The Federal Reserve is nearly done completing its revamp of its Washington, DC, headquarters with a price tag of $2.5 billion. The luxurious facility has come under intense scrutiny as many believe they are borrowing from public funds while already operating in a deficit. Yet, these funds will not be added to national debt calculations.
The Federal Reserve operates on a self-funding mechanism, allegedly, using revenue it generates from interest on government securities and other services such as payment processing. Yet, that interest is generated from public funds. However, the Federal Reserve does not need approval from Congress to finance internal costs as it manages to bypass the federal budget.
The national debt is calculated based on congressionally authorized borrowing. Since no Treasury securities were issued, these costs remain off-budget and outside final calculations. The Federal Reserve operated independently, and as such, it can build a massive new facility equipped with garden terraces, elaborate water sculptures, ceiling skylights, and a private elevator system to transport board members to the newly designed VIP dining suite.
There are several special lending programs budgeted through the Fed that will not be included in the national debt. For example, the central bank purchased $500 billion in short-term debt from local and state governments during COVID to push cash into the system. Loans provided through the Main Street Lending Program and the Money Market Mutual Fund Liquidity Facility (MMLF) are not factored. The Fed maintains some monetary policy tools absent of congressional approval, like discount window loans and overnight reverse repurchase agreements.
Foreign central banks may exchange their treasuries for dollars, which does not pull from public funds. The FedNow Instant Payment system for banks also operates independently, as does the Consumer Financial Protection Bureau (CFPB) that funds around $630 million annually.
The Fed has a $7.4 trillion asset portfolio that is not congressional appropriations. Any losses are considered deferred assets on the central bank’s balance sheet. Now, the Fed differs from other central banks, such as the Bank of Japan or the European Central Bank, which rely more on shareholder capital and government-backed reserves. The 12 regional Federal Reserve banks operate as quasi-private institutions with elected board members, whereas the ECB and BoJ operate as public entities.
The Fed returns around 90% of its net income to the US Treasury despite the current negative press. The new headquarters may be excessive, but it is paramount for the Fed to remain independent from the federal government. Politicians should not drive fiscal policy, as all confidence in the system would be lost. A central bank like Turkey’s, which is completely politically controlled, faces ongoing currency crises and inflation because politicians only want to patch up the short term to ensure they win the next election. Congress should have no say in the Fed’s budget – period.
Posted originally on Apr 29, 2025 by Martin Armstrong
German Finance Minister Jörg Kukies is urging the European Union to force nations to drastically increase aid to Ukraine under an emergency clause. This emergency clause acts as a loophole that could allow Brussels to surpass defense investment parameters.
Kukies penned a letter on April 24, 2025, to Brussels to state that the “changing environment in Ukraine “requires a significant build-up of defense capabilities with a major impact on its public finances.” This clause would force EU members to spend up to 1.5% of GDP on Ukraine for the next four years. Kukies also would like the European Commission to consider expanding what constitute as “defense” spending, as it “adequately reflects the multiple threats to security in Europe” and considering “in particular dual-use expenditure.”
Incoming chancellor Friedrich Merz has already agreed to spend €1 trillion on Ukraine’s military and infrastructure. Germany is not “leading” Europe as many believe. Rather, it is dragging the entire continent into the grave. This is not about helping Ukraine. This is about creating the next perpetual conflict to justify more government power, more taxation, and the further erosion of individual liberty.
The German government believes it has the funds to shell out. Yet, other EU members have not masked their hesitancy to sink into debt at the expense of Ukraine. When Foreign Policy Chief Neocon Kaja Kallas attempted to bend the bloc’s hand to increase spending, a few southern European nations like Italy and Spain shouted that they did not want to excessively increase their debt. Spanish Finance Minister Carlos Cuerpo touched on a point that caused Brussels to shudder. If Europe believes it is acting as a solid consolatory force, then why not consolidate the debt?
Spain proposed a temporary special purpose vehicle (SPV) that would restructure defense debt from national balance sheets by issuing joint European debts through bonds or a similar vehicle. EU and non-EU nations could fund the SPV with a shared repayment obligation. Brussels is still considering the proposal, but rest assured that the top economies in the EU will not want to share the debt obligation. The entire premise of the euro robbed lower GDP nations through a failure to consolidate debt, and nations like Germany refused to forgive their multiplied debt after they adopted the euro because every nation will put itself first. It was a fantasy to believe that a continent could erase its borders and operate as one.
