“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.
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…
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.
