The Money Printer Is Coming Back—And Trump Is Taking Over the Fed

“Inflation is always and everywhere a monetary phenomenon.”

– Milton Friedman

December 9, 2025 — Something happened on Monday last week that barely made headlines but will shape markets for years to come.

On December 1st, the Federal Reserve officially ended quantitative tightening. After three years of what was supposed to be draining liquidity from the system, the Fed threw in the towel.

Let me bring you up to speed on what actually happened—and why it matters.

But first, some backstory…

As you may recall, the Fed has already cut rates twice this year—in September and October. Markets are pricing in another cut at the December meeting with an 88% probability. By year-end, the Fed funds rate could drop from 4.00–4.25% down to 3.50–3.75%.

But short-term rate cuts don’t control what really matters: longer-term borrowing costs.

The Fed can set the Fed funds rate, which affects overnight lending between banks. But it cannot directly control the 10-year Treasury yield—the benchmark that dictates mortgage rates, car loans, corporate borrowing costs, and the true price of credit in the economy. The market sets those longer-term rates based on inflation expectations and supply/demand for Treasuries.

And those longer-term rates have been stubborn. The 10-year Treasury is still hovering around 4%, even after the recent cuts.

That’s why rate cuts alone won’t deliver those cheaper mortgages and car loans that President Trump keeps talking about. To push down longer-term yields, the Fed needs more than a cut in the Fed funds rate.

It needs to buy bonds. A lot of them. In other words: it needs the money printer.

The Fed Just Gave Up

Since June 2022, the Fed has been letting up to $95 billion in securities mature each month without replacing them. That’s quantitative tightening—QT—the opposite of quantitative easing (QE), aka money printing.

Of course, as I’ve said before, it’s all been for show. They chose the slowest possible method of draining liquidity—letting bonds “roll off” as they mature rather than actually selling them or forcing banks to return cash. And the result? After three years, they’ve barely made a dent.

But even this apparently proved a little too much for the system. By late November, bank reserves had dropped to about $2.8 trillion—the lowest since 2024—and overnight funding rates crept higher. Warning lights started flashing.

And so on November 29, Fed Chair Jerome Powell confirmed what everyone paying attention already suspected: QT was ending on December 1. No tapering, no gradual slowdown. Just done.

Now, if you’ve been reading us for any length of time, you know the Fed isn’t just hitting pause. They’re getting ready to start printing again. The end of QT always leads to QE. One flows into the other.

Powell himself hinted at this back in October, saying: “At a certain point, reserves will have to start growing gradually.”

New York Fed President John Williams backed him up a few weeks later in November, warning that the Fed will “soon need to grow its balance sheet again.” Not maybe. Not eventually. Soon. He added: “I expect that it’s not going to be long before it happens.”

Dallas Fed President Lori Logan also warned that if repo rates—which are simply short-term loans backed by Treasuries, the day-to-day plumbing that keeps the financial system functioning—keep rising, “the Federal Reserve will need to begin buying assets.”

Meanwhile, Evercore—one of Wall Street’s most respected macro shops—predicts the Fed may need to buy up to $50 billion per month starting in Q1 2026.

So make no mistake: QE is coming back.

In fact, in a way it’s already back, with the U.S. Federal Reserve quietly injecting about $13.5 billion into the banking system through overnight repurchase agreements — the second-largest liquidity operation since the COVID era, according to media reports.

The official story will, of course, be that it’s not “stimulus” at all — it’s just “reserve management” to keep the plumbing from breaking.

But currency creation (note: I’m not saying money) is currency creation. When the Fed is buying bonds, liquidity pushes into every corner of the market. Asset prices rise. Real yields fall. Risk-taking ramps up.

The Other Half of the Story: Trump’s Fed Takeover

The end of QT and the restart of QE is one thing. The ongoing Trump takeover of the Federal Reserve is the other—and it’s equally important.

Trump has been trying to reshape the Fed for months. First came Stephen Miran’s appointment—the architect of what we’ve been calling Trump’s Monetary Reset. Then came Trump’s attempt to remove Fed Governor Lisa Cook on mortgage-fraud allegations—something no president has tried in over a century of the Fed’s existence.

These weren’t random moves. They were steps in a plan.

And now that plan is coming to a head as Powell’s term ends in May 2026.

