following this statement to its logical implications, if they lower interest rates even further below a Taylor Rule, then that would be deflationary since less money would find its way back into the economy and fuel inflation?

by not printing money they are printing money or something..cough...tell me you don't understand monetary policy without telling me you don't understand monetary policy.

the money they lose when rates go up is of no more significance than the profits they make when they create high-powered reserves. everything on the Fed's balance sheet is outside the real economy. what matters to the real economy is the current nominal and real interest rates and the expectations for where they are going.

net income (as opposed to cash flow) is mostly a fiction in general but all the more so when it's the Fed.

these stories amount to "boo! OMG big numbers! Zurg say stop doing economics, they have played us for absolute fools" https://ifunny.co/picture/stop-doing-economics-eyears-of-yet...