In this week’s edition of “Three on Thursday,” we delve into the current financial challenges facing the Federal Reserve. Back in 2008, the Federal Reserve embarked on a novel experiment in monetary policy by transitioning from a “scarce reserve” system to one characterized by “abundant reserves.” In addition to inflation, this experiment has resulted in some other developments that are worrisome. Higher interest rates have resulted in substantial unrealized losses on the Fed’s securities portfolio. Simultaneously, they have caused the Fed to pay out more in interest to banks than it is earning, resulting in sizable and ongoing losses.  For deeper insights into this matter, click the link below.

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