In an unprecedented development, the Federal Reserve's urgent crisis escalates as its decade-long bond-buying spree, valued at $7.7 trillion, reveals a shocking loss, with unrealized losses on the balance sheet surpassing $1.3 trillion for the first time ever. The amortized cost now stands at 20.4% more than the mark-to-market price, presenting an alarming financial discrepancy. This perilous situation extends beyond the central bank, with countless banks now facing imminent trillions in losses due to manipulated asset prices in the bond market. As the threat of further bank bailouts looms large, urgent concerns intensify about the stability of the financial system. It's crucial to note that selling devalued securities may reduce the impact on the money supply, adding a layer of complexity to an already critical scenario demanding immediate attention to avert a potential crisis.
Remember all of those trillions of $$$ worth of US Treasury and mortgage bonds that the Fed has been buying from the past decade or longer, much of it between 1% to 3%?— Wall Street Silver (@WallStreetSilv) November 20, 2023
The current amount is about $7.7 trillion. But if the Fed sold them all today they are only worth about $6.4… https://t.co/k2zXnpjBAj