Trump and Powell are no buddies. They’ve been fighting over rate cuts all year—Trump demanding more, Powell holding back. Even after cutting twice, Trump called him “grossly incompetent” and said he’d “love to fire” him. The tension has been building for months.

And Trump now seems ready to install someone who shares his appetite for lower rates and easier money.

Trump has been dropping hints for weeks—saying on November 18, “I think I already know my choice,” and then doubling down last Sunday aboard Air Force One with, “I know who I am going to pick… we’ll be announcing it.”

He was referring to one Kevin Hassett, who—according to a recent Bloomberg report—has emerged as the overwhelming favorite to become the next Fed chair.

Most people have never heard of Hassett. So here’s the short version.

Hassett is Trump’s man. He served as Chair of the Council of Economic Advisers from 2017 to 2019, where he was a key architect of the 2017 Tax Cuts and Jobs Act. Trump called him “a true friend” when he left in 2019. When COVID hit, Trump brought him back as a senior advisor. Now he’s running Trump’s National Economic Council—essentially quarterbacking economic policy across the entire administration.

His views on monetary policy?

Identical to Trump’s. Hassett favors lower rates, easier credit, and aggressive monetary easing to juice growth.

He’s also echoed Trump’s attacks on Powell. He’s said interest rates are too high, that Powell was “late to the game,” and that Fed officials have been “putting politics ahead of their mandate.” When Trump fired the head of the Bureau of Labor Statistics last summer, Hassett defended it on TV.

Last month, he told Fox News: “I would be cutting rates right now… the data suggests that we should.”

In other words: with Hassett, Trump gets someone who won’t fight him. A yes-man. Which, of course, is exactly why Trump wants him.

So how likely is Trump to actually get him confirmed?

Pretty high. If Trump wants Hassett, odds are he gets him. The Fed chair is a presidential appointment that only needs a simple Senate majority, and Republicans are fully aligned behind Trump’s push for lower rates. Democrats aren’t exactly itching for a public brawl over a nominee who promises voters cheaper mortgages, either. Hassett checks all the boxes—credentialed enough to pass the smell test, loyal enough to keep Trump happy, and not nearly controversial enough to trigger a full-scale confirmation war. Barring some surprise scandal or an unexpected revolt in the Senate, Hassett becoming the next Fed chair is the base case.

In fact, markets are already acting like it’s a done deal. Treasuries rallied and long-term yields dipped on the Bloomberg report, as investors started to price in Trump’s takeover of the Fed and the return of easy money.

Position accordingly.

Regards,

Lau Vegys

Doug Casey’s Crisis Investing & Grey Swan Investment Fraternity

P.S. from Addison: The Fed’s two-day meeting begins this morning, and unless Jerome Powell wakes up with a mystical revelation, we’re getting the anodyne quarter-point cut everyone already priced in.

The real drama — such as it is — lies in the path the Fed sketches for the next few months. A few soothing phrases about “progress on inflation” and “flexibility in policy stance,” and suddenly the S&P might be clinking eggnog glasses at fresh all-time highs before Santa even boots up his sleigh.

As Dan Denning reminded us on Grey Swan Live! last week, “The Fed can’t do anything about their second and third mandates — full employment and social justice — but that doesn’t stop them from trying.” There’s a whole tragicomic poetry in that, somewhere between Samuel Beckett and a spreadsheet.

Meanwhile, Trump says he’ll name Powell’s successor in early 2026. There’s technically no such creature as a “lame-duck Fed chair,” but we may be about to witness the first in captivity. If Kevin Hassett gets the nod — and Polymarket’s 76% probability isn’t exactly subtle — the moment his name leaves the Resolute Desk, the markets will treat his every syllable as gospel. Powell could still be warming the chair at the May 15 expiration of his term, but Hassett will already cast a ginormous shadow at the press-conference lectern.

However the choreography unfolds, the direction seems clear: under new management, the Fed will cut more aggressively, and Trump — through policy, pressure, or sheer cosmic insistence — will try to run the economy hot into the midterms.

Which leaves us where? Inflation isn’t dead; it’s merely catching its breath. That’s why we continue to see high-quality dividend payers, gold, silver — which touched $60 today for the first time in its long, unruly life — and other inflation-protective assets as the rational side of the boat to sit on.

The early months of 2026 could reward those who prepare… and punish those who assume cooling prices mark the end of the story.

Make sure you’re on the right side of that trade.

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