Fed Loses $176B as Others Shift to Gold; X Defies CNN

Originally published at: https://peakprosperity.com/daily-digest/fed-loses-176b-as-others-shift-to-gold-x-defies-cnn/

The Federal Reserve has been grappling with consistent monthly operating losses since September 2022, amounting to $176 billion as of June 2024. These losses stem from the Fed paying higher interest rates on reserves held by banks and on reverse repo operations than it earns on its debt securities. Major banks like JPMorgan Chase and Bank of America benefit from these rates, which have not been passed onto customers’ savings accounts. Researchers Paul Kupiec and Alex Pollock from the American Enterprise Institute argue that these losses have constrained the Fed’s monetary policy options, forcing it to avoid selling its System Open Market Account (SOMA) securities to prevent turning unrealized losses into actual cash losses. Instead, the Fed plans to let these securities mature over time. If interest rates remain high, the Fed’s operating losses could persist, with taxpayers ultimately bearing the burden.

In a related financial shift, central banks have been moving away from US Treasuries as the global reserve asset, favoring gold instead. Since 2014, central banks have sold $400 billion in Treasuries and bought $600 billion in gold. This trend is driven by geopolitical risks, the high US debt-to-GDP ratio, and the increasing costs of commodities like oil and copper. Gold purchases by central banks have reached record levels, indicating a significant shift towards gold overtaking US Treasuries as the primary reserve asset. The discussion also touches on the potential repricing of the dollar and the role of Bitcoin as a digital gold-like asset, suggesting that increased dollar liquidity and weaker dollar scenarios could benefit Bitcoin and gold prices.

Meanwhile, the yen has dropped to ¥160.8 against the USD, its weakest since 1986, marking a 34% decline since 2020. This depreciation is attributed to the Bank of Japan’s (BOJ) aggressive monetary policies initiated under Abenomics. Despite interventions and warnings from Japanese authorities, efforts to stabilize the yen have been largely ineffective. Japan’s trade deficit, exacerbated by the weak yen, has led to higher import costs, particularly for energy. The BOJ’s delayed response to global inflation trends has further weakened the yen, with recent policy changes proving insufficient to stabilize it. The BOJ plans more significant steps, such as further rate hikes and quantitative tightening, but these measures come late as inflation rises globally.

In the realm of media and technology, Elon Musk has clarified that his platform, X, will not block or remove live streams and footage of the Presidential debate, despite demands by CNN. Podcaster Tim Pool claimed that CNN had informed him he would not be legally allowed to simulcast the debate with his own commentary. Musk’s stance on this issue highlights the ongoing tension between traditional media outlets and new media platforms over content control and distribution.

The meanings of words in agriculture have evolved, with terms like “family farm” and “factory farm” becoming contentious. While 97% of U.S. farms are family-owned, this statistic includes large-scale industrial operations, often referred to as factory farms or CAFOs (Concentrated Animal Feeding Operations). These operations focus on maximizing economic efficiency at the expense of natural animal behaviors and environmental health. In contrast, traditional, independent family farms allow animals to engage in natural behaviors and use sustainable practices. The term “family farm” has been co-opted by the CAFO industry to evoke positive imagery, despite the industrial nature of their operations.

Solar farming is increasingly competing with traditional agriculture for land, raising concerns about the loss of farmland. In Douglas County, Kansas, a 1,105-acre solar farm was approved on highly productive farmland, sparking debate about the best use of such land. One proposed solution is agrivoltaics, which combines solar power generation with agricultural activities. Researchers at Iowa State University are experimenting with agrivoltaics to determine if crops can thrive under solar panels and if the shade provided by the panels can help plants during heat spells. However, challenges remain, such as increased humidity and reduced airflow under the panels, which could lead to plant diseases. Despite these challenges, some farmers may find agrivoltaics financially viable due to lease payments from power companies, although skepticism remains about its practicality on high-quality farmland.

Sources

Fed Faces Unprecedented $176 Billion Losses Amid High Payouts to Banks

According to Federal Reserve data, for the first time in its history, the Fed has been losing money on a consistent monthly basis since September 28, 2022.

Source | Submitted by rhollenb

Gold Glitters as U.S. Treasuries Tarnish: Central Banks Shift Reserves Amid Geopolitical and Economic Shifts

“Since 2014, global central banks have sold $400 billion of Treasuries on net and bought $600 billion worth of gold on net.”

