Since the financial crisis, the Federal Reserve has lost over $700 billion
The Fed's losses owe to a shift in the way it does business
Before the 2008 financial meltdown, the central bank tried to control interest rates by buying and selling U.S. bonds
Since the crisis, it has used a different playbook
It provides enough funds to satiate the entire banking world, and it seeks to adjust the economy by paying banks more or less interest to hold those funds
When it first undertook this "floor" experiment, the Fed's balance sheet exploded to more than $4 trillion
A larger balance sheet means greater risks, so the Fed has added to that risk by purchasing longer-duration assets
Hundreds of billions of losses on Treasuries, mortgages, and other programs have swamped its meager $40 billion in capital
Fed is not just losing value on its old assets; it has started paying out more money than it takes in
https://www.city-journal.org/fed-goes-underwater
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