[GUEST ACCESS MODE: Data is scrambled or limited to provide examples. Make requests using your API key to unlock full data. Check https://lunarcrush.ai/auth for authentication information.]  Richard Crowe [@SocraticQuant](/creator/twitter/SocraticQuant) on x 13.4K followers Created: 2025-07-25 17:15:48 UTC 🚨Higher Fed Rates generates long term profits for the Fed (a semi private corporation.) 🚨 Higher Federal Reserve interest rates can increase the Federal Reserve's income, but the relationship isn't straightforward. The Fed generates revenue primarily from interest on its holdings of U.S. Treasury securities, mortgage-backed securities, and other assets in its portfolio, which was about $XXX trillion as of early 2025. When the Fed raises interest rates, the yields on newly purchased securities increase, potentially boosting interest income over time. However, there are complicating factors: X. **Cost of Liabilities**: Higher rates increase the interest the Fed pays on reserves held by banks and on reverse repurchase agreements. Since September 2022, the Fed has been operating at a loss because these interest expenses have exceeded its interest income. For example, in 2023, the Fed reported losses of $XXXXX billion due to high interest payments. X. **Portfolio Composition**: Many of the Fed’s securities were purchased when rates were low, yielding less income. As rates rise, the market value of these older, lower-yielding securities drops, though the Fed holds them to maturity, avoiding realized losses. X. **Remittances to Treasury**: When the Fed earns a profit (interest income minus expenses), it remits the excess to the U.S. Treasury. Higher rates could increase profits if income outpaces expenses, but since 2022, losses have led to zero remittances, with deferred assets recorded instead (e.g., $XXX billion by late 2024). In summary, higher rates can lead to more income from new securities but also raise costs, often resulting in net losses in the short term, as seen recently. Over time, as the portfolio rolls over to higher-yielding assets, profitability could improve, assuming expenses stabilize. XXXXX engagements  **Related Topics** [collateralized debt obligations](/topic/collateralized-debt-obligations) [federal reserve](/topic/federal-reserve) [fed](/topic/fed) [Post Link](https://x.com/SocraticQuant/status/1948794323254083918)
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Richard Crowe @SocraticQuant on x 13.4K followers
Created: 2025-07-25 17:15:48 UTC
🚨Higher Fed Rates generates long term profits for the Fed (a semi private corporation.) 🚨
Higher Federal Reserve interest rates can increase the Federal Reserve's income, but the relationship isn't straightforward. The Fed generates revenue primarily from interest on its holdings of U.S. Treasury securities, mortgage-backed securities, and other assets in its portfolio, which was about $XXX trillion as of early 2025.
When the Fed raises interest rates, the yields on newly purchased securities increase, potentially boosting interest income over time.
However, there are complicating factors:
X. Cost of Liabilities: Higher rates increase the interest the Fed pays on reserves held by banks and on reverse repurchase agreements. Since September 2022, the Fed has been operating at a loss because these interest expenses have exceeded its interest income. For example, in 2023, the Fed reported losses of $XXXXX billion due to high interest payments.
X. Portfolio Composition: Many of the Fed’s securities were purchased when rates were low, yielding less income. As rates rise, the market value of these older, lower-yielding securities drops, though the Fed holds them to maturity, avoiding realized losses.
X. Remittances to Treasury: When the Fed earns a profit (interest income minus expenses), it remits the excess to the U.S. Treasury. Higher rates could increase profits if income outpaces expenses, but since 2022, losses have led to zero remittances, with deferred assets recorded instead (e.g., $XXX billion by late 2024).
In summary, higher rates can lead to more income from new securities but also raise costs, often resulting in net losses in the short term, as seen recently. Over time, as the portfolio rolls over to higher-yielding assets, profitability could improve, assuming expenses stabilize.
XXXXX engagements
Related Topics collateralized debt obligations federal reserve fed