The Treasury currently pays out $203 billion in coupon interest and something on the t-bills, which I took the liberty of rounding to 0, which isn’t that far from the truth.
What we see is that while the Fed only owns 16% of all T-bills and Bonds it controls almost 30% of all interest paid. Again, the Fed is managing this on purpose. Bonds with greater than 8% are all almost at the 70% limit. They went and targeted those bonds. It lets them funnel more money into the system by buying high priced bonds, and has a bigger benefit to treasury who gets to pay itself the 8% coupons and leaves the rest of the world to own the 1% and 2% coupon bonds.
The Fed paid for hurricane Sandy. Hurricane Sandy will cost us $60 billion or so, and the Fed, happens to have $60 billion in income that can be used. Our deficit this past year would have been $100 billion greater without the Fed direct payments (they have mortgages and other assets).
The indirect benefits are also large. A measly 1% higher rate on the one year debt getting rolled over would have added $30 billion to the deficit. The numbers are mind boggling. If Ben could figure out how to get himself paid 2 and 20 on that portfolio he would be one rich professor.
Read more: http://www.businessinsider.com/fed-balance-sheet-fairy-tale-ending-2013-2#ixzz2M0tUnHXI