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However, there are activities which the Fed undertakes that in many ways forces the FedGov to cover the losses via Treasury obligations.

The Fed causes losses?

TARP is a perfect example.

You mean money the Treasury is spending?

Likewise, with Bernanke & Co accepting $trillions in agency debt & MBS (previously a big no-no), he is committing the Fed to greater risk than that of the individual member banks that used them as collateral to access funds.

You think the Fed is going to lose money on those loans?

Who here doesn't believe that We The People are not going to be asked to cover the losses in these bonds when they inevitably occur

The Fed accepted them as collateral, at a discount and is charging interest. You think the Fed will lose money?

If there are losses, how do you imagine taxpayers are on the hook?

So, of course you are correct that the Fed doesn't technically have anything to do with increasing our national debt.

I've been saying.

But they are an indirect party with limited oversight that is able to threaten us to cover (that is, issue debt) the results of their bad decisions.

So how much of the bubble is Congress' fault? How much is the Fed's?

The Fed has transrferred private default and inflation risk to the public by accepting collateral from banks that cannot be transferred back without instantly causing insolvency of the largest banks. Citi, for example, owes a trillion or so to depositors and has essentially no money to pay them except for what the Fed has given them in exchange for Citi's illiquid assets. Likewise F&F have no money to lend to homeowners other than what the Fed has given them in exchange for an extremely poor bond portfolio.

If you believe so strongly in what the Fed is doing, you should be buying Citibank bonds yourself and/or loaning money to average American homebuyers at 5%, locking your money for 10 to 30 years betting that there will be no inflation and the big banks and American real estate represent no credit risk. But undoubtedly you are not, you are speculating on a new inflationary boom like everyone else in the market.

The Fed accepted them as collateral, at a discount and is charging interest. You think the Fed will lose money?

Yes. I think we will discover that the Fed has lent in excess of the true market value of the underlying collateral. If the magnitude of the mispricing is to the extent that many believe, Congress will be faced with allowing an insolvent Fed to fail, or having US taxpayers once again socialize a private enterprise's losses.

So how much of the bubble is Congress' fault? How much is the Fed's?

I don't know, nor is it especially relevant. If it were so, what would be your point? That we the people have the ability to control the Fed, and the fact that we didn't means we are wholly to blame? The Fed was given a fairly narrow charter, yet it has proven to enable a body of private citizens to effectively run our economy.

Perhaps if our representatives were more versed in economics it wouldn't be so, but unfortunately, we are at the mercy of their understanding (or honesty). The Fed & their allies take full advantage of this IQ arbitrage to their own benefit.