Federal Reserve "Losses" on Asset "Purchases"

"The U.S. Federal Reserve is carrying $330 billion in unrealized losses on its holdings of U.S. Treasury and mortgage-backed securities as of the end of March, according to newly released financial statements showing the impact of rising interest rates on the market value of the Fed's balance sheet."

https://www.reuters.com/markets/us/fed-carrying-330b-unrealized-losses-its-asset-according-q1-financial-statement-2022-05-27/

I understand how this is SUPPOSED to work, but I'm guessing that is not what is really happening.

This is how it's SUPPOSED to work:

Federal Government wants to spend more money on this, that, and something else. They don't want to increase taxes, so they borrow the money.

They auction Treasury Bonds. Their offer is something like, "We will pay you $10,000 ten years from now (I'm not getting into coupon interest here.) You bid what price you think you want for that promise." People bid $9,000 or $9,500 and the bid price gets higher and higher until there are no more higher bids.

Then, under Quantitative Easing, the Federal Reserve outbids the last highest bid, say, $9,800 and they take possession of that "promise" which is a physical piece of paper with a serial number and such details so that if you or I had it in our safe at home, or a safe deposit box at the bank, we can take it to the bank and collect the $10,000 ten years from now. And we can also probably endorse the certificate to someone else and they give me something of value like cash or gold or whatever, and then he owns that promise.

IMO the certificates that the Federal Reserve owns should just be sitting in a vault until they mature, and then surrendered to the US Treasury. There shouldn't be unrealized gains or losses, Jerome Powell trying to time the market to make a profit.