No. of Recommendations: 2
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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No. of Recommendations: 1
iirc, the paper loss is due to marking their bond portfolio to market, rather than actually selling bonds and realizing losses. I'm sure the "leaders and statesmen" will resolve this problem by no longer requiring the Fed to mark to market. Of course, the TBTF will be granted the same "right".

Steve
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No. of Recommendations: 3
“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.’’


After enacting legislation that is exacerbating huge and rising fiscal deficits, I wonder what grounds does Congress have a right to complain about the solvency of the Fed?
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After enacting legislation that is exacerbating huge and rising fiscal deficits, I wonder what grounds does Congress have a right to complain about the solvency of the Fed?

The same grounds that are cited for passing huge tax cuts, then declaring the only way to address the resulting deficit is to cut Social Security and Medicare.

Steve
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