The Fed Just Restarted the Money Printer (And Hopes You Won't Notice)

Starting Tomorrow, the Fed Will Begin Buying Billions in T-Bills—With No Stated End Date.

Yesterday, the Federal Reserve cut interest rates again, dropping the Fed funds rate from 4.00% to 3.75%. That’s the third cut since June, bringing the total reduction to a full percentage point.

You wouldn’t think rate cuts would come when inflation remains stubbornly above the Fed’s 2% target—and has been rising, not falling. Or when the stock market is sitting near all-time highs. Or when the economy, by the Fed’s own projections, is growing faster than expected.

But here we are.

Still, that’s only mildly interesting. I probably would have chosen to write about something else if it wasn’t for what the Fed announced alongside the rate cut.

I’ll get into the details below, but if you take one thing from all this, take this: they’re restarting the money printer on December 12th.

That’s as soon as tomorrow—so let’s dig in while we’re ahead.

“Reserve Management”

When announcing the rate cut, Fed Chair Jerome Powell said this:

We also decided to initiate purchases of shorter-term Treasury securities solely for the purpose of maintaining an ample supply of reserves over time.

In fact, starting tomorrow, December 12th, the Fed will begin purchasing $40 billion in Treasury bills per month.

Now, the official story the Fed is spinning, of course, is that this isn’t “stimulus” at all—it’s just “reserve management” that will go on “for a few months” to keep the plumbing from breaking. In Fed-speak, that means ensuring there’s enough liquidity sloshing around the banking system so that short-term funding markets don’t seize up and banks can meet their daily cash needs without scrambling for dollars.

When pressed on why they’re starting with such a large number—one reporter literally asked “Why so big?”—Powell blamed it on tax day. Here’s what he said:

If you look ahead, you will see that April 15th is coming up, and our framework is such that we want to have ample reserves even at times when reserves are at a low level temporarily. So that’s what happens on Tax Day. People pay a lot of money to the government, reserves drop sharply and temporarily. So this seasonal build up that we’ll see in the next few months was going to happen anyway.

Sounds temporary, right? Just seasonal liquidity management for tax day?

Not quite. Buried in that same answer, Powell admitted something far more revealing:

There’s also a secular ongoing growth of the balance sheet. We have to keep reserves, call it constant as it relates to the banking system or to the whole economy. And that alone calls for us to increase about $20-25 billion per month.

Let that sink in. Even without the tax-day excuse, the Fed plans to buy $20–25 billion per month just to maintain “ample reserves.” The seasonal front-loading is simply cover to start big and normalize the number.

The best part? They didn’t even bother giving an end date for when the purchases stop.

What’s Actually Happening?

I’ve seen a lot of misinformation floating around, so let me give you the straight story.

The first question is: Is this money creation?

Absolutely. The Fed can call it “reserve management” or whatever they want, but mechanically, it’s money printing:

Fed creates reserves → Fed buys Treasury bills → Banking system’s reserves increase → Fed’s balance sheet grows

That’s the exact same plumbing used in quantitative easing (QE).

Alright, but is this really QE?

Not exactly. Here’s the nuance.

Traditional QE targets long-term bonds and intentionally pushes down long-term yields to boost risk assets, housing, and make it cheaper for the government to borrow. What we have here is the Fed buying short-term T-bills, which don’t directly target long-term borrowing costs.

But here’s the deal: bond buying is bond buying, and Fed balance sheet expansion is Fed balance sheet expansion, no matter what label you slap on it. If the Fed’s balance sheet goes up, financial conditions loosen. Doesn’t matter whether they call it QE, reserve ops, or unicorn stabilization. Liquidity is liquidity.

And here’s the more important point.

Even if the Fed isn’t officially targeting the long end of the curve yet, the steps they’re taking now are the textbook pre-QE sequence. The Fed always begins QE with “technical,” “plumbing,” or “reserve management” operations to justify balance-sheet expansion before shifting to full-scale quantitative easing.

This happened in 2008 (pre-QE1) and again in 2019 (pre-COVID QE). In both episodes, the Fed first argued that it needed to expand reserves for “market functioning,” “ample reserves,” or “liquidity management.” Then—once reserves were high and liquidity normalized—they transitioned to outright QE.

So believe me when I tell you the $40 billion per month is just the starting dose. Powell may claim the purchases will taper down after a few months till the cows come home—but that’s not how this usually goes. And honestly, it’s absurd to pretend otherwise. Then again, he probably doesn’t care anymore, given that his tenure ends in several months.

Powell’s Impossible Math

But the absurdity of the meeting didn’t end there.

At the press conference, Powell also claimed the Fed remains committed to “bringing inflation sustainably to our 2% goal, and keeping longer-term inflation expectations well anchored.”

When I heard that, my first thought was: is this man living in the same country as we are? Same planet? Same universe?

In case Powell hasn’t noticed, inflation has been rising, not falling. At around 3.0%, it remains well above the Fed’s 2% target—and it actually edged up from 2.9% in August to 3.0% in September.

And yet despite all that, the Fed has already cut rates three times this year. And now they’re going to print $40 billion per month starting tomorrow.

But somehow, Powell expects inflation to come down.

Even more absurd, the Fed’s latest economic projections show them revising GDP growth for 2026 upward—from 1.8% to 2.3%.

When asked about this directly—how exactly GDP goes up while inflation comes down with rate cuts and money printing—Powell offered some hand-waving about productivity gains. Maybe AI, maybe not. He didn’t sound particularly convinced himself.

That’s some impressive mental gymnastics from a guy who clearly doesn’t seem to care anymore.

Now, the Fed’s own projections claim they’ll only cut rates one more time in all of 2026—just a single 0.25% cut for the entire year. But here’s the thing: Powell will be gone by then. His term ends in May 2026, and President Trump will appoint a new Fed chair. Given Trump’s constant pressure for lower rates and easier money, does anyone seriously believe the new chair will stick to just one rate cut? Give me a break.

The truth is simpler: Powell knows inflation isn’t tamed. He knows the market’s frothy. He knows cutting rates while restarting the money printer risks fueling another inflationary surge. But he’s out of options.

When asked why he’s deprioritizing Americans’ number one concern—high prices and inflation—Powell offered this gem:

So the best thing we can do is restore inflation to its 2% goal. And our policy is intended to do that. But also have a strong economy where real wages are going up, where people are getting jobs and earning money. And we’re going to need to have some years where real compensation is higher. You know, it’s positive, significantly positive. So wages, nominal wages are higher than inflation for people to start feeling good about affordability.

Translation: We can’t actually bring prices down, so we’ll just try to make wages go up faster than inflation and hope people feel better about it.

And of course, the Fed can’t fix these problems with rate cuts alone. So they’re moving to the next phase: restarting the money printer while pretending it’s something else.

Regards,

Lau Vegys

P.S. We believe the Fed’s move back into easy money will set off a massive bubble in commodities—especially in monetary metals like gold and silver. And the market’s already getting the message: gold just climbed to a one-month high following the Fed’s announcement, while silver hit a record high. That’s why a big portion of our Crisis Investing portfolio is in mining stocks, which Doug Casey himself owns. We recently released our latest issue—if you haven’t read it yet, be sure to check it out.