Bailing out The Federal Reserve and the US Government (millionaires, rating, economy)

[lifelongMOgal]

Are the cash options in 401Ks and pensions being forced into the purchase of government debt? Is The FED trying to force regulations via the SEC (Securities & Exchange Commision) for investors to bail them out with their money market accounts?

Power Grab By Fed Over Money Market Funds Could Lead To More Money Flowing To Gov't - Investors.com

These proposed new rules represent a self-initiated bailout for the Federal Reserve System itself, designed to protect the Fed from the consequences of its own mistakes over the past four years. Because the Fed owns so many long-term bonds at such low yields, any significant rise in market interest rates would result in a large drop in the value of Fed assets, driving the Fed into insolvency.

Understanding the prospects of its own insolvency, the Fed has decided to force money that is typically lent to other borrowers to be lent to the U.S. government.

[gwynedd1]

Originally Posted by lifelongMOgal

Are the cash options in 401Ks and pensions being forced into the purchase of government debt? Is The FED trying to force regulations via the SEC (Securities & Exchange Commision) for investors to bail them out with their money market accounts?

Power Grab By Fed Over Money Market Funds Could Lead To More Money Flowing To Gov't - Investors.com

You do understand that its a debate about what to do with a #2 pencil


"Creative Accounting" Makes Fed Insolvency Impossible | ZeroHedge

So even though I have said all along to deaf ears that Fed debt that draws interest is recycled to the treasury, I'll say it again.

Fed required to remit profits to Treasury (not build capital)
Since 1947, the Board of Governors has required that the Reserve Banks remit nearly all net earnings to Treasury. Remittances are roughly equal to income from loans and securities holdings less operating expenses, interest paid on depository institutions’ reserve balances, dividends paid to member banks, and any amount necessary to top up the Fed’s capital. Fed remittances have surged since late 2008, reflecting its aggressive balance sheet expansion in the context of nearzero term interest rates (Chart 1). The Fed could potentially incur losses, however, if short term rates rose such that the interest paid on bank reserves exceeded the interest income of the System Open Market Account, or SOMA portfolio. Similarly, the Fed could face capital losses if it were to sell securities below their original purchase price (Chart 2). Note that the SOMA portfolio is not marked to market, but is reported on a par-value basis each week, so higher yields would only impact Fed earnings in the context of asset sales.

That is why the national debt is in many ways a fiction.



All it means is da guberment took junk assets and all the loses of Wall Street. So now it will be sending no money to the Treasury.



In short ,tax payers handed millionaires, who make no product, a big wad of money. Now we are just going to fill in a number in a box.




When it comes to comparing microeconomics and macroeconomics, stop it. Microeconomics concentrates on accumulating debt instruments against the rest of the economy. The more the rest of the economy owes you for a product, the better. At a macro economic level, debts and assets = 0. Its a completely absurd comparison.

[DRob4JC]

Originally Posted by lifelongMOgal

Are the cash options in 401Ks and pensions being forced into the purchase of government debt? Is The FED trying to force regulations via the SEC (Securities & Exchange Commision) for investors to bail them out with their money market accounts?

Power Grab By Fed Over Money Market Funds Could Lead To More Money Flowing To Gov't - Investors.com

I am planning for my money to be out of the 401K system in short time. No one can be trusted right now.

[gwynedd1]

Originally Posted by DRob4JC

I am planning for my money to be out of the 401K system in short time. No one can be trusted right now.

What's the difference? What did anyone expect the LLR(Lender of Last Resort) to do? Go bankrupt? When the Fed only held sovereign debt it can never be insolvent because taxing power always makes the asset good. All they had to do is vote a law to have da guberment own the houses with money provided by the Fed holding treasuries instead of the MBS. Thus the FED is solvent. However then the US guberment would just take the loss directly. Now it just makes a Fed accounting loop. This is just the last few bounces on the bottom of the stairs. It was a fait accompli when the FED bought the junk .

Don't worry about the performing loans; the banks stepped in to help collect that money for us.