The Golden Age VII: End Game
The Fed cut the Federal Funds Rate on Wednesday, September 17, 2025 and the yield on 10 year treasuries increased instead of decreasing.[1]
For 40 years, the Fed has been juicing the economy and financing the expansion of government by progressively lowering interest rates, called the Greenspan Put.[2][3]
The end game is when investors demand higher interest rates to account for the dollar being worth less as the Fed prints money to both juice the economy with low-interest rate loans and to finance the government.
“I think we are actually at a point of encouraging risk-taking, and that should give us pause. Investors really do understand now that we will be there to prevent serious losses. It is not that it is easy for them to make money but that they have every incentive to take more risk, and they are doing so. Meanwhile, we look like we are blowing a fixed-income duration bubble right across the credit spectrum that will result in big losses when rates come up down the road. You can almost say that that is our strategy.” -Jerome Powell, Chairman of the Federal Reserve, then member of the Board of Governors, Oct 2012 Federal Open Market Committee Meeting.
If you loan out $100, get back $110, but the things that cost $100 now cost $150 because of inflation, then you are poorer even though you have more money.
Gold has certainly done well in the year since treasury yields rose 3 times and went flat in response to the Fed cutting rates 3 times and then going flat, starting in September 2024. This is their fourth rate cut.[4]
End Note: FRED (Federal Reserve Economic Department) hasn’t updated their chart for September, so the most recent rate cut is not included in their chart. Additionally, this is the effective federal funds rate. Read the third link for details.
[1]Federal Reserve issues FOMC statement
[2]https://www.bloomberg.com/view/articles/2018-02-13/powell-s-fed-isn-t-about-to-end-the-greenspan-put
