It’s not clear just how much longer they can keep this up and continue to kick the can down the road.
The Fed used to be profitable and send billions of $$$ per year to the US Treasury to help pay for the budget. Because of reverse repos and interest on reserves, now the Fed pays commercial bank $700 million PER DAY to keep the system from falling apart. It will be a long time before the Fed is profitable again, if ever. Quote E.J. Antoni, Ph.D.
Before you gray over thinking this is beyond you, this scheme, the Heritage Foundation does a nice piece for us average Joe and Bettys on what these graphs really mean to you an me. Why we should care. The ultimate Ponzi scheme, and it is worth the time.
Remittances due to the Treasury.
Between reverse repurchase agreement operations (to maintain interest rate floor) and interest on reserve policy, Fed is shelling out $700 million DAILY interest in effort to keep $4.7 trillion sterilized – they’ve wrecked the whole system..
Daily Interest payments, millions of dollars.
Interesting chart showing the FED paying all this money (in reverse repos) to the banks. The chart shows the losses at the Fed Reserve. The same FED who prints money like crazy are “losing money” to keep the system going…makes sense?
Heritage picks up the story:
Today, however, the Fed is deeply in the red, largely because it’s funneling $800 million to Wall Street daily.
In short, the Fed has created a no-win situation for the American people while ensuring that the politicians and special interests still get paid.
….
Shortly after President Biden took office, the Fed faced a problem: It sought to create trillions of dollars for the government to spend, but it also wanted to minimize the inflationary impact of all that money printing—two diametrically opposed goals. The Fed decided to square the circle using reverse repurchase agreements, called “reverse repos.”
A reverse repo is basically a short-term loan to the Fed. But why would the Fed need a loan when it can create money at will? The Fed doesn’t need a loan—it needs to temporarily soak up excess liquidity, which effectively reduces the amount of money in circulation.
As the Fed created trillions of dollars for the government to spend, those dollars worked their way through the banking system and multiplied, a phenomenon that occurs courtesy of fractional reserve banking. For every dollar the Fed created, the banking system created several more, and that tsunami of liquidity gave us 40-year-high inflation.
But unlike Mr. Bernanke’s interest-on-reserves policy, Mr. Powell’s reverse-repo operations are available to financial interests beyond just big banks. Hedge funds, government-sponsored entities and others can park their cash at the Fed for a risk-free rate of return.
And what a return it is—the Fed is paying $800 million daily in interest on $6 trillion between bank reserves and reverse repos. Amazingly, in the name of fighting inflation, the Fed is now creating almost $300 billion via these interest payments. And those payments are going to large money interests, not the American people.
…..
Instead, Americans are footing the bill. Under normal operations, the Fed actually makes a relatively small profit, which it turns over to the Treasury, payments known as remittances. Today, however, the Fed is deeply in the red, largely because it’s funneling $800 million to Wall Street daily. Despite selling hundreds of billions of dollars in securities, the Fed has accrued a $70 billion loss since August 2022.
Read the whole thing… well worth it.
Looking back at Bunks Box of Gold, this nonsense started under Obama. Who else?
Is the Fed’s Debt-Buying Unconstitutional?
The very best of the swamp.
BUNKERVILLE | God, Guns and Guts Comrades! 