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12/23/22 – The Fed lost $1,731,000,000 last week.
From 9/14/22 to 12/21/22, the Fed lost $1,731,000,000. This marks the 14th consecutive week of Fed losses. The average loss during this time has exceeded a billion dollars per week. Cumulative losses are now in excess of $16 billion.
12/15/22 – The Fed lost $1,139,000,000 last week.
This marks the 13th consecutive week of Fed losses from 9/14/22 to 12/14/22. The average loss per week during this timeframe was in excess of a billion dollars. Our 12/2/22 update (below) has details from this story earlier. How Much Can The Fed Tighten?, explores some of the potential ramifications of the Fed losing money and discusses what this may mean for monetary policy.
12/9/22 – Banking Industry Equity and Assets Now Declining
The banking industry’s total equity and total assets have both begun to decline over the past year. Will the economy continue to grow while the banking sector shrinks? It seems unlikely.
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12/2/22 – Fed Losses Identified
In How Much Can The Fed Tighten?, we stated that the Fed could only raise interest rates so much without sustaining losses. Additionally, we stated that we suspected that the Fed had already begun losing money on a net interest margin basis. Here we are providing data that shows that the Federal Reserve is indeed losing money.
Beginning in September, the accrued earnings due to the U.S. Treasury plunged negative, indicating that the Federal Reserve began losing money. Losses since that time have grown on a month by month basis. September’s loss was just over $3 billion, October exceeded $4 billion, and November rose above $6 billion. As warned about in the article How Much Can The Fed Tighten?, this constrains how much the Fed can tighten.
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