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To: Red Badger; cgbg; logi_cal869

So how exactly does the fed lose or make money?

What exactly are the transactions that the fed is involved in that cause it to make or lose money? What’s all the fuss about?

In this case, the fed bought a bunch of bonds when they were yielding a much lower dividend rate, like 2%. They still hold trillions of them.

Their asset is what these bonds are worth at today’s interest rates which are closer to 5%. Because the value of a bond is inverse of the dividend rate, that means that those bonds are worth less today than when they bought them with money they printed.

So all this “loss” is a “pretend bookkeeping” entry, because assets for the fed are always whatever it needs.

For a real bank this would be a real problem. It’s exactly what happened to the Silicon Valley Bank. They had “invested” in a lot long term bonds paying very low rate, so with the the rates shooting up, their balance sheet took a nosedive, which caused a bank run which they couldn’t cover because the value of their bonds had shrunk so much.

But there ain’t going to be any run on the fed. The only depositors there are commercial banks and they know their deposits are covered by the printing press. So no run on the fed.

We can sleep well tonight.


18 posted on 01/13/2024 10:00:28 AM PST by aquila48 (Do not let them make you "care" ! Guilting you is how they control you. )
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To: aquila48

19 posted on 01/13/2024 10:04:46 AM PST by Red Badger (Homeless veterans camp in the streets while illegal aliens are put up in hotels.....................)
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To: aquila48
So how exactly does the fed lose or make money?

I'm not even going to try to address your moronic commentary opening after a totally asinine question.

Even John Maynard Keynes would recoil at your assertions.

Educate yourself (or don't; I could GAS in the face of what you're shoveling):

https://www.youtube.com/watch?v=ndmmO07ckAU

20 posted on 01/13/2024 11:22:12 AM PST by logi_cal869 (-cynicus the "concern troll" a/o 10/03/2018 /!i!! &@$%&*(@ -)
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