While we all lose money, the Fed makes money?

This from the Economist:

“Last year the central bank reported a whopping $43 billion in operating income. That was more or less the same level as in 2007, but meanwhile short-term interest rates had plummeted, ending the year near zero. That should have clobbered Fed income, as rate cuts did in the early days of the last recovery in 2002-04 (see chart).

But it did not, for two reasons. First, to shore up financial markets the Fed has pumped up its balance-sheet—its total assets were $2.2 trillion on December 31st, more than double their level of a year earlier. Second, it has been trading in low-risk, low-return Treasury debt and buying higher-yielding private debt—discount loans to banks, commercial paper, and mortgage-backed securities, for example.”

Are you kidding me? Not only the Fed can debase our currency, print as much money as it wants, cause booms and busts at will, but they also make money on the recession. Tell me if this makes any sense! Oh wait, they can print as much money as they want, so how can they ever lose money?

~Marxsevelt

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Published in: on June 2, 2009 at 12:38 pm  Leave a Comment  
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