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Monday, October 11, 2010

The Fed as a Profit Center

Federal revenues rose nearly 3 percent from fiscal year 2009 to FY2010. But virtually the whole increase came from higher corporate income taxes and a more than doubling of Federal Reserve earnings. Preliminary data in the Congressional Budget Office’s October Monthly Budget Review reveal that revenue climbed $57 billion to $2.16 trillion in the fiscal year that ended last month (see graph). Combined with a $67 billion fall in outlays, that revenue gain cut the federal deficit by $125 billion to a still astronomical $1.3 trillion, or 8.9 percent of GDP. Bad as that is, it’s well below 2009’s deficit of 10 percent of GDP.

It's like we all work for a huge conglomerate that has as its main business a giant hedge fund that can also print its own money.

Posted via email from rhymeswithclown's posterous

7 comments:

Cindy Kilkenny said...

Not very comforting, huh?

Jeremy R. Shown said...

Not in the least..........

J. Strupp said...

And how would corporate income tax revenues be faring without temporary assistance from that huge conglomerate's hedge fund?

Jeremy R. Shown said...

Struppster,

I take it you think they would be worse.

So do you think it's a good idea for our central bank to prop up the profits of private corporations?

J. Strupp said...

1. Oh I know they would be worse. Even the Mises people agree that that revenues would have collapsed in the absence of Fed. intervention.

2. I think it's a good idea for the Fed. to do whatever is necessary to fulfill it's dual mandate. If propping up profits of private corporations becomes a biproduct of this mandate in many cases, so be it.

Jeremy R. Shown said...

If it were just a byproduct, I wouldn't mind either. At this point it seems to be just about the only product of the government effort.

Anonymous said...

Strupp...

so what if the QE caused 35% inflation and a 15% increase in tax revenue?

ignoring fake propaganda like the CPI, inflation is rising at about 10% a year!!

if you think that you can print tax revenues you think like a child. (in a nation run by children)