Reuters/Howard Schneider/5-27-2022
USAGOLD note: We are not certain what impact, if any, the situation summarized in the headline will have on Fed operations or the solvency of the Fed itself. The article does advise that if it chooses to actually liquidate Treasuries or mortgage-backed securities, the “unrealized losses would have to be booked as a tangible hit.” We have not seen a great deal of discussion on this arcane aspect of Fed operations, and one wonders if it even matters if the Fed runs at a profit. This article does not follow up on or reach any conclusions on the “tangible hit” observation, but perhaps it should have. I would think that a good many would like to know to what extent Fed monetary policy operations could be hemmed in due to a shrinking bottom line.
