Interesting article...

...which demonstrates that the journalistic public is groks the implications of the current global monetary system.  One of the major themes of this blog is to point out that definitions like "leverage" and "debt" are consistantly misapplied.

But this is besides the point. It doesn't matter how "leveraged" the Fed is. It doesn't even make sense to talk about it. Leverage, after all, is how much money a bank is borrowing. But a central bank doesn't borrow money. It prints money. So its "leverage" is meaningless. Think about it this way. When the things a bank has bought are worth less than the money it's borrowed, it's insolvent—and if its lenders figure that out, they'll push it into bankruptcy by asking for their money back all at once. So we care about leverage because more of it makes this easier to happen. But what would it take for this to happen to a central bank? Well, suppose the Fed's assets, in this case, Treasury and mortgage bonds, lose so much value that it's technically insolvent. Who would the "lenders" asking for their money back even be?