US Federal Reserve makes $80.9bn profit

[EnglishLady]

Telegraph Jan 11

It seems that being the lender of last resort in a financial crisis has its benefits. The US Federal Reserve recorded $80.9bn (£52bn) profit last year thanks to the interest payments on the vast amount of US government and private debt it now owns

More than $75bn of the total, which it hands over to the Treasury, came from income generated by its holdings of Treasury bonds, mortgage-backed securities and debt issued by Fannie Mae and Freddie Mac.

The 65pc jump in profits compared with 2009 comes as the Fed's quantitative easing (QE) programme has pushed the size of its balance sheet to almost $2.5 trillion. After the first round of QE in March of last year, the Fed embarked on controversial second round in November designed to boost the US economy's stuttering recovery. Critics say QE is the wrong policy to try to cut unemployment with, and it risks sparking inflation as more money chases investments.

Experts cautioned that while the Fed's vast holding of debt has so far generated the gains for US taxpayers, the risk remains that the assets could lose their value.

Ben Bernanke, Fed chairman acknowledged the risks when testifying to the Senate last week. "Should short-term interest rates rise, which of course could happen if the economy recovers and we need to normalise monetary policy, then those remittances could do down."

 

[layoutshooter]

Yep, Bush, Barry and Co. took that money right out of the pockets of the American people and gave to their buddies in the Federal Reserve. The gunkies!!

 

[greg334]

This has been going on for a long long time, since Congress remove the fed out of their control - maybe 60 years?

However, I am trying to figure out how do you make a profit by owning the exact debt that you issued the treasury for in the first place?

You pay yourself interest?

 

[chefdennis]

Greg wrote:

However, I am trying to figure out how do you make a profit by owning the exact debt that you issued the treasury for in the first place?

You pay yourself interest?

Sure they pay themselves interest...on paper....but there is no real money moving anywhere...its all a scam and nothing more..an illousion to make the people believe that they know what they are doing when the fact is the country is broke and without foreign money and a raise in the debt ceiling so they can continue to borrow, there is no more money to play with...well other then what the Fed prints and it is slowly becoming worthless and without the loans from the foreign nations and the IMF we are economiclly nothing more then a 3rd world country running on empty......

 

[greg334]

Then this also backs Ron Paul's demand that we audit the fed. I think it is a great idea to return the fed back under congressional control, remove the autonomy of their board and to move back to a better monetary system.

 

[chefdennis]

Greg wrote:

Then this also backs Ron Paul's demand that we audit the fed. I think it is a great idea to return the fed back under congressional control, remove the autonomy of their board and to move back to a better monetary system

Exactly...and the Fed is scared to death that now the Paul as been appointed to head up the House Financial Committee, that he just might get that done....one can only hope...