Here Comes Yield Control

“I’d throw dollars out of helicopters if I had to, to stimulate the economy.”

—Ben Bernanke

October 1, 2025 — Jerome Powell had signalled capitulation – and on September 17th, the Fed made it official with a 25bp cut, the first one since a quarter point cut in December ’24.

They also did it with dovish talk, and only dissenter being Stephan Miran – the new Trump interim appointee – who had actually called for -50bp.

The Bank of Canada also cut a quarter point the same day – after holding steady for six months. The Bank of England held steady the next day, but as we also noted last month, they’d made five cuts in a row before then.

What did all these cuts have in common? The yield on both the US and Canadian 10-year government bonds went the wrong direction, practically instantly.

Turn Your Images On

Coming out of the September Fed meeting, there was a sudden surge in awareness around the Fed’s elusive “third mandate.”

It’s the lesser-known component of The Fed’s congressional directive, alongside the well-known “dual mandate” of price stability and maximum employment.

Since it was amended (in 1977), The Federal Reserve Act tasks the Fed with three goals (originally two): stable prices, maximum employment, and moderate long-term interest rates.

This third goal has historically been downplayed, as it’s often seen as a byproduct of achieving the other two, but Stephan Miran, the aforementioned Fed Board nominee and prominent critic of rate policy, brought it up at his confirmation hearing – and then Powell talked about it at the FOMC presser.

Originally, in the language of the 1977 Federal Reserve Reform Act, “moderate” was an adjective — it was a word describing the desired state of long-term rates.

But now, (at least in practice), it’s become a verb — something the Fed must do.

In FedSpeak, that translates to Yield Curve Control.

We’ve been saying for a long time that when it came time to rev up the money printer again, the Fed would do it under some other rubric than “Quantitative Easing” (QE), because by now, everybody knows what that is. YCC? Not so much.

What it means is that the Fed will buy unlimited bonds out at the long end of the yield curve in order to keep yields under some arbitrary line in the sand.

Japan has been doing this for decades. And every time a crisis flares up there — like last summer’s “Black Monday” carnage — it’s usually triggered by a breach of their yield threshold, requiring some emergency BoJ intervention.

The entire Everything Bubble that ran from the end of the GFC and went vertical through COVID was because of interest rate suppression.

At the end of the day, YCC is more of that – pushing rates below where an unfettered market would clear them.

We’ve been writing for a year how yields the world over are defying central bank cuts to their respective benchmark rates; what the Fed is signalling here, is the necessity to get out front and “moderate” the long end of the curve.

The Fed is now cutting rates, with stocks, Bitcoin and gold all at or near all-time highs. Meanwhile, bond yields are signalling less appetite for government debt, and fissures are beginning to appear in the consumer debt markets.

Mark Jeftovic
The Crypto Capitalist & Grey Swan Investment Fraternity

P.S. from Addison: Tomorrow, Mark will join us on Grey Swan Live! As you can see from today’s excerpt from his latest Crypto Capitalist newsletter, the timing is critical for protecting and growing your wealth.

Trump is about to commit the single greatest act of creative destruction ever.

We call it the Dollar 2.0. And again, history repeats…

1971: By flooding the system with an endless trove of physical dollars, Nixon’s actions led directly to the boom in gold prices… thus hatching an entire generation of gold millionaires.

And now…

2025: By flooding the system with an endless trove of digital dollars, stablecoins will lead directly to a Dollar 2.0 boom… thus hatching an entire generation of digital-dollar millionaires.

Due to the (official) arrival of government-mandated stablecoins — by way of the newly-passed GENIUS Act — the price of the “Dollar 2.0” could double over 20 times.

To prepare, Mark Jeftovic is joining us tomorrow on Grey Swan Live! Mark has been watching this all unfold for years. And he’s going to show how you can position your portfolio, even if you’ve never bought an individual cryptocurrency or token.

See you tomorrow at 2 p.m. ET. Sign up now if you’re not a member yet.

If you’d like, you can drop your most pressing questions right here: Feedback@GreySwanFraternity.com. We’ll be sure to work them in during the conversation.

“I’d throw dollars out of helicopters if I had to, to stimulate the economy.”

—Ben Bernanke

October 1, 2025 — Jerome Powell had signalled capitulation – and on September 17th, the Fed made it official with a 25bp cut, the first one since a quarter point cut in December ’24.

They also did it with dovish talk, and only dissenter being Stephan Miran – the new Trump interim appointee – who had actually called for -50bp.

What did all these cuts have in common? The yield on both the US and Canadian 10-year government bonds went the wrong direction, practically instantly.

Turn Your Images On

Coming out of the September Fed meeting, there was a sudden surge in awareness around the Fed’s elusive “third mandate.”

It’s the lesser-known component of The Fed’s congressional directive, alongside the well-known “dual mandate” of price stability and maximum employment.

