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If you read the Fed’s consolidated financial statements for fun and take them seriously, you would learn that the Fed’s current leverage ratio is …


It’s just a number of course.

2 Responses to “Fun Facts to Know and Tell: FED Leverage Ratio Edition”

  1. Harry says:

    We used to get a weekly report from Citibank, and on the back page was The Weekly Fed Watcher. I have to admit that I studied that page for too much time, hoping it would give me a Delphic sign that would lead to a revelation, and, of course, big money.

    The fact that the CITI people who distributed this inside information about the inner workings of the Federal reserve was puzzling, especially since they had not profited from it, and retired to become an economics professor on the side.

    I did learn, not from Citi’s newsletter, that the financial ratio of 77:1 was not good for anybody, even if one can pay one’s debt by legally to pay the interest.

  2. Gabriel Wittenberg says:

    1) Fed lowers interest rates to almost nothing
    2) Fed buys trillions of dollars in MBS’s, many of those loans insured by GSE’s (and then AIG)
    3) Fed has trillions of dollars in debt with no interest rate risk; they control interest rates!

    This is a remarkably effective way to socialize the housing industry.

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