Top Three Videos – October 5, 2023

The Financial Risks and Consequences of the Federal Reserve’s Actions

• The Federal Reserve is technically insolvent, meaning its losses are greater than its capital.
• The refusal to pay in gold in 1971 led to the creation of the modern fiat currency Central Bank, like the Federal Reserve, which has no limits on how much money it can create, resulting in a perpetual problem of inflation and constant expansion of government power.
• The Federal Reserve, as the world’s leading Central Bank, has the power to print unlimited amounts of money, which can potentially lead to inflation.
• The Federal Reserve’s balance sheet has exploded over the last decade, reaching almost 9 trillion dollars, making it a massive organization.
• The Fed suffered significant losses on mortgage-backed securities due to investing in long-term fixed rate assets when interest rates were low and funding them with floating rate liabilities.
• The Fed’s potential insolvency is highlighted by the fact that financing assets yielding 2% with expenses of 5% can lead to bankruptcy.
• The collapse of the Savings and Loan industry in the 1980s was a result of this classic mistake in banking, highlighting the importance of avoiding such risks in the financial sector.
• The creation of the unprecedented balance sheet by the Fed demonstrates their inability to predict the financial future and avoid colossal losses.
• The Fed’s actions, such as creating money out of thin air and buying bonds, can lead to unrealized capital losses and cash flow mismatches.
• The Federal Reserve’s poor investment choices have turned them into the biggest debtor in history, resulting in significant financial losses.
• The Federal Reserve’s losses directly impact the deficit and debt of the United States, as it spends taxpayer money without Congressional approval.

The Federal Reserve’s Power and Influence

• The Federal Reserve is an extremely powerful and dangerous organization, functioning as a bank with assets, investments, deposits, and capital, but surprisingly, the stock of the 12 Federal Reserve Banks is not owned by the government.
• The Federal Reserve has become increasingly powerful and centralized over time, despite making numerous blunders.