Fed balance sheet - a question

They get put at the front of the bailout line?

total assets minus total liabilities

I'm asking what would happen if the fed took a net loss.

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I'm asking what would happen if the fed took a net loss.

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Governments are generally expected to lose money or at least not earn very much - they are nonprofits by design and use accounting rules similar to rules for nonprofits.

If a government makes a consistent profit, then taxes/fees are too high.

Of course, if they lose too much there's a limit, but generally speaking governments at all levels aren't expected to make a lot of money.

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I'm asking what would happen if the fed took a net loss.

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So, you're not really asking about the Fed's balance sheet but about the Fed's income statement????




Are you "Rivers"???

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Do you mean the Federal Reserve Bank, or the federal government? The federal government does not have a balance sheet. There are no assets on the books of the government. The Capital, White House, Yellowstone, Yosemite, and every other piece of federal property have zero value from an accounting stand point.

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The Federal Reserve Bank System - what happens if, say, the value of the mortgage assets they've purchased declines a lot and they wind up with a negative net worth?

Please explain what happens if the assets the fed has (treasuries, mortgages,etc) are no longer sufficient to back the liabilities it has issued (dollars).

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Nothing.

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Why not?

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Because it doesn't matter. It's all accounting entries. The dollar is not based on accounting entries. It's based on confidence and on what people accept it's worth.

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The failure of the assets backing the dollar won't change people's confidence in the dollar?

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What assets "backing the dollar" are you referring to?

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All of the treasury obligations, mortgages, etc. that the Fed buys in exchange for newly issued dollars.