(CNSNews.com) - The same day that the Federal
Reserve's Federal Open Market Committee announced last
week that the Fed would continue to buy $40 billion in
mortgage-backed securities (MBSs) and $45 billion in U.S. Treasury securities
per month, the Fed also released its latest weekly
accounting sheet indicating that it had already accumulated more
Treasuries and MBSs than the total value of the publicly held U.S. government
debt amassed by all U.S. presidents from George Washington though Bill Clinton.
Since the
beginning of September 2008, in fact, the Fed's ownership of Treasury
securities and MBSs has increased seven fold.
As of the close
of business Thursday, the Fed said, it owned approximately $2,052,055,000,000
in U.S. Treasury securities and approximately $1,339,771,000,000 in
mortgage-backed securities—for a combined total of about $3,391,826,000,000 in
Treasury securities and MBSs.
The U.S.
Treasury divides the U.S. government debt into two parts: debt held by the
public, which includes publicly traded Treasury securities such as Treasury
bills, notes and bonds, and intra-governmental debt, which is money the
Treasury has borrowed out of the Social Security trust fund and other
government trust funds and then used to pay current expenses.
As of the
opening of business back on Nov. 23, 2001, according to the Daily Treasury
Statement, the federal government’s total debt held by the public
was $3,383,605,000,000. (By the close of business that day, the total debt held
by the public would increase to 3,406,661,000,000.) The $3,383,605,000,000 in
U.S. Treasury debt held by the public as the morning of Nov. 23, 2001,
represented the total publicly held debt the federal government had accumulated
until that date from the moment the Treasury first opened during the presidency
of George Washington.
The
$3,383,605,000,000 the Treasury owed to the public as of the morning of Nov.
23, 2001 was less than the $3,391,826,000,000 in Treasury and mortgage-backed
securities owned by the Federal Reserve as of the close of business last
Thursday.
Thus the
Federal Reserve now owns more debt in the form of U.S. Treasury securities and
MBSs than the sum total of the publicly held debt that the U.S. government
accumulated from George Washington’s administration into November 2001, during
President George W. Bush’s first term.
The
mortgage-backed securities owned by the Fed are those that have been issued and
guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae. Ginnie Mae is
government-owned corporation operated by the U.S. Department of Housing and
Urban Development. Fannie Mae and Freddie Mac are congressionally chartered,
government-sponsored enterprises, that are now held in conservatorships by the
federal government.
“Fannie Mae and
Freddie Mac are chartered by Congress as government-sponsored enterprises
(GSEs) to provide liquidity in the mortgage market and to promote homeownership
for underserved groups and locations,” the Congressional Research Service
explained in a report published this August. “They purchase mortgages,
guarantee them, and package them in mortgage-backed securities (MBSs), which
they either keep as investments or sell to institutional investors. In addition
to the GSEs’ guarantees, investors widely believe that MBSs are implicitly
guaranteed by the federal government. In 2008, the GSEs’ financial condition
had weakened and there were concerns over their ability to meet their
obligations on $1.2 trillion in bonds and $3.7 trillion in MBSs that they had
guaranteed. In response to the financial risks, the federal government took
control of these GSEs in a process known as conservatorship as a means to
stabilize the mortgage credit market.”
The federal
government first took control of Fannie Mae and Freddie Mac on Sunday, Sept. 7,
2008. In its last weekly
accounting sheet released before that, on Thursday, Sept. 4, 2008,
the Fed said that it owned $479.726 billion in U.S. Treasury securities. That
sheet did not even include a line item for mortgage-backed securities.
The Fed’s
combined ownership of $3,391,826,000,000 in Treasury securities and
mortgage-backed securities is now more than 7 times as great as the $479.726
billion in Treasury securities it owned five years ago before the takeover of
Fannie and Freddie.
Of the ten
members of the Federal Open Market Committee who voted on whether the Fed
should continue purchasing $40 billion in MBS each month and $45 billion in
Treasury securities, only one voted no. That was Esther George, who is
president of the Federal Reserve Bank of Kansas City.
The Fed’s
press release announcing the vote said George voted against the continued
buying of Treasury securities and MBS because she was “concerned that the
continued high level of monetary accommodation increased the risks of future
economic and financial imbalances and, over time, could cause an increase in
long-term inflation expectations.”
September 22,
2013 - 3:47 PM By Terence P.
Jeffrey
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Jeffrey RSS
Comments:
$45 billion a month is $540 billion a year. The House, Senate and Whitehouse need to
agree to cut a half trillion from annual spending. Let’s start with HUD, EPA,
FDA, DOT, USDA, Education, Labor, Energy, Interior, Commerce and all military
foreign aid. Let the States handle this; it’s “constitutional”.
Norb Leahy, Dunwoody GA Tea Party Leader
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