THE FEDERAL RESERVE MADE A LOT OF MONEY

[bimetalaupt]

Fed pays US Treasury record $78.4B last year
Fed pays US Treasury record $78.4B last year, makes money off programs to aid economy
ap

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Topics:
o Economy, Government & Policy

Jeannine Aversa, AP Economics Writer, On Monday January 10, 2011, 2:11 pm EST

WASHINGTON (AP) -- The Federal Reserve is paying a record $78.4 billion in earnings to the U.S. government, reflecting gains from the central bank's unconventional efforts to lift the economy.

The payment to the Treasury Department for 2010 is the largest since the Fed began operating in 1914. It surpasses the previous record $47.4 billion paid in 2009, the Fed said Monday.

The bigger payment mostly came from more income generated by the Fed's massive portfolio of securities, which includes Treasury debt and mortgage securities.

Critics in Congress have expressed concerns that the Fed's purchases could put taxpayers at risk by reducing the amount turned over to Treasury. The Fed is funded from interest earned on its portfolio of securities. It is not funded by Congress. After covering its expenses, the Fed gives what is left over to the Treasury Department.

Income from the Fed's portfolio of securities came to $76.2 billion last year, up from $48.8 billion in 2009, Federal Reserve officials said. Such income rose largely because the Fed bought a greater number of securities. Increases in the value of securities also played a role.

In early November, the Fed launched a program to bolster the economy by purchasing $600 billion worth of Treasury debt through June. The program aims to boost the economy by lowering rates on mortgages and other loans and by lifting stock prices. Republicans in Congress and others have criticized the program, saying the Fed is printing money to pay for the U.S. government's swollen deficits and debt.

To fight the financial crisis and lift the country out of recession, the Fed bought $1.4 trillion of mortgage-backed securities and mortgage debt as well as up to $300 billion worth of government debt. The Fed completed the mortgage purchases last year.

The purchase programs have helped boost the value of securities held by the Fed.

But the Fed could lose money if the central bank had to sell those securities and their prices were to fall. Once the economy is on firm footing, the Fed will need to mop up some of the money it pumped into the economy. The Fed could do that by selling some securities to reduce its balance sheet to a more normal size.

Federal Reserve Chairman Ben Bernanke has said the Fed's goal is to eventually return the portfolio back to holdings of only Treasury securities. The Fed's balance sheet now stands at $2.4 trillion, nearly triple its size from before the financial and economic crises.

The Fed's securities could lose value if low interest rates shoot up. That means the Fed would pay the government less money -- or none under some circumstances.

"It's possible that there might come a period where we don't remit anything to the Treasury for a couple of years," Bernanke told the Senate Budget Committee last week. "That would be, I think, the worst-case scenario."

Bernanke said in most cases the Fed will continue to return to Treasury "significant amounts of money."

The figures provided by the Fed on Monday are preliminary, unaudited results. Final results will be released later this year.

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[Aman A.K.A. Ahamburger]

Good post B!!!

[bimetalaupt]

Again,
The 85Billion a month has made the Fed a lot of money..This is super for the fed..record year profits INCREASE OF ..60-70 billion for Mr.Lew..

Just the green..all about the money..only money..Unemployed and mainstreet USA are the song!!

Bi

[Deleted]

 Wow.
 Some good ol' boys got together and magically created $78 Billion ... out of thin air... ?

 And (er)... this is a good thing?

 It sounds to me an awful lot like something Kenny-boy Lay pulled off awhile back...

[bimetalaupt]

Dec 12, 2013 22:30:51 GMT -5 @patiencetried said:

 Wow.
 Some good ol' boys got together and magically created $78 Billion ... out of thin air... ?

 And (er)... this is a good thing?

 It sounds to me an awful lot like something Kenny-boy Lay pulled off awhile back...

Fed Purchases  TOtAL NOW ALMOST 4 TRILLION DOLLARS

The Fed buys $85 billion of bonds each month to push down borrowing costs and fuel economic growth. It purchased $1.58 billion today of Treasuries due from May 2038 to February 2043 as part of the program.

The Federal Open Market Committee will start slowing the purchases at its Dec. 17-18 meeting, according to 34 percent of economists surveyed Dec. 6 by Bloomberg, an increase from 17 percent in a Nov. 8 survey. Others predicted tapering will start next year.

Minutes of the Fed’s Oct. 29-30 meeting, released Nov. 20, showed policy makers expected economic data to indicate improvement in the labor market and “warrant trimming the pace of purchases in coming months.” The central bank’s mandate is to ensure both full employment and price stability.

