http://www.economicpolicyjournal.com/2011/01/hot-fed-hides-major-accounting-change.html This looks to me like the sort of creative accounting that would put the average company director in jail for about 20 years, but apparently the US government is not audited and so the Federal Reserves debts now 'disappear', so the Fed remains rock solid despite losses beyond solvency. In effect it seems that the piper never has to be paid - so wall street gets another giant boost of confidence and an escape clause for bad debts. ie the Fed buys the bad debt, moves it to the negative liability side of the ledger in a forgotten filing cabinet somewhere in washington and that 'bad money' disappears. If this is so then this looks possible. (http://www.dailyreckoning.com.au/master-credit-plan-of-the-global-elite/2011/01/24/) Or am I missing something here? (ie: it looks like I'm dining in a restaurant and when the bill comes I say 'the owner already paid that' and so I can keep eating whenever I want with this excuse)
The article is too wordy, perhaps because the brief was to write so many words. But we can parse the essence from a few remarks. "An accounting methodology change at the central bank will allow the Fed to ... denote losses by the various regional reserve banks that make up the Fed system as a liability to the Treasury rather than a hit to its capital." That says it all. Bond holders get a rimming.
