they will need to sell Treasuries for USD liquidity
- The U.S. side fears that large Treasury sales will push long term interest rates higher. Instead, they offer to provide dollar liquidity against those Treasuries. Effectively, they print dollars repaying the coupon early to prevent rates from rising naturally.
This looks like money printing to suppress wartime funding pressure. Especially as the USA starts its ground invasion of Iran, this program is likely going to expand.
How will this ultimately affect the purchasing power of ordinary USD holders? When will people start to notice what this is saying about the U.S. central bank? How will this affect? For instance might stop the falling gold price?