Federal Reserve pays government $88.9 billion

Published on NewsOK Modified: January 10, 2013 at 11:14 am •  Published: January 10, 2013
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WASHINGTON (AP) — The Federal Reserve paid the federal government a record $88.9 billion in 2012. The central bank earned the money from the Treasury bonds and mortgage-backed securities it has purchased to drive interest rates lower and boost the economy.

The Fed said Thursday that the 2012 payment was up 17.9 percent from 2011 when it paid the federal government $75.4 billion. It also surpassed the previous record payment of $79.3 billion made in 2010.

The Fed began buying Treasury bonds and mortgage bonds during the last recession and has kept up the effort since the downturn ended in June 2009 in an effort to boost the sub-par recovery and lower high unemployment. It is currently purchasing $85 billion in bonds each month.

Fed officials say the massive bond buying, known as quantitative easing, is needed until economic growth is stronger. But critics contend that the bond purchases could ultimately lead to higher inflation.

All of the Fed's purchases have pushed the central bank's balance sheet to $2.92 trillion, more than three times the size of the Fed's holdings before the financial crisis struck in the fall of 2008.



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