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21 sats \ 2 replies \ @grayruby 26 Mar \ parent \ on: Federal Reserve Profits and Losses charts_and_numbers
Not sure how the accounting or plumbing of it all works. I have heard Lyn Alden talk about it before but honestly it was many months ago so I wouldn't even know where to point you to get the answer.
I know it's all a big accounting scam, but they usually try to pretend like the assets and liabilities make sense.
I remember seeing this article back in January from AEI: https://www.aei.org/wp-content/uploads/2024/02/Fed-losses-and-monetary-policy-Jan-31_2024-WP.pdf?x91208
The Fed System and the majority of Reserve Banks are technically insolvent on a GAAP basis. Fed officials claim that the Fed’s losses and negative GAAP capital do not compromise its ability to conduct monetary policy because the Fed can create money to cover its losses, however large the losses may become.
So, I guess they're taking these enormous losses now, while the money supply shrinks and later they'll create a ton of money to cover their losses.