The Fed is getting destroyed...massive bond losses
- Thread starter Maverick74
- Start date
An organization that can modify its capital base by adding a zero or two to an Excel file cannot be destroyed by mark to market bond losses.
This is more fight the Fed bullshit.
The Fed is going to ride all their bonds to maturity. I mean seriously, who would they sell to? lol
This is more fight the Fed bullshit.
The Fed is going to ride all their bonds to maturity. I mean seriously, who would they sell to? lol
Quote from nazzdack:
2) ?... The Fed's cost basis on all of its positions is "zero"?
Exactly!
the fed is a joke and i think the stock and the bond market is really sticking it to them. they made the top 2% richer than before, 80% are worse off since last bubble, and companies know hiring is foolish when everybody is cost cutting earnings profitability. i feel one day you will see rioting like you do in Europe or South America in USA. i think the fed means well but they are economist who think the financial sector wants the best for the USA and can't understand they only want to make money.
what rioting in europe and sa are you talking about?
where is the rioting in greece or in sa?
" i think the fed means well but they are economist who think the financial sector wants the best for the USA and can't understand they only want to make money. "
what is business in business for?
are you a European socialist?
my tv had a lot of unhappy Brazilians going nuts about bus hikes a few weeks ago.
isn't socialism when government involves itself in the financial markets and economy? isn't my statement totally opposite? that's like a crackhead smoking up than saying to his therapist no you have a drug problem when being asked questions.
isn't socialism when government involves itself in the financial markets and economy? isn't my statement totally opposite? that's like a crackhead smoking up than saying to his therapist no you have a drug problem when being asked questions.
Of course it can which is the precise reason the SNB is traded on a stock exchange and reports gains or losses on its balance sheet. Most every central bank is held accountable by political leadership which means a cb cannot endlessly buy up an asset until it bought up all the supply there is and until there cannot exist a seller anymore. As soon as a cb is getting close to that the charade will be one very visible and trust is completely lost in,ironically, the seller/issuer of such asset, not the cb. It would equate to the seller printing money out of thin air leading to a complete devaluation not just of the currency paid for such asset but of the whole structural system around it. By the way the Fed is light years away from becoming the sole owner of treasury securities.
But all that does not keep a central bank away from losing money at precisely the point where a cb holds interest rate sensitive securities and pressure to fight expected inflation picks up then a cb will have to realize a loss on the book because at some point they will need to sell back those asset holdings. Of course they could wait until maturity and lie to themselves and the rest of the world that the 100 they get back buys the same toy it bought 30 years ago.
But all that does not keep a central bank away from losing money at precisely the point where a cb holds interest rate sensitive securities and pressure to fight expected inflation picks up then a cb will have to realize a loss on the book because at some point they will need to sell back those asset holdings. Of course they could wait until maturity and lie to themselves and the rest of the world that the 100 they get back buys the same toy it bought 30 years ago.
+1... as a matter of fact, Ben Bernanke recently testified to that effect before congress... In the end, the fed will simply hold the bonds until maturity while simultaneously printing money...
Don't worry about the devaluation of the U.S. currency, as there's a universal collusion to print money among the world powers... This is necessary to keep the efficacy of the global market (import/export trades & the viability of each respective nation's economy participating in this ruse)... This is the consummate Insider Trading!!!
Walt
We are not talking a destruction of the Fed but certainly can the Fed asset holdings suffer losses, either now directly or at maturity through inflation. Either way. High inflation is a real cost to any economy and there is no way inflation will not significantly pick up when a central bank keeps on printing money on such dimension.
Central banks in fact book fx gains and losses almost daily through FX trading operations. Prime Brokerage's largest customers are often central banks at least on the currency side of things.
Central banks in fact book fx gains and losses almost daily through FX trading operations. Prime Brokerage's largest customers are often central banks at least on the currency side of things.
doh doh doh...
the tea-party anti-fed-money-printer group misses the point.
The Fed prints because that is by design. Banks don't multiply money (in a significant manner) anymore. They merely intermediary base money.
Base money is the new M3.
And every century banker (worth his salt) knows that.
With interest on reserves in place, combined with what will likely be a continued balance sheet recession / debt deflation cycle for the next decade, there is no risk to all of this fiscal-stimulus-free money printing.
Put the new money in peoples' hands (instead of bank excess reserves) and then it becomes a risk.
the tea-party anti-fed-money-printer group misses the point.
The Fed prints because that is by design. Banks don't multiply money (in a significant manner) anymore. They merely intermediary base money.
Base money is the new M3.
And every century banker (worth his salt) knows that.
With interest on reserves in place, combined with what will likely be a continued balance sheet recession / debt deflation cycle for the next decade, there is no risk to all of this fiscal-stimulus-free money printing.
Put the new money in peoples' hands (instead of bank excess reserves) and then it becomes a risk.