This from Reuters today:

‘The Federal Reserve sent a record $88.4 billion in profits to the U.S. Treasury last year, audited results showed on Friday – a big payday for the government thanks to the central bank’s massive bond purchases. The income came mostly from $80.5 billion in interest on Treasury bonds and mortgage-backed securities.

The central bank has in the last few years snapped up some $2.5 trillion in assets to help drag the U.S. economy from the 2007-2009 recession; unsatisfied with slow economic growth and high unemployment, it now buys $85 billion in bonds per month.

The Fed regularly transfers its profits, known as remittances, to the Treasury in what amounts to payments to U.S. taxpayers. Those profits could turn to losses in the years ahead, however, if the Fed sells assets as interest rates rise.’

As the inimitable George Carlin was fond of saying, “Let’s just examine some of the words being used here”.

1. ‘Profit’. Whose profit is this exactly? The profit was made with taxpayers’ money. The all-up cost in QE to the taxpayer during 2012 was $83bn. Note the chances of the taxpayers ever getting their capital back: 0%. Note the cost to the taxpayer of this QE monthly rate per annum: almost exactly a trillion dollars. Don’t bother to work out the margin there, because we didn’t invest a trillion to get 0.0884 trillion back, we blew it. Spent. Gone. Not coming back, ever.

2. ‘Snapped up’. Wow. Ben goes down the Primart discount store to snaffle bargains. My arse: Bernanke’s Fed paid top Dollar for worthless scrap – the better to underwrite more mergers, more jobs being moved offshore, more gains in share value, and more whopping dividends for the shareholders. And he paid for it all with our money.

3. ‘….in what amounts to payments to U.S. taxpayers’. I think we need to get a continuity guy on the set here, and give him a serious dressing down. Only a paragraph ago you said, ‘a record $88.4 billion in profits to the U.S. Treasury last year’. Since when was every last American taxpayer called Ulysses Stanford Treasury? But heh – if this means that every US citizen is going to get a rebate of $25, well whoopee and let’s put out more flags.

4. ‘Those profits could turn to losses in the years ahead, however, if the Fed sells assets as interest rates rise.’ Ah yes of course – the sting in the tail….or tale, depending on your degree of cynicism. ‘Losses’ is a word fairly low down in a hierarchy which, at the top, has ‘utter ruination for everyone’ and at the bottom says…..’losses’.

Last night at The Slog: The drivelling of those who report losses