So. Inflationary or deflationary? Before I'm attacked, recall that with the bailouts, the "real economy" remained largely agnostic (to some extent still do) to the monetizations because the banks didn't loan them into our economy.
They sat on it or scooped up bargain priced assets or now as we're learning, propped up other failing investments. OVERSEAS. The bonus money they threw around to their top execs was paltry by comparison it seems. But again, they still aren't lending much of anything into our economy. Small businesses can't get credit, people can't get mortguages and refis. Some folks are saying the "derived" (imagined, calculated) "M" indicators have been in contraction for some months now.
So what happens when they dump (or as we're learning, continue to dump) a pooload of USD into the EU? How long till we see this translate into higher commodity prices? And do presently higher prices at the supermarket reflect inflation or is the supply chain just reorganizing to reflect new market conditions?
This does seem to be a "dumping" because these swaps are backed by the non-performing (junk MBS crap) assets of the receiving institutions. THE ONES THAT WON'T LET THEIR MBS CRAP GET MARKED TO MARKET. However, as the EPJ article suggests, doesn't this imply that infusions might be offset to some extent by these implied losses? It seems these losses are inevitable because all of those assets eventually have to find BUYERS.
Never mind that a currency swap that needs backing is no swap at all, it's a business deal. Something tells me we'll end up on the hook for the balance of the deal gone wrong and the banksters will keep all the assets. Once again.
However the question remains if this is an inflationary event, how will the "new money" get spent into the "real economy"? My guess is that depends on that these foreign banks are going to do with the money. If we start hearing about shopping sprees is the Asian industrial sector or large volumes of gold starting to move we'll know.