Federal Reserve Profits and Losses \ stacker news ~charts

539 sats \ 8 comments \ @kr 26 Mar charts

175 sats \ 7 replies \ @Undisciplined 26 Mar

What's the consequence of those losses?

Is that just another representation of the shrinking money supply?

Does the money supply shrink? To me it would just mean they are paying out more in interest on assets banks park at the Fed than they are earning on the treasuries they own. Just seems like a transfer of money from fed to banks but maybe I am missing something.

50 sats \ 3 replies \ @Undisciplined 26 Mar

How are they sustaining those losses?

21 sats \ 2 replies \ @grayruby 26 Mar

Not sure how the accounting or plumbing of it all works. I have heard Lyn Alden talk about it before but honestly it was many months ago so I wouldn't even know where to point you to get the answer.

100 sats \ 1 reply \ @Undisciplined 26 Mar

I know it's all a big accounting scam, but they usually try to pretend like the assets and liabilities make sense.

I remember seeing this article back in January from AEI: https://www.aei.org/wp-content/uploads/2024/02/Fed-losses-and-monetary-policy-Jan-31_2024-WP.pdf?x91208

The Fed System and the majority of Reserve Banks are technically insolvent on a GAAP basis. Fed officials claim that the Fed’s losses and negative GAAP capital do not compromise its ability to conduct monetary policy because the Fed can create money to cover its losses, however large the losses may become.

So, I guess they're taking these enormous losses now, while the money supply shrinks and later they'll create a ton of money to cover their losses.

21 sats \ 0 replies \ @grayruby 26 Mar

Sounds about right.

21 sats \ 1 reply \ @kr OP 26 Mar

good question, hope some of the econ wizards on here can give you a good answer

21 sats \ 0 replies \ @kr OP 26 Mar

more context: https://www.bloomberg.com/news/articles/2024-03-26/fed-s-operating-losses-swelled-to-record-114-3-billion-in-2023