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The Fed is losing money, for the first time ever, by paying out 4.8% on $2T of deposits. https://www.wsj.com/articles/for-the-first-time-the-fed-is-losing-mone

• JumpCrisscross 4y ago
  > Fed is losing money, for the first time ever, by paying out 4.8% on $2T of deposits That article has errors, e.g. “the Federal Reserve was designed to make money for the government from its monopoly on issuing currency.” And that’s not what they’re saying. When rates rise bond prices go down. The Fed made rates rise while holding lots of bonds. Their value went down. This was expected, unavoidable and inconsequential; it is what the authors are complaining about. The interest the Fed pays on reserves is a policy choice to keep those reserves at the Fed and out of the economy. The Fed could turn it off at any time.
  • bagacrap 4y ago
    The Fed literally can't turn it off because they have a mandate to fight inflation.
• zie 4y ago
  It doesn't matter. The Fed can choose to make or lose money at their whim. They are wholly unconcerned about losing money right now. They are much more concerned with Inflation, and it's obvious, because that's been a broken record for over a year now: WE WILL RAISE RATES UNTIL INFLATION IS UNDER CONTROL. Oh Look, they just raised rates again, even after SVB and friends crashed and burned. They are totally serious. If Banks still haven't gotten the memo, there is no hope for them, and the equity shareholders deserve to get wiped to zero, it won't affect US mere mortals, provided we keep under our FDIC limit.