The U.S. producer price index fell 0.1 percent in November following a 0.2 percent decrease the prior month, the Labor Department reported today. A Bloomberg survey of 77 economists called for no change. The so-called core measure, which excludes food and energy, rose 0.1 percent.

[bimetalaupt]

When the Fed was 12 banks..
Money reserves = 45 % Gold  ...55% self liquidation financial  assets  ZERO Treasurership...
every bank bought and sold gold and paper on there own!! 

Now NewYork trade desk runs it all... 

[Aman A.K.A. Ahamburger]

Hilarious isn't it b? Easier to stay uninformed and critical.

Great posts, as usual.

[bimetalaupt]

Dec 14, 2013 13:18:37 GMT -5 Aman A.K.A. Ahamburger said:

Hilarious isn't it b? Easier to stay uninformed and critical.

Great posts, as usual.

A+++,
Thank-you for your kind words!! Just think what Poole and Yelson would  be like? Each with their own trading desk and loan window!!!!KAYOS!!!

Just think what the price of Gold would be if the Fed bought 2 Trillion dollars worth of it!!!

B

Like Shakespeare...Fire and Ice.....

[sunrnr]

Ok, I'm going to show my ignorance to all here. When the Fed was created and its charter established, how was it funded? Where did the monetary resources come from? 

Also, it seems the operation of the Fed and the Treasury seem like a "rob Peter to bay Paul" sort of scenario?

Any help in my enlightenment would be greatly appreciated.

namaste

[bimetalaupt]

Dec 15, 2013 21:25:41 GMT -5 sunrnr said:

Ok, I'm going to show my ignorance to all here. When the Fed was created and its charter established, how was it funded? Where did the monetary resources come from? 

Also, it seems the operation of the Fed and the Treasury seem like a "rob Peter to bay Paul" sort of scenario?

Any help in my enlightenment would be greatly appreciated.

namaste

sun,

Great Question!!!
Stockholders..each of the 12 Reserve districts sold stock to the banks it served...All member banks are stockholders and share profits.  Long story but this was the main reason New York banks controlled money and St. Lewis did not. New York was one of three money central Reserve Banks that moved money internationally.
These are  not the only banks backed by the Treasuary..Texas Farm Credit Bank sells bonds on there AAA credit ration and supplies money to the  Stockholding member Farm Credit Associations. In 1929 35% of the then 10,000 banks were not stockholders in any of these. 

Just a thought,
BiMetalAuPt

[bimetalaupt]

Yes, tell everyone you you are going to cut buying by ? and buy Almost60 Billion in one week( end dec 11)..  bet one What...HELICOPTER BEN.......
FROM NYFRB Site!!!!
www.newyorkfed.org/markets/soma/sysopen_accholdings.html
 SOMA  Open Market..Money from Banking..they did not lend

US Treasury Bills (T-Bills)
US Treasury Notes and Bonds (Notes/Bonds) 2,080,640,286.4
US Treasury Inflation-Protected Securities (TIPS)* 91,378,973.8
Federal Agency Securities** 57,221,000.0
Agency Mortgage-Backed Securities*** 1,482,966,222.7
Total SOMA Holdings 3,712,206,482.9
Change From Prior Week 57,901,086.4
*Does not reflect inflation compensation of 13,700,189.5

You Plan to do what?  I still want to see Stanley Fischer,PhD for Chairman!!!not Inflation in 2015!!!
A slight inflation is like being slightly pregnant....
Just a thought,

BiMetalAuPt

[Aman A.K.A. Ahamburger]

Dec 14, 2013 14:06:53 GMT -5 bimetalaupt said:

Dec 14, 2013 13:18:37 GMT -5 Aman A.K.A. Ahamburger said:

Hilarious isn't it b? Easier to stay uninformed and critical.

Great posts, as usual.

A+++,
Thank-you for your kind words!! Just think what Poole and Yelson would  be like? Each with their own trading desk and loan window!!!!KAYOS!!!

Just think what the price of Gold would be if the Fed bought 2 Trillion dollars worth of it!!!

B

Like Shakespeare...Fire and Ice.....

B,

No problem on the kw, 2 trillion worth of gold?


What is a gold bugs wet dream?

What would they do with all that gold though?  As soon as they start to taper, the price would drop.  The same could be said about tbonds, however, the tbonds have provided income, as you have stated above. With the tbonds all the FED has to do to avoid losses is hold until they mature. Just like we have been talking about for the last few years, they will still pay face value when they mature. 

More later, God bless,

[frankq]

I think we can turn the page on gold........

[Aman A.K.A. Ahamburger]

No doubt Q, and now that the taper has begun the real fun starts. Just think about how many people around here thought the FED would never be able to start to exit, Virg just tried to convince people on PM that they would never exit because it was actually a conspiracy by big wigs to steal the American peoples money.