The computer has warned that Europe is at risk of a depression. The EU is collapsing under its own weight. The unelected authoritarian regime in the EU is working to destabilize Europe to fight Russia, and member nations must stand idle and watch their nations spiral into debt to spur on a war that was never their battle to fight.
Posted originally on Apr 28, 2025 by Martin Armstrong
I have never witnessed such outright lies by a candidate as Carney. But hey, it has worked. With the votes in from the East, giving the Liberals 150 seats out of 343 so far, there is no way the Conservatives will get a majority. Our model provided three numbers for the Liberals: 41.25, 45.40, and 59.93. They are at 45.5 currently. His entire campaign has been about hatred of Trump.
Carney is a globalist, and he will sign up with the losing team, all for this agenda from the World Economic Forum, of which he has been indoctrinated as a key player. Mark Carney will remain Canada’s prime minister. There is no question about that. Even if the Conservatives took every seat in the West, they would still not have a majority and Carney will form a coalition if he didn’t get 172 seats.
As one reader just wrote in: “To be honest with you, I don’t care anymore, today Canadians have sealed their fate .” Our computer has been showing that Canada’s economy will take a nosedive over the next two years, into 2027. Of course, Carney will blame Trump. He has carried out this agenda from the Neocons to try to isolate Trump. Still, in the process, Carney has undermined trade relations with the United States far beyond Trump, and sources say he will try to shift to the EU, which can’t seem to get out of its own way when it comes to economics. EU consumer consumption is $1.29 out of $10 globally, with 450 million people, compared to 25% for the USA, with only 330 million people. The EU will likely move into a depression, so this won’t work out well for Canada.
Posted originally on Apr 28, 2025 by Martin Armstrong
QUESTION: Marty, Socrates seems to be pointing to a C$ bounce. Does this imply that Carney will lose, or does it mean the bounce will be brief on his nonsense and then turn south?
RE
ANSWER: The only hope that Carney has is a coalition. Comparing the Conservatives to the Liberals in Canada provides an interesting picture. Trudeau was able to be the leader of Canada with 32% of the vote. The computer clearly shows that Carney will beat Justin Trudeau, who was first elected as Prime Minister of Canada on October 19, 2015, and served until his recent resignation in January 2025. He led the Liberal Party to victory in three federal elections during his tenure. In 2015, he had 39.47% of the vote. Then in 2019, he won with 33.1%. Then in 2021, he won with 32.6% while the Conservatives beat him with 33.7%. This is the problem with a Parliamentary system – it allows fragmentation and coalitions.
Trump threw his 2 cents into the ring on Truth Social. That could help Carney. Canada would never become the 51st state. Each province would become a separate state, and that would mean each gets two senators, and they could join the Democrats and kill the US economy with their EQUALITY that has killed Canadian productivity. Canada’s once-thriving economy is now facing severe challenges, from a housing bubble that has pushed debt beyond GDP to a massive brain drain of skilled workers. With real estate prices climbing over 300% in two decades while wages lag far behind, homeownership is slipping further out of reach for most Canadians. At the same time, Canada’s productivity is declining, with the average worker producing 30% less than their U.S. counterpart. With rising discontent, increasing financial strain, and a lack of strong leadership. This has led to the question of how much longer Canada can hold on before a major economic crisis?
In the last election, the Conservatives beat Trudeau with 33.7% vs 32.6%. To get a majority, they need 172 seats. The Liberals will most likely carry the East – Newfoundland, Nova Scotia, Prince Edward Island, New Brunswick, Quebec, and Ontario. This election could ignite the separation fires burning beneath the surface in the West. Our model warns that it was the completion of a 72-year cycle in the 2021 election for the Liberals, and that should be the low point. They have a fighting chance this time and will beat Trudeau’s numbers.
We still have the risk of war in May. Germany has just instructed Zelensky not to agree to any peace deal with Trump. The key level will become 7225 in the future, going into May.
Posted originally on Apr 26, 2025 by Martin Armstrong |
COMMENT: Martin,
Had to laugh here’s a comment about Janice Stein and Mark Carney.
As my father in law always said, “in the valley of the blind the one eyed man sees the most.”
