The Federal Reserve confirmed that it plans to lay off about 300 employees this year. The last time the Fed cut jobs was 13 years ago, in 2010. One of the reasons for the cuts was that the Fed slipped back into an annual net loss for the first time in more than a century. The last time the Fed lost money was 108 years ago, in 1915.
As of September 2023, the Fed has a deficit of $100 billion. According to projections, the Fed's net losses will be as high as $150 billion to $200 billion by 2024. Faced with huge losses, the Federal Reserve, which controls the printing press, has been forced to cut jobs and tighten its belt.
Most of the Fed's losses came from reverse repos, or the interest it has to pay banks on overnight reverse repo deposits. By paying interest on overnight reverse repos, the Fed entices banks to transfer dollar liquidity to the Fed. At the same time, the Fed also needs to pay banks more interest on their reserves.
At present, the total interest payments are close to $4 trillion, and with the benchmark interest rate rising rapidly, this business is eating into the Fed's earnings and starting to lose money. Billions of dollars of losses, had to put the Federal Reserve on the road to layoffs.
In response to the Fed's violent rate hike, jpmorgan's Leibovitz pointed out that if interest rates continue to rise as before, there will be a financial accident. Something is going to break, and that's going to push the Fed in another direction. In other words, the United States has met the conditions for a crisis, with interest rates now at 4.7%, close to the peak that triggered the financial crisis in 2008
The Federal Reserve's violent interest rate hike does have the intention of pulling grass and shooting rabbits, but the drunk man's intention is not to play the wine thing, and it will inevitably shoot itself in the foot. For now, it seems that neither the ostensible goal of curbing inflation nor the small part of the financial harvest behind it has been fully achieved, so the Fed can only press ahead.