The Fed Is Deep In The Red
The Fed is operating deep in the red. As of Wednesday, the Fed’s operating loss was ($149.5) billion.
The Fed is supposed to remit its profits to Treasury. However, the Fed has run operating losses since September 2022 as it pays out more than it takes in. When the Fed records a loss, it records the loss as a deferred asset.
Don’t worry about the size of the operating loss the Fed will tell you. In the Fed’s own words: “A deferred asset has no implications for the Federal Reserve's conduct of monetary policy or its ability to meet its financial obligations.” How can this be true? The Fed will be required to print money to meet its obligations. This printing will further devalue the Dollar. The very act of printing is monetary policy. Nobody instructed the Fed to spend Trillions in taxpayer Dollars in response to COVID, yet we are all suffering the consequences of the Fed’s inflation-inducing monetary policy of mid-2020 through spring 2022 when it grew its balance sheet by more than $5 Trillion.
The Fed answers to Congress, yet Congress frankly does not know how to reel in the Fed. Congress members are either too lazy to take the time to understand the negative implications of loss-generating monetary and fiscal policy and/or they self-servingly benefit from the outrageous spending levels undertaken by Treasury and the Fed.
