Two weeks ago we reminded the world that thanks to soaring interest rates, which will only keep rising until the Fed figures out what "big-enough" crisis it uses to trigger QEx+1, the staggering losses on global fixed income securities which according to the IIF amount to $307 trillion - as calculated by DB's Jim Reid - have risen to a staggering $107 trillion. And while thanks to such facilities as the BTFP much of the MTM risk has been transferred (if only for the time being) away from commercial banks and to the Fed, the cumulative losses at central banks are now absolutely staggering, starting with the biggest and baddest one of all, where the Fed operating loss is now $111 billion and rising with every day that the Fed pays out more in interest to banks (excess reserves) and money markets (reverse repos) than it collects on its bond portfolio...

... while the cumulative MTM loss on its multi-trillion bond and MBS portfolio is now a staggering, hold on to your hats, $1+ trillion (this despite unwinding more than $1 trillion in assets on its balance sheet since the early 2022 peak).

And yet, as everyone knows by now, the Fed will never go bankrupt thanks to printing the world's reserve currency. That's right: the accounting treatment of record income or balance sheet losses is, well, none: they just assume that the Fed will merely print enough to plug any hole, and so the Fed is exempt from the ordinary rules of capitalism where a big enough loss will eventually put you out of business. Which is a bit of a philosophical paradox: on one hand, the Fed by default remits its profits to the Treasury, be they $1 or $1 trillion... yet when it has a net loss at the end of the year, the Treasury is not bound to bail it out, which is the sweetest form of crony capitalism ever conceived, and is by far the biggest benefit to whatever nation is the issuer of the world's reserve currency du jour.

The same, however, can not be said for other central banks such as the Bank of England (which about a hundred years ago relinquished global reserve currency status to the US), and which one year ago had to be bailed out by the UK Treasury after the central bank suffered its first huge losses from the QE program (see "Treasury bails out BoE for first losses on QE programme".)