If you take the people that thought the exit would never happen, mix them with the people that don't understand what QE has been doing, the result is the new economic reality that is upon us.

I'm going to update the "no matter what the markets will be up" thread in the next week or so here, but just think; Canadian debt to GDP is 163%, Australia is about the same and both places have had real estate prices that went up with low rates. China... ghost cities and malls, all very reliant on low rates and the overbuilding has hit places like shanghai now. It's fun to get warm and fuzzy when the markets are rockin' but we are still only about half way through this $hit storm that has been a couple thousand years in the making; and that is why I could care less what the market is at.

[Deleted]

Dec 20, 2013 15:08:31 GMT -5 Aman A.K.A. Ahamburger said:

No doubt Q, and now that the taper has begun the real fun starts.

How much taper?

[Aman A.K.A. Ahamburger]

Slow and steady. It's crazy to think that the FED saying they are going to taper closed the yield curve substantially. B's math model is calling for 5% on the 10yr... It could get there a lot faster than most expect I would imagine.

[bimetalaupt]

Dec 21, 2013 9:26:28 GMT -5 @jma23 said:

Dec 20, 2013 15:08:31 GMT -5 Aman A.K.A. Ahamburger said:

No doubt Q, and now that the taper has begun the real fun starts.

How much taper?

M1 HAS BEEN INDEPENDENT .. FOR DISCOUNTED CASH FLOW WITH 24 TO 60 MONTHS WE USE 5%..aS PROJECTED BY MMXV...IF NOT THEN MOST VALUES ARE NOT TRUE.. I BACK THE 5% EST BY MMXV-BETA..

ALSO OIL TO 150  WTI FOR 60 MONTHS!!  inflation !!! Like being slightly Pregnant....

Just a thought,
BiMetalAuPt

[Aman A.K.A. Ahamburger]

There are trimesters to pregnancies B, the first one being the most delicate. So while there may be "pockets" of inflation we don't want to talk about it too much because the last thing we want to do is lose it in the first three months.

I think this baby is going to make it though.

[Aman A.K.A. Ahamburger]

For all the talk, the federal reserve keeps making a lot of money and will avoid all losses on rising interest rates by holding until maturity...

You were talking about central banks that bought a bunch of gold bimetal…

Gold's Decline Eats Into Swiss Reserves Central Bank to Cancel Dividends for First Time

[bimetalaupt]

Federal Reserve transferred $77 billion to the UST today.. Not sure why the decline!! 
Maybe the decline in interest or did I miss a payment in July?

Just a thought,
BiMetalAuPt

[Aman A.K.A. Ahamburger]

I was reading an article the other day about that, I can't seem to find it right now. Last year was a banner year because of some one time sales. The author also mentioned that there could be some loses in the future. He then went on to explain that the fed was the only bank in the world that could hold securities until they mature... So in other words the FED should continue to pay around 70 billion dollars a year to the UST.

[bimetalaupt]

Jan 10, 2014 23:05:29 GMT -5 Aman A.K.A. Ahamburger said:

I was reading an article the other day about that, I can't seem to find it right now. Last year was a banner year because of some one time sales. The author also mentioned that there could be some loses in the future. He then went on to explain that the fed was the only bank in the world that could hold securities until they mature... So in other words the FED should continue to pay around 70 billion dollars a year to the UST.

A+++,
Then yoru are saying the Federal Reserve does not M<ark the value of bonds to market. .Sounds correct..Do as I say; not as I do..

Great point,
BiMetalAuPt

[Aman A.K.A. Ahamburger]

Jan 11, 2014 12:40:47 GMT -5 bimetalaupt said:

Jan 10, 2014 23:05:29 GMT -5 Aman A.K.A. Ahamburger said:

I was reading an article the other day about that, I can't seem to find it right now. Last year was a banner year because of some one time sales. The author also mentioned that there could be some loses in the future. He then went on to explain that the fed was the only bank in the world that could hold securities until they mature... So in other words the FED should continue to pay around 70 billion dollars a year to the UST.

A+++,
Then yoru are saying the Federal Reserve does not M<ark the value of bonds to market. .Sounds correct..Do as I say; not as I do..

Great point,
BiMetalAuPt

 The  ,

 Thing is, the FRB is a quazi govt institution. If Goldman or JPM wanted to remit all profits to the UST, and was one of the US armies best weapons, then I would imagine there would be different rules for the banks as well.  This rule only came into effect in 2011, so when the crisis passes there could be rules put into effect on new purchases..

On the other hand, why sell debt to China when it could essentially be used to help pad the UST...   

God Bless,