Is the Federal Reserve ready to tap out to Treasury? MASSIVE balance sheet losses ahead
10/16/22 - 2 min read
Is the Federal Reserve about to "tap out" to the Treasury because of the losses they are about to accrue on their $9T balance sheet? REMEMBER, the Fed is PRIVATE, owned by the biggest banks. Recall, the banks co-signed and blessed the changed to their own rules in 2010 with the Dodd-Frank bill, which clearly allows bail-ins to rescue banks and shunned bailouts.
Fast forward to today, the Fed is now LOSING MONEY with current rates (they started losing money in September). They are required to submit profits to the Treasury, but no one thinks about the losses as much.
Dollar strength coupled with rising rates diminishes the odds of dollars coming back into the US as international borrowers who borrowed in dollars to receive their local currency will find themselves today illiquid, and unable to pay that debt back.
To keep a Ponzi scheme going, one must continually increase the supply of currency in the system by creating new debt. But who is taking debt on at these very high interest rates and economic backdrop? The fact is, far less people, except for the desperate and unobservant. So will the Fed eventually need Treasury to "bail-in" the Fed to get through the technical hurdle of decommissioning and dismantling the Fed, forever? Quite possibly.
The legislative process would have been the ideal scenario, but clearly that is impossible at this stage. In retrospect many know the gig is up, but much like a chess player, they have to play the rest of the game out! I think they knew they lost in March 2020, yet they've been playing it out since.
https://youtu.be/710Wo5YNEbY
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