(DailyDig.com) – According to data published on September 14 by the Federal Reserve, the institution’s total cash operational losses have surpassed $100 billion. If interest rates stay the same, they will continue to accumulate around $2.5 billion each week.
A little below $8 billion is invested by the Fed in securities backed by mortgages and Treasury securities, yielding an average annual rate of 2%. It has purchased these assets using over $5 trillion in borrowing from money market funds and banks, as well as $2.3 trillion in physical currency and more than $500 billion in interest-free deposits.
By the close of the 2023 fiscal year on September 30, the Fed will have spent almost $110 billion on cash expenditures, above $100 billion on net interest costs, and around $9 billion on operational expenditures. The mystery underlying the Fed’s ability to generate money has caused many to downplay the significance of recent losses, even if they total $110 billion.
Neither the Fed’s losses nor the borrowings are reflected in the U.S. debt to the Treasury figures. However, they are still expenditures of the federal government, and Federal Reserve borrowings are in the same category as U.S. government debt.
The Federal Reserve has contributed to the U.S. government with operational earnings throughout the majority of its existence. The federal government’s spending and interest costs were cut by the Fed’s transfers. No one probably ever thought that the system was going to lose money, much less over $100 billion in one year; therefore, the losses from its operations are not recognized evenly in the federal government’s accounting procedures.
Since the Fed’s losses and accompanying liabilities are not officially recognized in the federal debt figures and budget, the Fed is now operating in secret while losing a fortune and obligating taxpayers to pay back billions in new debt incurred by the Fed.
It’s unlikely that an educated public discussion will take place until the losses of the Feds are made more transparent in relation to the national debt, statistics, and budget.
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