Peter Schroeder for the The Hill reported Tuesday that the Federal Reserve quietly transferred $76.9 billion in profits to the Treasury department.


The vast majority of the Fed’s earnings came from interest income obtained from its massive holdings in Treasury debt, mortgage-backed securities from Fannie Mae and Freddie Mac, and other government debt securities. It also earned several billion dollars from the sale of Treasury securities and another $152 million from foreign-currency trades.

This expansion of the balance sheet is part of a calculated effort to boost economic output through other channels:

The Fed has dramatically expanded its balance sheet in recent years, in part due to its broad efforts to prop up the ailing financial system by buying the debt of struggling entities like American International Group (AIG). Later, the Fed added more to its portfolio by way of Treasury bonds as part of an effort, called quantitative easing, to boost the economy.


So what’s Quantatative Easing?

Per Investopedia:

Central banks tend to use quantitative easing when interest rates have already been lowered to near 0% levels and have failed to produce the desired effect. The major risk of quantitative easing is that, although more money is floating around, there is still a fixed amount of goods for sale. This will eventually lead to higher prices or inflation