The Fed’s broke. Maybe you heard.

Or as broke as you can be when you’re the sole legal issuer of the only universally-accepted form of money on Earth, and when you can create a negative liability to balance it all out.

Audited financial statements released on Tuesday showed the Fed had an operating loss in excess of $114 billion last year, the widest ever. SOMA income was $164 billion against interest costs of $281 billion, give or take.

I don’t know why I’m writing this, to be honest. It’s not new, nor is it news, with an “s.” Over the course of the inflation-fighting campaign, the Fed effectively hiked itself into a hole, illustrated best by the figure below.

That’s remittances due to Treasury. Think about it as what the Fed would, in better times, hand its Ponzi partners across the street.

The Fed said Tuesday that the deferred asset issued to Janet Yellen was $133.318 billion for 2023, up from $16.585 billion the prior year.

This is, of course, meaningless. That deferred asset will just sit there until the Fed “earns” it away, at which point payouts to Treasury will resume. There’s no impact on monetary policy and no, Treasury doesn’t have to “recapitalize” the central bank.

If there’s an angle worth exploring, it’s the political ramifications of a “broke” Fed in an environment where everyone’s an opportunist and everything’s an opportunity.

In that context, you’d think Republicans (especially today’s Republicans) would seize on a massive operating loss at the central bank which they (the GOP) could semi-plausibly blame on the “reckless,” inflationary policies of the Biden administration.

Why the GOP hasn’t pushed a “Biden broke the Fed” narrative is anyone’s guess. Maybe Republican strategists think it’s too arcane for the general public to care about or understand.