Warren Buffett: The Fed is the greatest hedge fund in history. In a speech at Georgetown University, Warren Buffett had some interesting insights on the current role of the Federal. He only half-jokingly referred to the Fed as the greatest hedge fund in history because of the Fed's ability to make money of its bond purchases. The Fed is earning about $80 to $90 billion a year for the government off its more than $3 trillion of bond purchases. Buffett says the Fed needs to be very careful how its ends this position as this type of action has never been taken before. If interest rates spike, it could badly impact the value of the Fed's bond portfolio and hurt the Fed's credibility. While the Fed can always print more money to offset these losses, it would impact the US dollar's status as the World reserve currency. (VIEW LINK)
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