Memo To RFK: Blast The Fed’s $281 Billion Gift To The Banks And Wall Street

You might think that an institution possessing the right to print legal tender at will would be one barn- burner of a profit machine. And if you also assume that history ended in 2021 you would be dead right.

Under law, the Federal Reserve is required to remit all of its profits after operating expense to the US Treasury. And as it happened, Uncle Sam was the happy recipient of such Fed profits to the tune of $870 billion during the 10-years ending in 2021. All of this cash remitted to the US Treasury got promptly spent, of course, and a good share of it went to the pointless Forever Wars. But in the U.S. Government book-keeping scheme it is considered an off-set to outlays. That is, a spending “cut”!

So, mirabile dictu (wonder to behold!), upwards of $1 trillion of Federal spending disappeared into the government accounting mist on the basis of “profits” earned by the central bank for producing nothing but fiat credits. If you perchance wonder whether the statesmen of Capitol Hill inquired as to how the Fed managed to “cut” $870 billion out of their profligate spending over a decade—far more than the Congress did, the power of the purse and Federal law-making authority notwithstanding—don’t bother.

The didn’t give a whit as to how it happened then, but now may have urgent reason to belatedly ask. That’s because during 2023 the Fed’s miraculous and fulsome profits morphed into a thundering net loss of -$114.3 billion. So there is no $109 billion “cut” to spending this year like that which occurred in 2021 alone.

Indeed, the swing from 2021 to 2023 on the Fed’s income statement is itself a wonder to behold. After all, a near quarter trillion-dollar adverse swing on the bottom line in just two years makes a ripple on the radar screen, even among the denizens of the Washington beltway.