What is the value of a dollar?

 A dollar is a liability of the Federal Reserve. So I am really asking, what is the ratio of assets to liabilities on the Federal Reserve balance sheet.  The latest one we have is from June 30, 2023.  It shows assets of $8.375 trillion.  This includes $74.7 billion of deferred assets for the money it doesn't have to pay the US Treasury.  It also includes $7.916 trillion of SOMA holdings, which however have a fair market value of only $6.902 trillion.  So there is an unrealized loss of $1,013,555 (million).

So the assets really have a value of $7.360 trillion vs liabilities and equity of $8.375 trillion.  So the value of a dollar is backed only by 88 cents of assets.  That is why inflation is intrinsic.  Obviously the smart thing to do would be to take the dollar and invest it in something that is going to give you a dollar's worth of value.  Like a US Treasury bill. You can buy one in increments of $100 that matures in only 28-days and it will pay you interest and it is backed by the full faith and credit of the United States.  Everyone should (in theory) immediately do this and stop using dollars and instead start using promissory notes backed by Treasury bills.  If this happened then the Fed would (in theory) go bankrupt.  Because Treasury bills will provide you the full value of your money.  Or will they?  To be continued...  

Update: The deferred assets don't have any market value.  If you exclude them, this makes the value of a dollar only 87 cents.

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Update: The new quarterly report as of September 30, 2023 is available here. There are total assets of $8.195 trillion; however, this includes deferred assets of $106 billion.  The SOMA holdings are $7.695 tn, with a fair market value of $6.394 tn, for an unrealized loss of $1.302 tn.  So there are assets with a FMV of $6.787 trillion compared to liabilities and equity of $8.195 trillion.  So the value of a dollar is now only 83 cents.

So what does this mean?  Everyone is in denial but the Fed is insolvent.  If they were a commercial bank, they would be shut down.  So what is the solution?  Obviously to cut interest rates, which will increase the FMV of the holdings, and it will also help with the deferred assets.  And maybe get a bailout from the US Treasury, which could get a special equity stake, and get its investment back if the condition of the Fed increases.

However, if the Fed keeps issuing phony money, this is how hyperinflation starts.