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| Joined: | Mon Nov 21st, 2005 |
| Location: | California USA |
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The Fed then proceeded to buy the ‘toxic illiquid assets’ from the big banks. In all, it was about $1,250,000,000,000.00 in MBS (Mortgage Backed Securities) paper – give or take a few hundred billion. Where did they get the money? The Treasury printed it by increasing the debt by virtue of Treasury note issuance. Bear in mind that the Federal Reserve is a for-profit privately owned bank. Now they own a lot of bad paper. How did they complete the theft?
Maybe I’ve got this all wrong but here is the way it seems to me. Going into 2009, the Fed had $700 billion to $800 billion on their balance sheet. The holdings were mostly Treasuries. Through the early months of 2009, they bought $1.75 trillion dollars of ‘toxic illiquid asset’ debt from America’s biggest banks. Where did the Fed get the money for the purchases? The conjured it from our Treasury, of course. So now the ‘toxic illiquid assets’ are ‘maturing’ or defaulting. If the garbage is maturing, the original notes are getting paid and the Fed is accumulating cash in place of the notes. If the garbage is defaulting, the Fed is losing money. If the Fed is getting repaid on the garbage, and they got the original money from the Treasury in the first place, shouldn’t they then return the money to the Treasury so the US government can pay down debt? If the Fed is losing money, isn’t that the chance they took? I guess that’s not the way a ‘stick up’ works!