The Federal Reserve and its monetary policymaking counterparts worldwide have recorded enormous losses as they raised interest rates to combat inflation. Despite the sizable hemorrhaging showing up on the books, central bank chiefs do not believe it will alter how they conduct monetary policy.
The U.S. central bank is funded from the interest earned on its securities holdings, purchased from its open market operations to influence interest rates in the debt market.
Excess earnings are transferred to the Treasury Department, known as remittances. Between January 2011 and September 2022, the Fed sent Washington approximately $1 trillion in cumulative remittances. This helped the federal government pay some of its bills and plug a small portion of the gaping budget deficit.
For 19 months, the Fed has […]
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