Is the Fed Broke?

[Watchman]

Is the Fed Broke?

Robert Wenzel
Economic Policy Journal
January 17, 2011

Bob McTeer, former President of the Federal Reserve Bank of Dallas, argues that the Federal Reserve has no reason to mark to market its securities holdings:

First, there is no need for the Fed to mark to market since its assets are not held for trading and can easily be held to maturity or recovery if necessary

Curiously, he does not discuss what happens to his theory if it turns out some Fed assets are total junk and worthless. This could very well be the case. The Fed has still not told us all the collateral it loaned money out against during the financial crisis.

I hasten to add that this somewhat of an academic question, though, since the most important reason you need to know the value of assets on a balance sheet is to determine if they are greater than liabilities, to evaluate whether an organization will have the means to meet its obligations. This is not a problem with the Fed, since even if all its assets were worthless, it could still simply print new money to payoff its obligations.

 

[cass888]

Is the Fed Broke?

Robert Wenzel
Economic Policy Journal
January 17, 2011

Bob McTeer, former President of the Federal Reserve Bank of Dallas, argues that the Federal Reserve has no reason to mark to market its securities holdings:

First, there is no need for the Fed to mark to market since its assets are not held for trading and can easily be held to maturity or recovery if necessary

Curiously, he does not discuss what happens to his theory if it turns out some Fed assets are total junk and worthless. This could very well be the case. The Fed has still not told us all the collateral it loaned money out against during the financial crisis.

I hasten to add that this somewhat of an academic question, though, since the most important reason you need to know the value of assets on a balance sheet is to determine if they are greater than liabilities, to evaluate whether an organization will have the means to meet its obligations. This is not a problem with the Fed, since even if all its assets were worthless, it could still simply print new money to payoff its obligations.

What a stupid writer. The Fed owes something that it can just print.

 

[Dreamer1]

What the Fed can do is to impose a tax on USD,since it is the reserve currency,and there is absolutely no competition to its status,not Yen,not Euro,not RMB

So the world trade must go on,folks all need USD,the world needs USD to function.

And the maker of USD-Fed and only Fed!

Fed has a long list of poweful weaponry which it can unleash on the world,so it is stupid to think that Fed is a lame duck

 

[newyorker88]

Stupid post.

The Fed prints all the money the world uses, and they control all the value of your money.