Postcards: Is the Federal Reserve Broke?
The numbers look pretty bad when it comes to debt... but then again... so does everything. What you missed, what I’m watching, and what’s investable now.
Dear Old Friend,
The Federal Reserve has all the money in the world. It can magically press buttons to create currency (Ben Bernanke said so on 60 Minutes). It can pump unlimited capital into the economy during a pandemic (Neel Kashkari said so on 60 Minutes). It is the most important central bank on global monetary policy right now… driving up interest rates to cull inflation while pummeling the valuations of other global currencies.
Most importantly… the central bank of the U.S. is bankrupt.
The Fed has a balance sheet worth trillions… and as the buyer of last resort, its bonds have produced massive unrealized losses – much like the regional and community banks that held long-duration bonds on their balance sheets. The chart:
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