It’s been acknowledged for a few months now that the Fed, like all central banks, is experiencing an unusual problem: for the first time in its history, it is actually losing money instead of being able to remit interest earnings to the treasury. As this post on the Mises website notes, those losses have now grown to $44 billion.
But not to worry. Those central bank wizards have some accounting tricks that will make this all go away. Or at least they’ll apparently go away if we ignore basic math:
The Fed’s balance sheet claims its capital is $42 billion, but in violation of the most obvious accounting principle (from which it conveniently excepts itself), the Fed does not subtract its operating losses from its capital as negative retained earnings.
Instead, it accumulates the losses as an opaque negative liability, which balance is found in Section 6 of the report under the title “Earnings remittances due to the U.S. Treasury.” These are simply negative retained earnings: to get the right answer, you just subtract them from the stated capital.
When you’re a privately owned corporation with a deceptively sounding “public” name, and have tricked the people into getting a license to what otherwise would be a counterfeiting scam, you can do whatever you want.
Central banks should be illegal. They serve no good to the public whatsoever, cause inflation by design, and allow politicians to run massive deficits every year.
2023 Cdn fed budget announced that it wasn’t requiring Bank of Canada to remit earnings to Gov while it has negative equity due to its Gov of Canada bond purchase scheme.
Bank of Canada Act has provision that exempts it from applicable winding up and liquidation statutes. It is allowed to operate as a bankrupt.
Speaking of debt … Canada’s deficits by year.
21-22 : $90.2 B
20-21 : $327.7 B
19-20 : $39.4 B
18-19 : $14.0 B
17-18 : $19.0 B
16-17 : $17.8 B
15-16 : $2.9 B
Since Justin Trudeau has been elected, Canada has accumulated over $500 B in debt.
yes, and 2015-16 was looking like a surplus until Justin got is fingers on it.
That’s what Canadians voted for (Libs, NDP, BQ, Green).
51% of BC voters
36% of AB voters
33% of SK voters
59% of ON voters
77% of QC voters
And that doesn’t reflect the real situation, if GoC was paying market rates on the debt instead of artificially low ones created by the BoC being the buyer of much of this crap paper over the last two years, it would be worse.
As if those are the true numbers.
When we see the true state of government finances,which includes the Bank of Canada,we will once again be the joke..
“How did you go bankrupt?”
“Slowly at first,then suddenly”.
Abandon ship.
I’m not giving up on them. After all, they’re called “the Fed” beause they never miss a meal!