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As the world's largest economy, the United States has a considerable annual fiscal revenue, and the Federal Reserve has become one of the most profitable institutions.
In recent years, the outbreak of the US fiscal crisis has been unexpected, and I thought that this crisis would end soon, but I did not expect it to intensify, and the Federal Reserve has suffered huge losses since last year.
According to statistics, its losses have now reached $117.3 billion, the largest loss in history, and the United States is completely panicked when it sees this, what will be the consequences of the Fed's losses?
First, the Fed's huge losses
During the epidemic, there was severe inflation in the United States, which led to soaring prices and a sharp increase in unemployment, which had a huge impact on the American economy, and the Federal Reserve raised interest rates several times in order to solve this problem.
This is also very common, after all, the United States has used it many times in the previous economic crisis, and its fundamental purpose is to harvest international capital in this way, but he did not expect that this time the United States will harvest itself first.
As the number of interest rate hikes increases, people are becoming less and less optimistic about the U.S. economy, so many countries have begun to sell U.S. bonds in large quantities, which puts all the pressure on U.S. banks and the Federal Reserve.
Soon after, many banks in the United States collapsed, and the Federal Reserve had to join in the ranks of selling US bonds.
Recently, the Federal Reserve released its audited financial statements, which showed that in 2023, it received $163.8 billion from its bond holdings, but the interest payment reached $281.1 billion in this year, of which the interest on bank reserves was as high as $176.8 billion.
As can be seen from various data, the Fed not only did not make a profit in the past year, but also lost $117.3 billion, which made him record the largest operating loss in history.
The Fed had to deal with this huge fiscal loophole, so it decided to abandon sending money to the Treasury, which undoubtedly blocked the back road of the federal government.
Second, the United States is completely panicked
A country's economic development is closely linked to the central bank, and the Federal Reserve is required by the federal government to turn over the income from its securities portfolio to the Treasury after paying for its day-to-day operating expenses.
This money can be regarded as the reserve fund of the federal government, and it is also the greatest financial security, which can help him fill the fiscal deficit and facilitate the normal operation of the fiscal and economic markets.
The huge losses of the Federal Reserve have severed this economic link between the two, and the current federal government is most short of money when it is most likely to be backed by it, but the Federal Reserve has suffered losses, which means that no one can rely on anyone.
Data shows that in the past 10 years, the Federal Reserve has paid an average of $90 billion a year to the federal government, and now he can't get a dime.
3. Reasons for this phenomenon
For many years, the federal government has regarded the Federal Reserve as the god of wealth, and it is also the most oily and watery institution in the world, but in recent years, it has been troubled by various policies of the United States.
The fundamental reason for its losses is actually the continuous interest rate hike, and the United States wants to use this method to allow foreign capital to flow into the American market quickly to alleviate the impact of inflation.
The data shows that in 2023, the Federal Reserve will increase the interest rate from 0~0.5% to 5~5.5%.
No one is stupid, and everyone is unwilling to do this series of interest rate hike operations, in fact, he wants to transfer the debt crisis of the United States to other countries, but his wishful thinking is wrong.
Now that the United States has changed the debt ceiling, it shows that he is completely incapable of solving the existing crisis on his own, but he is putting the pressure of debt on the Fed.
Even so, the United States has not stopped, and in recent years, it has been involved in many international disputes, and he can be seen in the Russian-Ukrainian conflict and the Palestinian-Israeli conflict, and has also provided a large amount of military assistance to the other side.
As a result, the federal government is living a tight life, and the Fed has incurred huge losses, which would be strange if the United States did not panic anymore.
This situation will only gradually reduce the influence of the United States in the international community, and the current Fed's first consideration must be self-preservation, and it is also powerless against various crises in the United States.
It can only be blamed that all kinds of economic policies in the United States are becoming capitalist, and when there is a crisis, they will throw a lot of money, and when they want to make money, they will start to reap the harvest by raising interest rates, which will only make the market enter a vicious circle.
Even the Federal Reserve has suffered losses, which means that the financial crisis in the United States has entered a life-and-death moment, and the ability of domestic banks to resist risks has been further reduced, and now he can only seek help from other countries.
summary
In the face of high interest payments on the national debt, the federal government can be said to be in the dark, and it is clear that the economic tools used by the American version many times are no longer suitable for the current era, and he must make changes if he wants to survive this crisis.
This period is not lacking in opportunities for the mainland, and crises and opportunities actually exist at the same time, and the mainland market has a relatively high degree of stability, and the correct solution is to quickly occupy the international market.