Powell framed it as balance of risks—but in practice, it’s the familiar loop:
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More Debt → Easy Money (Inflate Your Way Out) → Currency Debasement → Asset Price Inflation.
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With U.S. debt north of $35T, rising borrowing costs threaten both growth and solvency. The Fed’s “careful” pivot is less about inflation victory and more about keeping debt service sustainable. Lower rates relieve the Treasury’s load, but at the cost of debasing the currency. That debasement shows up immediately in asset prices—gold, Bitcoin, equities—because investors know the playbook: liquidity first, discipline later.
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This cycle rewards asset owners while hollowing out purchasing power. It explains why the Nasdaq trades at 145% of M2 money supply, above dot-com peaks, and why speculation keeps reappearing in meme stocks and crypto. Powell may have spoken of “careful” adjustments, but the market reaction underscored the truth: once again, the U.S. is preparing to inflate its way out of a debt trap.

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