The world is full of Academics that have no clue, too many people playing business and politics with other people’s money and lives!
“Janice Stein Endorsed Carney . Canada’s Leading, Most Respected Political Scientist and International Affairs Expert Janice Stein saying “Mark Carney is the “World’s Leading Economist” and Could very well lead the “Whole World” through the Trump Crisis, let alone Canada.” Stein isn’t just a leading voice in Canada—she’s recognized worldwide for her expertise in conflict resolution, global governance, and international relations. When someone of her global standing says this, it’s a big deal! Janice Gross Stein is Canada’s leading, most respected political scientist and international affairs expert.”
When a third of the country works for the Government, and a third is living off the Government, it sure makes it hard for the other third to vote for a Government.
Unfortunately, this Monday, Canada will witness another Liberal win, which will confirm your forecast that Canada will split!
It’s just time!
Jim M
REPLY: Carney was a key player in this Net-Zero nonsense, and he has lied about everything and acts like he is running against Trump – nobody else. I have not yet confirmed that the coup at the WEF was also in hopes of supporting Carney to claim he is not truly linked to Schwab, since he is no longer there. Trudeau resigned to avoid a NO CONFIDENCE vote, which would have led to the loss of power for the Liberals. Every step of this game is to retain power for the LEFT.
Carney is the instrument of Canada’s demise, for the LEFT will always burn down their own houses to protest against the RIGHT. Carney offers nothing that will benefit Canada, and the joke that Canada will replace the USA as the new leader of the world is laughable. Canada is highly socialistic, so the “income inequality” is lower, just like Communist Russia and China, which ultimately caused their demise. The productivity of the US compared to Canada explains the cost of the more regulations that Canada adopts, following Marx’s socialist philosophy.
United States: $76,643
Canada: $56,316 The U.S. GDP per capita is about 36% higher than Canada’s in nominal terms.
The U.S. indeed has higher inequality, so that median income disparities may be less pronounced. The U.S. generally has higher labor productivity due to greater investment in innovation and technology. The U.S. population (332 million) is nearly 9x larger than Canada’s (38 million), the US economy accounts for 25% of the entire world’s consumer spending, which is why the US is the reserve currency of the world because everyone has to sell whatever products for export to Americans – not Canadians.
Carney’s Vision of Replacing the United States as New World Leader
There has been a coup at the World Economic Forum because these very LEFTIST views and agendas are collapsing. So, Carney wants to lead the world on a sinking ship? As one reader put it.
“It appears from here, at first glance, that the WEF is repainting its storefront in an effort to stay in business while narrowing its attacks on the global food supply chain to taking control of the water supply. Same depopulation goal, new coat of paint.”
FA in Arkansas
Military:
The US has one of the largest militaries globally, with approximately 1.3 million active-duty personnel, with 800,000 reserves, which is the highest globally at $877 billion (2023), about 3.5% of GDP.
Canada has around 68,000 active personnel and 27,000 reserves, which cost $26.5 billion (2023), roughly 1.3% of GDP.
The US military is a global powerhouse with unmatched scale and technology, while Canada’s smaller force emphasizes specialized roles, alliances, and domestic/Arctic security. Their cooperation through NATO and NORAD underscores a strategic partnership, with Canada often leveraging US capabilities for broader defense needs. Yet, Carney is claiming that Canada will now lead the world? Differences in budget and scope reflect distinct national priorities.
The 2025 Canadian federal election will be held on April 28 to elect members of the House of Commons to the 45th Canadian Parliament. The problem with Canada is that the Parliamentary System does not allow the people to vote for who should lead the country. Carney would never become president in the United States, where 42% would be the loser. The problem is that governments are cobbled together with coalitions, and this is what prevents any true economic progress for the future.
The LEFT has been declining since its high in 1949, necessitating coalition governments to remain relevant. Trudeau only won 32.62% of the vote in 2021. Carney should beat that since the 2021 election was most likely the bottom of a 72-year cycle. Additionally, the higher percentage of the workforce employed by the government in Canada naturally gives them an edge over conservatives. The rate of the US workforce employed in government is 13.8%, compared to 18.6% in Canada. This is what has lowered the Marxist view of “income equality” in Canada vs the USA.
We will do an Update on the threat of Canada Splitting soon.
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