🚨 THIS IS SHOCKING A former World Bank President says the Fed is creating a false illusion that the US economy is strong. And this is causing a major problem for the dollar and the real economy. During the low-rate years, the Fed bought a massive amount of government bonds and mortgage securities. When rates later surged, those low-yield assets became expensive to hold because the Fed had to pay much higher interest on bank reserves and money market funds. That is why the Fed reported record operating losses of $114.6B in 2023, $77.5B in 2024, and another loss in 2025, while carrying a deferred asset of roughly $245B before Treasury remittances can resume. But former World Bank President Malpass is saying that this isn't about just losses. He says the Fed is effectively borrowing from banks and money market funds at high rates while holding lower-yielding government bonds. That trade makes the Fed look less like a central bank and more like a leveraged bond fund. The real damage is what this does to the economy. Banks can earn risk-free interest by parking money with the Fed instead of lending to businesses. That means less capital for small business loans, inventory financing, expansion, hiring, and real economic growth. In 2025, the Fed still paid around $167B in interest on reserve balances to banks and financial institutions, even after those payments fell from 2024 levels. So the system is doing something very strange: Banks lend safely to the Fed. The Fed holds government debt. The Treasury loses remittances. The private economy gets less credit. Malpass says this also makes government finances look better than they really are, because Fed bond buying helped keep yields suppressed for years and encouraged Washington to borrow aggressively. Now rates are higher, debt costs are rising, and the losses are showing up. This is not money printing in the simple way people think. It is money being pulled into central bank balance sheets and used to finance government bonds while the productive economy competes for what is left. If the Fed keeps absorbing capital while paying high risk-free rates, banks have less incentive to lend into the real economy. If the Fed unwinds too fast, bond markets can break. And if losses keep growing, confidence in the dollar and Treasury market becomes the real risk. This is a massive trap, and there's no way for the Fed to get out of this.(Crypto Rover)