Deferred Assets and Hyperinflation

 The latest Federal Reserve Balance Sheet is very weird.  What is that negative amount for "Other Liabilities"?  Footnote 15 says: "Includes the liability for earnings remittances due to the U.S. Treasury".

This is a violation of accounting theory, where everything is either a debit or credit, with no negative balances.  So how should this be presented?  It is really an offset to amounts that are to be paid in the future to the US Treasury.  I think that it should show up on the asset side of the balance sheet as an intangible asset, similar to Goodwill.  But it really is a loss, because the Fed had to pay out so much interest because of rising rates.  All the Reverse Repurchase Agreements and Deposits show above, more than $5 trillion, are interest bearing.  If the rate is 5%, then that is $250 billion of interest a year paid.  Would any other bank present it this way?  No way, that would be fraud.  Anyways, legalities aside, the Fed effectively is covering its losses by printing more money.

Now, read this old article I wrote: "What causes hyperinflation? Quasi-fiscal deficits".  

"What is a quasi-fiscal deficit? A quasi-fiscal deficit is the deficit of a central bank. From Germany to Argentina to Zimbabwe, the hyper or high inflationary processes have always been fueled by such deficits. Monetized fiscal deficits produce inflation. Quasi-fiscal deficits (by definition, they are monetized) produce hyperinflation. The only losses that can meaningfully affect central banks stem from flows (i.e. deficits), like net interest losses. These losses result from paying a higher interest on their (i.e. central banks’) liabilities than what they receive from their assets. These losses leave central banks no alternative but to monetize them, in a deadly feedback loop. They are like black holes: Once trapped into them, there is no way out, because (fiscal) spending cuts are no longer relevant, unless they produce a surplus material enough to offset the quasi-fiscal deficits. And that, by definition, is impossible."

So, the thought for the day is that we are already in hyperinflation.  Maybe it is only 8% right now, but it is caused by a systemic breakdown in our financial system as opposed to an external shock like occurred in the 1970s.  We are already in a doom feedback loop.  Inflation will continue because it is CAUSED by the Fed.  That $250 billion a year is created out of nowhere.  Granted, it is mostly offset by interest received, but that doesn't change the fact that it is hyperinflationary.  The Fed is trying to fight inflation, but they are actually causing it.  Inflation will continue to rise and the Fed will continue to raise rates which will cause inflation to go even higher.  The solution is for the Fed to cut rates, but this will force losses on the big banks.  The big banks are really the owners of our economy.  The ship is taking on a slow leak, like the Titanic after it hit the iceberg.  And all the lifeboats are for the rich cats, with none for the women and children.