As always, ‘Any headline that ends in a question mark can be answered by the word no‘
My first thought.
https://en.wikipedia.org/wiki/Betteridge%27s_law_of_headline...
Do central banks’ mounting losses actually matter?
71–80 of 241 posts
Re: Do central banks’ mounting losses actually matter?
#72Don't be fooled, the central in "Central Banking" is about decision making power and profit. The losses are all distributed.
And how is the profit distributed? If you live in Europe, and specially US, you are already part of the shareholders and will profit from it (on average). More or less than other actors in the country, but definitely more than those ones not being under these central banks policies.
No, you won't profit from it. The people who profit are the member banks. Federal Reserve is an organization made up of member banks. Those banks make money off of interest and investments. The losses are distributed among the masses through dilution of our currency through the necessary expansion of it to absorb the losses.
No amount of annual profit returned to the Treasury has ever outweighed the negative effect of Fed induced business cycles and bailouts.
Re: Do central banks’ mounting losses actually matter?
#73Earlier quoted context omitted.
Does it, within Russia? Are you saying that as a person within Russia or an external observer? I feel like externally, the west feels like Russia is headed to certain doom, but a majority of Russians feels like they'll be fine and they're sticking it to the colonial west.
> colonial west Russian war in Ukraine is about regaining control of former colony. They lost lot of them in eastern Europe but still have some in Asia.
It's a bit more complicated than that.
Half of Novorossiya (New Russia) was taken from Turkey and Crimean Khanate by Russian soldiers and later that almost unpopulated land was settled by many ethnicities, but mostly by Ukrainians and Russians. [0]
When Russian Empire collapsed in 1917 this territory became Ukrainian on the basis of predominantly Ukrainian population even though the city population was mostly Russian and Jewish. [1]
[0] https://en.wikipedia.org/wiki/Novorossiya
[1] https://en.wikipedia.org/wiki/Third_Universal_of_the_Ukraini...
Re: Do central banks’ mounting losses actually matter?
#74Earlier quoted context omitted.
Does it, within Russia? Are you saying that as a person within Russia or an external observer? I feel like externally, the west feels like Russia is headed to certain doom, but a majority of Russians feels like they'll be fine and they're sticking it to the colonial west.
> colonial west Russian war in Ukraine is about regaining control of former colony. They lost lot of them in eastern Europe but still have some in Asia.
> regaining control of former colony
This is an oversimplification... How many countries have built nuclear power plants and missile assembly lines in their colonies?
Re: Do central banks’ mounting losses actually matter?
#75As always, ‘Any headline that ends in a question mark can be answered by the word no‘
Correct, but in this case it has a twist: “No, but bad things will happen.”
In macroeconomics, "bad things will happen" is so certainly true and so vague that it's meaningless.
Central banks don't/can't prevent economic problems, and we all know that. Their purpose is to "flatten the curve" so that we have a more predictable economy that doesn't scare people away from investing.
The big question right now is whether central banks can soften the blow from so many shocks happening at the same time.
Re: Do central banks’ mounting losses actually matter?
#76No.
That was easy
For the record, Im about as far from being a central bank apologist as it is possible to be.
Re: Do central banks’ mounting losses actually matter?
#77> On the other hand, central banks are constructs of sovereign states and can literally create money out of thin air, which makes the whole bankruptcy question take on a different dimension. This is not true, at least in the US. The Treasury issues currency. What the Federal Reserve can do (and has done under QE) is perform an asset swap. An asset held by a bank (such as a treasury bond) is purchased by the Fed and h…
Money and currency are not the same thing.
Re: Do central banks’ mounting losses actually matter?
#78Earlier quoted context omitted.
> Reserve assets are not money, therefore, the US Federal Reserve does not print money. Isn't this only half-true though? While they are not physically printing money, in a fractional reserve banking system they can certainly add to the money supply by exchanging illiquid assets for liquid ones. Agreed though that this is not infinite nor out of thin air.
Treasuries are one of the most liquid form of money there is. Reserve assets are not very liquid at all. If anything QE sucks liquid money out of the economy, elevating the price of that money (somewhat, according to central banks) in the process.
Wow, you are making multiple posts here with an authorative tone and yet you have been deader than dead wrong on most of the things you have said.
> Reserve assets are not very liquid at all.
??? Just stop confusing people. This statement has no meaning. Treasuries and gold are both incredibly liquid and are both among thr most common reserve assets. Feel free to google gold market liquidty depth and verify that assumption yourself
Re: Do central banks’ mounting losses actually matter?
#79This is a little alarmist. At least for the US, there don't seem to be any losses because the FED just lets the assets roll off. I.e., it does not sell the treasuries on its balance sheet, it lets them mature and gets paid the principle back by the government. If you do that and you have not purchased treasuries at negative yields (which the fed has not), and the government does not default (thankfully it hasn't) then you do not record losses.
There is a scary graph in the article but this is just for mark to market gains/losses but the fed does not mark to market.
Re: Do central banks’ mounting losses actually matter?
#80Earlier quoted context omitted.
Does it, within Russia? Are you saying that as a person within Russia or an external observer? I feel like externally, the west feels like Russia is headed to certain doom, but a majority of Russians feels like they'll be fine and they're sticking it to the colonial west.
I'm Russian living in Russia and it feels like that since 2/24. Now almost 90% are concerned about the events in the Ukraine [0]. Personally, in February I was concerned about loss of lives, mostly Ukrainian, political repressions and Russian economy, today the economy looks okeyish, but with all the Western help to the Ukraine, it looks like it's only the question of time when Putin turns to tactical nukes. [0] http…
If he uses a nuke, even a small tactical nuke, nato and the US will respond with overwhelming conventional forces, destroying some significant Russian military assets. The world will be on a precipice of doom. I don't see how it will stop. Russia is too weak, their only response is more nukes, and then it's over for all of us.