Fed is bankrupt, in the red, keeps spending.

JEAN-PIERRE: "It is their basic job…congress…It is their basic duty to lift the debt ceiling." pic.twitter.com/7yBoaigU1y

— Daily Caller (@DailyCaller) February 1, 2023

"We will not be doing any negotiation over the debt ceiling" — Karine Jean-Pierre pic.twitter.com/3Ik9vwG9I0

— Aaron Rupar (@atrupar) January 13, 2023

1) WH's Jean-Pierre on debt ceiling: We are talking about the full credit of the of this nation, which is why we believe that Congress should should not hold hold this up. It be done without conditions. There should be no negotiations.

— Chad Pergram (@ChadPergram) March 30, 2023

The Fed’s Capital Goes Negative

Recalling the famous line of Everett Dirksen — about how a billion here and a billion there starts to add up to real money — we are talking about serious losses.

By: Alex Pollack, NY Sun, March 31, 202316:00:27 pm

The Federal Reserve’s new report of its balance sheet shows that in the approximately six months ended March 29 it has racked up a remarkable $44 billion of cumulative operating losses. That exceeds its capital of $42 billion, so the capital of the Federal Reserve System has gone negative to the tune of $2 billion — just in time for April Fools’ Day.

This event would certainly have surprised generations of Fed chairmen, governors, and, we’d have thought, newspapermen. The Fed’s capital will keep getting more negative in April and for some long time to come, at least if interest rates stay at anything like their current level. The Fed in the first quarter of 2023 reported losses running at the rate of $8.7 billion a month.

On an annual basis that would be a loss of over $100 billion. Recalling the famous line of Everett Dirksen — about how a billion here and a billion there starts to add up to real money — we are talking about serious losses. These are cash, operating losses. The mark to market of the assets in Fed’s balance sheet also caused an unrealized loss of $1.1 trillion as of September 30.

To see the negative capital from the Fed’s weekly “H.4.1” report, one does have to do a bit of the simple arithmetic of the first paragraph. The Fed’s balance sheet claims its capital is $42 billion, but in violation of the most obvious accounting principle (from which it conveniently excepts itself), the Fed does not subtract its operating losses from its capital as negative retained earnings.

Instead, it accumulates the losses as an opaque negative liability, which balance is found in Section 6 of the report under the title “Earnings remittances due to the U.S. Treasury.” These are simply negative retained earnings: to get the right answer, you just subtract them from the stated capital.

Although the Fed itself and its defenders say that its negative capital and its losses don’t matter to a central bank, they do mean the Fed has become a fiscal drag on the American Treasury, a current cost to the taxpayers instead of a contributor of profits to it, as, just for the record, it was for more than a century.

The situation is certainly unbecoming for what is supposedly the world’s greatest central bank. Did the Fed intend to lose this much money and drive its capital negative? I think that the answer is no. Yet the Fed seems never to have explained to Congress how big a big money-loser and fiscal drag it would become.

The unprecedented $44 billion in operating losses so far, and their unavoidable continuation, are a feature of the post-1971 age of Nixonian fiat money, where the dollar is undefined in statute and unlinked from gold or silver specie.

This has allowed the Fed to have, in effect, made itself into the financial equivalent of giant 1980s savings and loan. Of the Fed’s $8.7 trillion in assets, there is a risk position of about $5 trillion of long-term fixed rate investments funded by floating rate deposits and borrowings.

Of these investments, $2.6 trillion are mortgage securities made out of 30-year fixed rate mortgages. The result is an extreme interest rate risk, which turned into big losses when interest rates rose. This interest rate risk is similar to that of Silicon Valley Bank.

Keep reading….

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Zeus

1 year ago

The Federal Reserve Bank was designed to rob us blind, use us as the muscle behind their global conquest by convincing us we were defending and spreading freedom, and then murder us in a war of survival against all of their opposition. The Federal Reserve bank is a hostile foreign bank.

When a nation has an overwhelmingly powerful military its enemies don’t dare pull a trigger. That is peace through strength. We’ve heard that all of our lives.

When The People assemble in overwhelming numbers, armed and willing to return fire with overwhelming lethal force, the tyrants won’t dare pull a trigger. The second Amendment comes to mind.

Unfortunately, they have gone so far that they will not go down without pulling a trigger. They already murder us by every means that we don’t recognize as murder. They have everything to lose by stopping now, and they have everything to gain by finishing what they started.

They want small opposition that can be crushed as an example to fear. They even set up that opposition for punishment when it was not even armed or aggressive. They are like transgender athletes. They like a rigged game and they gloat over their victories.

What they fear is American Revolution II. The Horse is actually much stronger than the Rider. That should mean something to a lot of people who would pray I go to hell just for cussing, and shame me for wanted a secure border, and shame me for my natural attraction to women, and so on. A horse is programmed to fear and obey the rider. We The People have been programmed to fear and obey. I don’t claim to be a Bible expert. I just decided to read one of the books in that book the way a child would read it. It makes more sense than the expert behind the pulpit ever did.

The entire government is not hostile, but enough of it is hostile to have their way. They have us convinced we are outnumbered and outgunned. We forgot who we are, and we forgot who they are. Once we control the government the rest of this diabolically designed system can be taken down, and we can restore our Republic and heal the damage done.

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Harry Grimes

1 year ago

All by design. The DemoNazi Party is destroying America.

In two years there will be nothing left but smoldering ruins.

10

Buzz

1 year ago

keep reading bad link goes to a different story!

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Grendel

1 year ago

It is the DUTY of Congress to live within a BALANCED BUDGET …. if We The People are expected to do so it IS THE DUTY of Congress to do so.

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