Re: Fed Risks Losses from Bonds
Dear Ms. Mcgrane and Mr. Hilsenrath,
With all due respect, you really don’t understand that the current so-called Fed profit from bonds is just funny money anyway. The Fed buys a government bond and places it in its portfolio. The interest that it gets is well in excess of its rather modest operating expenses, so it sends the so-called profits back to the Treasury. But where did the Treasury get the money to pay the interest? From the Fed itself through monetizing even more government debt! So the Fed creates the money out of thin air that it calls profits and remits to the Treasury. Nice work, if you can get it, I suppose….
Patrick Barron
