Topic: The Eighth Wonder of the World - The Federal Reserve Balance Sheet - page 2. (Read 1872 times)

Theres something I don't quite understand here.

http://www.federalreserve.gov/releases/h41/current/h41.htm

"Reserve Bank credit": 3,863,833,000,000

Presumably this means the total amount the Fed owes to others, right, including currency.

"Currency in Circulation": 1,220,210,000,000

Presumably this means the total amount of Federal Reserve Notes not held in reserve deposits at the Fed.

"Reserve Balances with Federal Reserve Banks": 2,473,552,000,000

Add it up and we get 3,693,762,000,000 or 170,071,000,000 less than the total Reserve Bank Credit. The majority of this (104,734,000,000) are reverse repurchase agreements, I.e, collateralized loans the Fed takes out from banks. The vast majority of this in turn is from international banks.

Now bear in mind the fact that the Federal Reserve can legally issue as many Federal Reserve Notes as its assets are worth. So, why in the name of heck is the Federal Reserve borrowing money, and offering US Debt as collateral, to borrow its own notes (i.e, its own credit) back from foreign banks for interest (albiet a low amount)? That makes absolutely no sense to me.

OK now here we go again:

"3,857,198,000,000" = credit
"3,942,816,000,000" = "total factors supplying reserve funds" = the value of the reserved assets, I presume.

Can somebody explain to me how the heck that's possible? Doesn't the fed have to turn over its profit to the treasury? When did it last do that?