Yes, I know how the Federal Reserve works. I used to work for the OCC and I’ve been reading Federal Reserve reports carefully for over 2 decades. Yes they can print USD anytime. If they print $10T then it means they have $10T of assets to go buy up assets and $10T of liabilities to the money markets. At any point in time (just like with any organization) there could be a “bank run” where their creditors (like people who have Federal Reserve Notes or balances in checking/savings) will dump dollars for something else & then while the market value of these assets will keep ratios that are relatively the same the dollars will lose tremendous value. We call that hyperinflation.
What my concern is on how they value their assets in their weekly reports as it’s an obfuscating dishonest tactic. Like me, you, and most people/organizations they should be marking their assets to Fair Market Value or some reasonable approximation of this.
Well, they aren’t the first organization to fail to mark their assets to Fair Market Value. That’s what Enron did, they became insolvent, and then they blew up. That’s what Lehman did, they became insolvent, and then they blew up. That’s what Bernie Madoff did with same result. And it looks like FTX did that too.
The difference for a central bank like the Federal Reserve is that instead of blowing up it’ll be the currency that blows up. Then the day will come when people will have to spend a full wheelbarrow of $100 bills just to buy a loaf of bread. But that’ll be just one day because the next day they’ll need 2-3 wheelbarrows of $100 bills for an even smaller loaf of bread.
What Key Lay (Enron), Dick Fuld (Lehman), Bernie Madoff, and the rest should’ve done was started being honest a lot sooner.
I have no problem whatsover with people/organizations holding on to assets to maturity. What I have a problem with is when they deceive people on the truth on what the true fair market value of those assets happens to be and do it at the level where people might erroneously conclude that they are solvent but in reality they are insolvent.
And I have a yes/no question for you & I’m going to ignore you going forward if you don’t straightforwardly answer this & provide a straightforward explanation in case the answer is YES.
Do you believe that the Federal Reserve is Solvent if their Assets are all valued at Fair Market Value?
You say a lot that is irrelevant and it’s obvious you don’t know what you are talking about. The Fed res creates US dollars. It is not a bank. It cannot be insolvent unless it chooses to do so. There is zero alternative to the US dollar. Despite a 50% increase in m2 directly caused by the Fed, the dollar is up massive against nearly everything on the planet. They did print $4 trillion in 2020 and a similar amount from 2008-2012. Have a good night and continue to call for the end of the USD when it’s had it’s best year in decades