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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: TobagoJack who wrote (247428)6/27/2003 1:28:47 PM
From: Perspective  Read Replies (2) of 436258
 
So does anyone understand this little snippet on page 8:

"This leads us to a third point: the Fed is almost guaranteed to take a capital loss on its
portfolio. If the strategy works, the economy picks up, interest rates go up, bond prices go
down, and the value of the Fed?s holdings of longer-term Treasuries falls."

What are the implications of that? Of course there gonna get whacked if they pursue something as stupid as buying up long-dated T-bonds. Are they legally required to actually maintain some capital themselves?

BC
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