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IPFS News Link • Federal Reserve

Federal Reserve's "net worth" collapses 33% in two weeks

•, Simon Black

First we need a quick accounting background. And, stay with me, because this is important.

Think about your own finances. You, me, everyone… we all have assets and liabilities.

Your assets might be things like cash, your house, car, baseball card collection, etc.

And your liabilities are loans, credit card debt, etc.

The difference between the two can be thought of as your 'net worth'. And hopefully it's positive, i.e. your assets exceed your liabilities.

In accounting, this concept of net worth is known as 'equity'. A company like Apple that has a lot of assets but not a lot of debt has substantial equity.

(As an investor, I typically look for opportunities where I can buy a great business or its shares for less than its equity. But we'll save that for another time.)