Clown-Free Zone... sorry, no clowns allowed Message Board

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Pastimes : Clown-Free Zone... sorry, no clowns allowed

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To: Perspective who wrote (247483)	7/12/2003 8:23:14 PM
From: EL KABONG!!!	Read Replies (2) of 436258

bobcor, "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? I may be way off base here, but so what if the Fed takes a big loss? Can't they just monetize the loss over a period of time (of their own choosing) so as to minimize any obvious effects on the domestic and global economies? They can (effectively) print as much money as they want (over time) and in essence, mitigate the losses by passing them on slowly to future generations, which is not too unlike the actions of the Fed of the 1930s... But maybe I'm just pissing into the wind here. It's possible that I'm missing something in the bigger picture... KJC

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