Source | Submitted by rhollenb

The Forgotten Lessons of Spain’s Empire: A Cautionary Tale for Modern America

“Maybe it’s just me, but I see an awful lot of food for thought for today’s Americans in the history summarized above.”

Source | Submitted by AaronMcKeon

Elon Musk Defies CNN: X to Allow Presidential Debate Streams Despite Network’s Demands

“DMCA Does Not Apply”: Musk Says X Will Not Remove CNN Debate Streams, Footage

Source | Submitted by nickythec

Yen Plummets to 37-Year Low: Bank of Japan’s Monetary Missteps Under Fire

The problem for the yen is the Bank of Japan’s reckless monetary policy, and that cannot be resolved by blowing tens of billions of dollars in ultimately useless market interventions.

Source | Submitted by rhollenb

Factory Farms vs. Family Farms: The Battle Over Definitions in Modern Agriculture

Factory farms are not farms. They are industrial livestock production facilities built and operated to gain the most economic benefit using the least amount of resources raising livestock in the least natural state possible.

Source | Submitted by Barbara

Can Solar Farms and Agriculture Coexist? The Quest for Agrivoltaics

One answer is agrivoltaics – the idea that production agriculture can coexist with utility-scale solar power.

Source | Submitted by Barbara

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Although I don’t believe solar panels to be a ‘green’ solution or a viable way to look at stepping away from fossil fuels, they have their place. I would much rather see small nuclear facilities, but it is what it is.

Taking into account solar panels are going to be placed on farm land I feel they could best be combined into grazing operations. Make the structures high enough so the animals don’t bother the panels, the panels also provide shade for the animals. Grasses grow reasonably well in such conditions, and although it might not make for optimal grazing land it at least provides a viable second use for the space being used. Probably best used in combination with sheep, or maybe even poultry.

Would save in having to import lamb from the other side of the globe as well. Just a thought as in the Netherlands the solar farm grounds under and around the panels are often maintained by small herds of sheep.

The solar farms I’ve seen in person don’t have a lot of grass. This may have to do with how they built it. The solar panels are so close together the ground doesn’t get much sun.

I agree the small nuclear reactor is the way to go but if someone really wants to go solar why not just give huge tax breaks to people to put them on their roofs. They could also improve the whole use the electric car to be the whole house backup generator. If I could get a combination solar array, electric car, backup generator system for less than $75,000 I’d do it.

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Indeed, to allow grass to grow it would require spacing between rows. That said, it might be that USA solar farms are set up differently than here in the EU. The ones I come across in the Netherlands and Germany are usually spaced so grass grows underneath. Spacing between rows is done so a small tractor or other vehicle can pass between the rows and clean the panels. In some cases there are also panels that are part translucent, allowing light to pass through between the PV cells.

With the own solar array I tend to agree with you. If you want it, get it and use it. I have quite a large set up as well, just lacking in energy storage at the moment. But I have panels and the energy is used to heat the house etc. We still have a gas connection as well as a wood burning stove as heating options, solar just happened to be the most cost effective in my situation.

In the Netherlands panels were heavily subsidized, so much so that we now produce too much energy on sunny days causing grid failures. Now I use my energy and purchase from the grid when I don’t produce enough, but people that produce more than they use now have to pay to deliver energy to the grid. On sunny days you can actually receive money if you are willing to take energy off the grid to reduce the overload. People are now installing battery packs to charge when energy is free or even pays out, to then use it at night.

Subsidies and tax breaks can disrupt a healthy economical ecosystem quickly, turning it into a monster that stops innovation, investments etc.

For me solar is one of the cheapest options to be somewhat self sufficient in energy. I am able to do so as I live in a rural area, different story if you live in a city or urban area, which most people do in the Netherlands.

Even though government is pushing EV’s it is almost impossible to charge if you live in an urban area and you don’t have your own charging station. In most cases you are not allowed to install a charging station, if you do your insurance goes through the roof as it is seen as a fire hazard (as are the vehicles themselves, so they are not allowed in quite a few underground parking areas, which is a big issue in such a tiny country with limited parking).

Anyway, I’m rambling on. The topic bothers me more than it should, mostly due to the stupidity of governing bodies that don’t have the foresight to look (even just a few years) into the future.

Solar farms are a stupid idea, there are so many rooves that could have the panels put on them and right were it gets used to boot. But it’s all about power companies making money, not letting people be energy independent. A lack of battery incentives has caused this daytime over supply issue, also poor old solar thermal gets over looked.

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