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Can the Fed Go Bankrupt?
- Thread starter balda
- Start date
The guy's a perma-bear who has been crying for the fall of western civilization for the past 8 years and all of the market's bull run.
Central Banks can't go bankrupt.
They can print all the money they want.
They don't even need paper or presses, which could be rate limiting factors.
Most money is printed electronically.
Historically, most defaults in the world have been actually caused by political government revenge on banks (often leftist governments targeting rightist opposition).
Central banks publish profit figures that are invariably well below the amounts implied by calculations of their seigniorage revenue. Most of the difference is due to the impairment of central bank balance sheets by the acquisition of substandard assets and of liabilities not matched by assets of equal value. In the limit, a central bank can go bust when it has acquired liabilities of greater market value than the present value of its seigniorage revenue calculated for any steady-state inflation rate. An insolvent central bank can continue to service its liabilities only through accelerating inflation. Copyright 1992 by Blackwell Publishers Ltd and The Victoria University of Manchester
http://ideas.repec.org/a/bla/manch2/v60y1992i0p85-98.html
http://ideas.repec.org/a/bla/manch2/v60y1992i0p85-98.html
Can a printing press go bankrupt?
Now theres a question.
No, it cannot.
It just prints more money.
A better question to ask: can the United States go bankrupt?
The answer to that is - yes.
Now theres a question.
No, it cannot.
It just prints more money.
A better question to ask: can the United States go bankrupt?
The answer to that is - yes.