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URL:  https://boards.fool.com/fed-piles-up-66-billion-in-paper-losses-34082770.aspx

Subject:  Fed Piles Up $66 Billion in Paper Losses Date:  12/12/2018  12:08 PM
Author:  Thomfranklin Number:  549014 of 571739

https://www.bloomberg.com/news/articles/2018-12-12/fed-piles...


“A central bank with a negative net worth matters not in theory,’’ former Fed Governor Kevin Warsh said in an email. “But in practice, it runs the risk of chipping away at Fed credibility, its most powerful asset.’’

The unrealized losses also provide fuel to critics of the Fed’s huge bond buying programs -- commonly known as quantitative easing -- and the monetary operating framework underpinning them, just as central bankers begin discussing the future of its balance sheet. The ostensible red ink also could make it politically more difficult for the Fed to resume QE if the economy turns down.

“We’re seeing the downside risk of unconventional monetary policy,’’ said Andy Barr, the outgoing chairman of the monetary policy and trade subcommittee of the House Financial Services panel. “The burden should be on them to tell us why this does not compromise their credibility and why the public and Congress should not be concerned about their solvency.’’
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