Part 6/8:
The Fed's operational losses can be generally attributed to its past decisions, particularly during the COVID-19 pandemic when low-interest rates were established. The assets bought during this period, many yielding low-interest rates (around 2%), now work against the Fed as it pays out roughly 4% on reserves. This discrepancy between income and expenses creates substantial losses.
As losses accumulate, the Fed has to effectively print money to meet its obligations, reinforcing further inflationary pressures within the economy. Turning profitable again appears improbable until the Fed reconciles these losses, which could lead to ongoing monetary inflation.