A recent investigative report by Pam Martens and Russ Martens from wallstreetonparade.com revealed that the U.S. Federal Reserve has been consistently facing financial losses since September 28, 2022. As of June 19, 2024, these losses have amounted to a staggering $176 billion. The primary cause of these losses is the Fed’s decision to pay out higher interest rates, at 5.4%, on reserve balances. However, this move primarily benefits major banks like JPMorgan Chase and Bank of America, while the Fed earns significantly less on its debt securities. Additionally, the report highlights that the Fed is also grappling with unrealized losses on its balance sheet securities, further exacerbating its financial strain. This situation not only poses a challenge to the Fed’s monetary policy but also sheds light on deeper systemic issues within the operations of the Federal Reserve.
