How the Fed "Went Broke" - Lyn Alden

Alden looks deep at financial trends (macro?) and I find the perspective interesting. This assessment of the Federal Reserve now operating at a financial loss is an interesting read. The assessment is the short term impact is not much, but that it is a step in a bad direction for the overall economy.

By the end of this decade, I have considerable concerns regarding a fiscal spiral occurring in the United States and other developed countries, meaning that a combination of high deficits, high debts, and high interest rates on those debts, will all work together to create structural inflation and money supply growth. The Federal Reserve entering into negative tangible equity is just another piece of that process unfolding, since it contributes to larger federal deficits by taking away Treasury remittances.

The article goes into the history of Central Bank assets and liabilities, and the gold standard and such. This paragraph did give me a moment of pause.

The financial system in the United States, and for most of the rest of the world for that matter, can basically be thought of as an Excel spreadsheet managed by the Federal Reserve. That’s all it really is. Some of the cells on the spreadsheet are assets, and some of the cells are liabilities. It’s just a ledger that they administrate, and that we all use. They do, however, have to follow certain laws regarding the administration of their ledger.

So how is it that crypto is so much less reliable than this? 😊