The finances of the FED plunge into a deep abyss!

In the arena of finance, a radical change is occurring with devastating force. Once unshakable, the U.S. Federal Reserve now finds itself on the brink of an economic abyss. This prestigious institution, the guardian of monetary stability, is caught in an unprecedented financial storm. Thus, a new era of major financial turbulence is on the horizon.

A Financial Deficit of Staggering Proportions  

The most seasoned analysts are shocked by the finances of the Fed. With staggering financial losses of $114.3 billion in 2023, the Federal Reserve is entering a realm of extreme financial turbulence. Moreover, this record deficit in the finances of the central bank shatters all previous historical records. In addition, this astronomical figure eclipses the net profit of $58.8 billion recorded a year earlier. Furthermore, this unprecedented financial abyss raises intense questions about the financial solidity of the American system.

Although officials are trying to allay fears, it is undeniable that this financial hemorrhage is of extreme severity for public finances. However, they insist that these recurring losses do not jeopardize routine financial operations. Nevertheless, this reassuring statement fails to convince investors and economists who are alarmed by this financial downturn, especially since bleak forecasts predict an unprecedented deterioration of finance for the coming years.

 Fed: The Deep Roots of the Crisis

Indeed, the upheaval of monetary policy orchestrated by the Fed is the primary cause of this unprecedented financial chaos. In its crusade against rampant inflation, the institution has drastically hardened its interest rate policy. In fact, the federal funds rate has skyrocketed from near zero to a stratospheric range of 5.25% to 5.5%. As a result, this sharp financial turn has caused a perfect storm for the finances of the U.S. central bank.

Furthermore, the financial obligation to pay substantial interest to institutions to hold their liquidity is creating a vast chasm in the public accounts. Also, the interest charge on bank reserves reached the astronomical sum of $176.8 billion last year in the Fed’s finance. In addition, payments of interest on repurchase agreement facilities devoured an additional $104.3 billion. However, at the same time, financial revenues stagnate at $163.8 billion, a feeble bulwark against this financial hemorrhage.

In summary, it must be noted that the Fed can technically create money to fill its financial losses. However, this extreme scenario poses the threat of a collapse of the American monetary system. The deferred asset that records these dizzying financial deficits has already reached $157.8 billion. These astronomical losses are shaking the economic foundations of the United States. According to experts, it will take years before the central bank rebalances its deficient finances. This could obviously cast a shadow over the financial future despite official assurances.