The Golden Age VII: End Game
The Federal Reserve cut the Federal Funds Rate on Wednesday, September 17, 2025 and the yield on 10 year treasuries increased instead of decreasing.[1]
Since 1987, the Federal Reserve has been juicing the economy and financing the expansion of government by progressively lowering interest rates- a policy called the Greenspan Put. The Federal Reserve does this by lowering the Federal Funds Rate, which lowers interest rates on US treasuries.[2][3]
Since September 2024, the interest rate on 10-year treasuries has risen in response to every Federal Funds rate cut by the Federal Reserve. This is their fourth rate cut since September 2024 when 10-year treasuries yielded 3.74% interest. They currently yield 4.14%.
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 at 10% interest, 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. So, you’ll only lend at a higher interest rates.
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.[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.
[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
