President Trump: The NEW one and only politics thread

This will seem esoteric to a lot of people. But it is the kind of thing people should be thinking about, because it is a huge risk to all of us, in my opinion.

The Fed is technically insolvent. Should anybody care?

The Federal Reserve is insolvent on a mark to market basis. This has been apparent to anyone who was actually watching, since they got into the asset buying business with their quantitative easing. Its unrealized losses are very likely to just get bigger, as they intend to hold the bonds they bought to maturity, and yields will likely rise significantly from their suppressed levels in the future.

They don't report this, because they aren't required to do mark to market accounting the way any other bank would (and people would lose confidence in that bank if it had a similar balance sheet).

There are a million reasons why the Fed is unique, not like a garden-variety 1980s savings and loan (i.e. What if the interest they have to pay on deposits gets to be much greater than the near zero yields on the 30-year treasuries they loaded up on to keep yields suppressed?). The main reason is that they can paper over their scheme by creating endless monetary inflation -- essentially printing more money to pay off their debts with more and more worthless paper. And this is what they do. People aren't focused on the negative effects of that, which is one thing. But they certainly aren't focused on what the guy in the link is pointing out, which is essentially how tenuous they have made our banking system. It has always relied on blind confidence. With that massive balance sheet of bonds they overpaid for, they tested that confidence in ways they never have. This guy is pointing out that the emperor has no clothes. Whether everyone realizes that at some point is the unanswered question. That would not be a good thing for the country.