Clearly, there’s a mismatch. The Fed earned $122.5 billion in interest income in 2021. Assuming this figure stays constant (it won’t, but bear with me) we’re talking about almost a quarter trillion in losses for the Fed at a 4% interest rate.
Simply put, they’ll try this experiment, realize it won’t work and get back to monetizing debt. Despite nearly $9 billion spent annually on economists and operations, I doubt any of them have even considered this. As the Fed effectively goes broke, so does the currency. We’re rapidly approaching the moment when “Project Zimbabwe” moves from conceptual to reality.