Post
Topic
Board Economics
Re: Could take 5-8 years to shrink Fed portfolio: Yellen
by
RoadTrain
on 09/05/2014, 19:50:52 UTC
I lost all respect for odolvlovo with his comment ^^^^

Since you obviously know more and better than Yellen, why aren't you running the Fed?
You must be very short-sighted if you unconditionally believe in what Yellen and other great economists say.

On the topic. It's quite predictable that Fed is likely to hold most of bought assets to maturity. In case they start raising interest rates they will incur paper losses. They will likely try to avoid realizing these losses by holding to maturity.
The only situation in which they might incur losses is if the rates they pay on liabilities are greater than average yield on assets.
But anyways earning profits is not a purpose of Fed's operations, so it may not matter.