American expert expects largest Fed losses in 100 years

The Fed’s operating losses by the end of 2023 could exceed $100 billion, former deputy director of the Treasury’s Office of Financial Research Alex Pollock predicts in an analytical note published by the Mises Institute (one of the main associations of libertarian economists; Pollock is a senior fellow at the institution). In the first half of 2023 alone, the Fed showed losses from operations amounting to $57 billion, the economist noted. A year earlier, the regulator recorded a profit of $63 billion, according to the Federal Reserve’s quarterly report. But already in the fourth quarter, the Fed went into a loss: in October–December it amounted to $7 billion.

“How can a central bank, especially the largest and most important central bank in the world, lose tens of billions of dollars in six months? The average person, influenced by the mystique of the Fed, might understandably be confused by this fact,” Pollock writes. But, according to him, we should not forget that the American regulator, although it has a monopoly on the issuance of dollars, which provides itself with virtually free funding for $23 trillion circulating around the world, remains first and foremost a bank, or rather, an association of banks. The Fed consists of 12 Federal Reserve Banks (FRBs), each of which oversees a different region in the United States – for example, the New York or Philadelphia Feds.