The Fed is insolvent

Yesterday the Fed released its latest quarterly financial statements, showing that the value of their bonds is now $66.5 billion LESS than what they paid. And that $66.5 billion unrealized loss is far greater than Fed’s razor-thin $39 billion in capital. This means that, on a mark-to-market basis, the largest and most systemically important financial institution in the world is objectively insolvent. (It’s also noteworthy that the Fed’s financial statements show a NET LOSS of $2.4 billion for the first nine months of 2018.)   https://www.sovereignman.com/trends/its-official-the-federal-reserve-is-insolvent-24373/

The Fed will say it doesn't matter because they intend to hold the bonds until maturity.  But that doesn't change the fact that they are insolvent.  This is a very early sign of a problem that will lead to hyperinflation.  If they keep buying bad assets (like U.S. government bonds that can only be paid back by issuing more), then they will have to monetize their losses.  

For the moment, quantitative easing has stopped.  But when the next recession hits, the government will spend like crazy, and borrow like crazy to get the money.  And the Fed will enable this by reinstating QE on a much larger scale.   They will buy an asset that nobody wants (one of an infinite number of treasury bonds) with the precious limited supply of Fed dollars.

How could the Fed get out of this situation?  It would be easy.  First, institute mark-to-market.  Second, stop sending the profits to the Treasury until the Fed's deficit is plugged.  But that won't happen.  It's easier to deny that there is a problem.