The Fed now holds just over $1 trillion in Treasuries, and if inflation rose by a couple of percentage points, it would dent the value of those holdings by about 10 percent, leaving the Fed with a $100 billion loss. That's painful by any standard. It's also only what they want us to hear. Without an actual independent audit of the Fed (as Rep. Ron Paul suggests and has not been done), we may never know the true answer to this question until it's too late. Read the article here.