Special Report – Wall Street Underground

By Nick Guarino | August 12, 2016

The Debt the Federal Reserve Holds is Making Them Record Breaking Profits!

Another supposed crises that is NOT!

Hi everybody, HK did it again. He asked some questions that many of you have sent me. I am experimenting with building Special Reports that answer YOUR specific questions. I will do a Special Report when I feel they are relevant and would appeal to all of us. This is my attempt to give you a relevant PROFITABLE interactive product.


Dear Nick, Thanks for excellent review of treasury bond issuance and its effect. I am sorry that I wont be able to come to radio talk show due to my work. Radio Shows are always posted on the WSIFN website within 24 hours of live webcast. Thanks to your invitation. I have one more question. When we say Central bank we mean Fed? Yes, the name of the Central bank of the US is the Federal Reserve. In England for example the Central bank is called the Bank of England. When Fed buys bond they buy from treasury and open market? Most often If interest rate is negative why will treasury sell bonds as they lose money to FED and to market. ? They will not lose money if rates go even further negative from the point they bought in. IE they buy at -22% negative yield and rates go to -30% negative yield they make a killing. Buying bonds from financial institution can provide them with reserve which they have lost in gambling with commodity (not just commodity markets but the global derivatives market) market that I can understand. No it does not work that way. The best they can do is loan them (dead broke commercial banks) SOME money to cover SOME losses for a short period of time. That is called a bail out. It’s temporary in nature and makes the Commercial banks losses even bigger. The Central banks (Federal Reserve among them) balance sheet (close to 5 trillion dollars) can’t begin to cover the 1 Quadrillion in leveraged losses the global banks are hiding. It does not work that way. First of all, the Federal Reserve of the US mandate is not to make or lose money… It’s to stimulate the economy the best they can with low inflation… A point in fact, most of the time they are very profitable and the money (profits) are turned over to the Treasury Can you explain please. Fed balance sheet of more than 4 trillions growing . How will they retire this. It’s a very Small amount as you will see in the Special Report below. It makes them enormous profits and contrary to retiring it, they will expand it by a factor of 2 times at least as they TRY to stop the Great Depression… They will fail! HK

Hi HK,

The Fed Reserve does buy just Bonds from the Treasury. They buy a lot of instruments of all kinds and strips as do ALL central banks the world over. And that 4.5 trillion on their balance sheet in the scope of things is a very small amount. And I expect in the depression that has already started to see their balance sheet multiply by at least a factor of two. In fact, I see it swelling to 10 trillion dollars in the next 24 months. It suits our purposes for them to do that. After all, it’s the Keynesian economic model from hell we are under. They must save a failing economy. And that means they must TRY to stimulate in a recession/depression. Since you understand these operations are money supply neutral, you also understand that in a depression stimulation does not cause inflation. The global economy is approaching GDP of 100 trillion a year. And the US is 20% in nominal terms of global GDP or around 20 trillion dollars. See chart below:

That 20 trillion dollars is a yearly figure. So to have a central bank that holds long term assets and short term assets of a measly 5 trillion dollars is very, very small in the scheme of things. Despite the debt/Federal Reserve hysterics that permeates media and political spin and economic spin, this amount is very small. In all the hyper blow it’s difficult for people to keep things in perspective. In the bond market, the Feds buying is very small compared to the size of the overall markets in securities the FED is allowed to buy. And I am looking forward to selling them our -22% negative yielding bonds as we take profits. They will be among the buyers along with investors screaming to protect themselves from banks and brokers and corporations wiping out. The whole world will buy double digit negative yielding bonds. As in everyone and their dogs. And the fed will help drive rates negative (as the central banks the world over) in a desperate attempt to (prisoners Keynesian stupidity) TRY AND stimulate the global economy that is careening lower and lower in the global depression. In a negative yield world, the Fed buying negative yielding bonds will make money for them as rates go further negative. There is something else you must know. The Federal Reserve is a non profit entity. It turns over its profits to the Treasury. Any surplus money left after the Fed pays all its obligations, including those of its 12 regional banks, must be sent to the Treasury. It’s not in the game to make money. And it makes a shit pot of money. On January 11 of this year the Federal Reserve sent to the Treasury department a record breaking 97.7 billion in profits. On top of that, the Fed said it sent an additional $19.3 billion to a capital surplus account to help fund federal infrastructure projects under a controversial provision Congress included in a five-year highway bill in December. So tell me, how is their holdings of 4.5 Trillion dollars in interest bearing instruments a problem? It’s making them more and more money.

The 2015 NET profits sent to the Treasury and the Infrastructure fund by the Federal Reserve is 177 billion

The 117 billion in profits made by the Fed Reserve in 2015 exceeded the record set the previous year (2014) of profits sent to Treasury of $96.9 billion. In 2008, before their balance sheet “swelled” the Fed sent $31.7 billion in profits to Treasury. Since then, total Fed Reserve profits have totaled about $565 billion. Assets on the Fed’s balance sheet started increasing sharply in 2008, rising from about $900 billion before the financial crisis to the current total of about $4.5 trillion as the central bank purchased Treasuries and mortgage-backed securities to push down interest rates. SO tell me, where is the freeging crises? See, as interest rates go lower and lower and turn negative, they make incredible sums of money. Welcome to reality my friends as verses the self serving bullshit of the sold out financial media designed to wipe you out. And get you to make the exact wrong investments at exactly the wrong time. You better get your ass in gear and do Depression Era investing with me where rates go lower and lower and lower and you make a killing.

Thank You,
Nick Guarino




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