Part 7/8:
Despite the bleak current standing, there's the potential for the Federal Reserve to return to profitability. As the balance sheet trends stabilize, continued retention of its current assets means they can begin refinancing existing debt with new loans at higher interest rates. This dynamic could eventually reverse the trend of losses if managed correctly.
However, once any profitability returns, the Fed will need to “pay itself back” for its prior losses before significantly contributing to government earnings. This restriction places an ongoing burden on the U.S. Treasury, which is grappling with a deficit exceeding $2 trillion annually.