“In ordinary times it would be ignorant to ask, “Who’s going to bail out the Fed?” — but then again these aren’t ordinary times. Solvency of the Federal Reserve Bank shouldn’t be an issue because it carries the full faith and credit of the United States of America. In theory, the only way the Fed could need a bailout is if the federal government fails. While theory is interesting, political reality is an entirely different story. The Federal Reserve is putting its future at risk by ignoring its own likely financial results when it raises interest rates. Simply put, rising interest rates will hurt the Fed by making interest costs higher and asset values lower.” Read more.
“Who’s Gonna Bail Out the Fed?”
Forbes, May 22, 2011.