Since it was amended (in 1977), The Federal Reserve Act tasks the Fed with three goals (originally two): stable prices, maximum employment, and moderate long-term interest rates.

Originally, in the language of the 1977 Federal Reserve Reform Act, “moderate” was an adjective — it was a word describing the desired state of long-term rates.

But now, (at least in practice), it’s become a verb — something the Fed must do.

In FedSpeak, that translates to Yield Curve Control.

What it means is that the Fed will buy unlimited bonds out at the long end of the yield curve in order to keep yields under some arbitrary line in the sand.

The entire Everything Bubble that ran from the end of the GFC and went vertical through COVID was because of interest rate suppression.

At the end of the day, YCC is more of that – pushing rates below where an unfettered market would clear them.

Mark Jeftovic
The Crypto Capitalist & Grey Swan Investment Fraternity

Trump is about to commit the single greatest act of creative destruction ever.

We call it the Dollar 2.0. And again, history repeats…

1971: By flooding the system with an endless trove of physical dollars, Nixon’s actions led directly to the boom in gold prices… thus hatching an entire generation of gold millionaires.

And now…

2025: By flooding the system with an endless trove of digital dollars, stablecoins will lead directly to a Dollar 2.0 boom… thus hatching an entire generation of digital-dollar millionaires.

Due to the (official) arrival of government-mandated stablecoins — by way of the newly-passed GENIUS Act — the price of the “Dollar 2.0” could double over 20 times.

See you tomorrow at 2 p.m. ET. Sign up now if you’re not a member yet.

If you’d like, you can drop your most pressing questions right here: Feedback@GreySwanFraternity.com. We’ll be sure to work them in during the conversation.

Back in April, when we published what we called the Trump Great Reset Strategy, we described the grand realignment we believed President Trump and his acolytes were embarking on in three phases.

At the time, it read like a conceptual map. As the months passed, it began to feel like a set of operating instructions written in advance of turbulence.

As you can expect, any grandiose plan would get all kinds of blowback… but this year exhibited all manner of Trump Derangement Syndrome on top of the difficulty of steering a sclerotic empire clear of the rocky shores.

The “phases” were never about optimism or pessimism. They were about sequencing — how stress surfaces, how systems adapt, and what must hold before confidence can regenerate. And in the end, what do we do with our money?!

Relative to GDP, the net international investment claim on the U.S. economy was 20% in 2003. It had swollen to 65% by 2023. Practically every type of American company, bond, or real estate asset now has some degree of foreign ownership.

But it’s even worse than that. As the federal deficit has pumped up the GDP figures, and made a larger share of the economy dependent on government spending, the quality and sustainability of GDP have deteriorated. So, foreigners, to the extent they are paying attention, are accumulating claims on an economy that has been eroded by inefficient, government-directed spending and “investments.” Why should foreign creditors maintain confidence in the integrity of these paper claims? Only to the extent that their economies are even worse off. And in the case of China, that’s probably true.

As global government interest expense climbed, gold quietly followed it higher. The IIF estimates that interest costs on government debt now run at nearly $4.9 trillion annually. Over the same span, gold prices have tracked that burden almost one-for-one.

Silver has recently gone along for the ride, with even more enthusiasm.

Since early 2023, Japan’s 10-year government bond yield has risen roughly 150 basis points, touching levels not seen since the 1990s.

Over that same period, gold prices have surged about 135%, while silver is up roughly 175%. Zoom out two years, and the divergence becomes starker still: gold up 114%, silver up 178%, while the S&P 500 gained 44%.

According to the American Association of Individual Investors, the average retail investor has about a 70% allocation to stocks. That’s well over the traditional 60/40 split between stocks and bonds. Even a 60/40 allocation ignores real estate, gold, collectibles, and private assets.

A pullback in the 10% range – which is likely in any given year – will prompt investors to scream as if it’s the end of the world.

Our “panic now, avoid the rush” strategy is simple.

Take tech profits off the table, raise some cash, and focus on industry-leading companies that pay dividends. Roll those dividends up and use compounding to your overall portfolio’s advantage.

Back in April, when we published what we called the Trump Great Reset Strategy, we described the grand realignment we believed President Trump and his acolytes were embarking on in three phases.

At the time, it read like a conceptual map. As the months passed, it began to feel like a set of operating instructions written in advance of turbulence.

Silver has recently gone along for the ride, with even more enthusiasm.

Since early 2023, Japan’s 10-year government bond yield has risen roughly 150 basis points, touching levels not seen since the 1990s.

A pullback in the 10% range – which is likely in any given year – will prompt investors to scream as if it’s the end of the world.

Our “panic now, avoid the rush” strategy is simple.

Take tech profits off the table, raise some cash, and focus on industry-leading companies that pay dividends. Roll those dividends up and use compounding to your overall portfolio’s advantage.