The people who are supposed to be in charge of our nation's finances apparently can't even manage their own. The Federal Reserve reportedly lost $114.3 billion in 2023, while trying to corral historic inflation as our national debt surged past $34 trillion. "That's a direct cost to the taxpayer," says EJ Antoni, economist with the Heritage Foundation. "Because normally, money the Fed makes just gets handed over to the Treasury, so the Fed losing money is actually exacerbating the deficit."
"On top of that, the Fed has over a trillion dollars of unrealized losses on its books," he continues. "They can't keep their own house in order, so how do we expect them to regulate the rest of the banking system?"
As concerning as the Fed's financial deficits are, more troubling might be the agency's plan to make up the losses, through promises of future revenues called deferred assets---basically an IOU. "That's what they've been doing for the last four years," Antoni tells KTRH. "They've been covering trillions upon trillions in unfunded government spending with IOUs, and what did that get us? Forty-year high inflation."
Two years after that inflation came home to roost, the Fed is still trying to get a handle on it. The board has held rates steady for months, even as inflation remains well above the target range. Antoni believes the agency has become too political under Fed Chair Jerome Powell. "They never should have stopped raising rates when inflation was still way above the target," he says. "(Powell) is clearly trying to help Biden get reelected by keeping rates artificially low, and we've seen how that turns out...it's going to give us more inflation."
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