(Money Metals News Service) In this recent episode of the Money Metals Midweek Memo, host Mike Maharrey argues the biggest takeaway from the Federal Reserve’s latest FOMC meeting wasn’t the widely reported 25 basis point rate cut. It was the quiet restart of balance-sheet expansion—what most people would recognize as quantitative easing—barely acknowledged by mainstream coverage.
He frames the entire discussion around “burying the lead,” the journalistic habit (sometimes accidental, sometimes deliberate) of hiding the most important fact deep in a story where most readers will never reach it.
The “Hawkish Cut” That Wasn’t Hawkish
Maharrey notes the Fed cut rates by 25 basis points, setting the federal funds rate in a range of 3.5% to 3.75%. Financial media also obsessed over the Fed’s dot plot, which projected just one more rate cut in 2026 and one in 2027, and treated this as evidence the Fed was turning “hawkish.”
He rejects that framing. Cutting rates again isn’t hawkish, he says, and neither is expanding the balance sheet. He argues the “hawkish” label was attached only because Jerome Powell tried to talk tough and tamp down expectations for further cuts.
The Fed’s Real Move: Balance-Sheet Expansion
Maharrey points to the official language in the FOMC statement: the committee judged reserve balances had declined to “ample” levels and would initiate purchases of shorter-term Treasury securities “as needed” to maintain an ample supply of reserves.
In his plain-English translation, that means the Fed is growing its balance sheet again—creating money to buy Treasury bills, increasing liquidity, pressing Treasury rates lower, and inflating risk assets. He emphasizes that the Fed won’t call it “quantitative easing” because the term carries negative connotations, preferring labels like “reserve management” or “technical operations,” but the effect is the same.
Why He Says QE Was Inevitable
Maharrey ties the pivot to the broader debt backdrop. He cites the federal government’s debt load at over $38 trillion, still running large deficits, and argues the system can’t tolerate higher rates for long because borrowing costs become politically and financially untenable.
He notes the Fed had already announced it would end balance sheet reduction effective December 1, following the prior (October) meeting. In his view, that was the tell, and the restart of asset purchases was the next step.
The Numbers, the Messaging, and the “Openmouth Operations”
Powell described the Fed as having reduced the policy rate by 75 basis points since September and 175 basis points since last September, putting the fed funds rate within a broad range of estimates of “neutral,” and claimed the Fed was now positioned to “wait and see.” Maharrey highlights Powell also calling the December cut a “close call,” with three dissenting votes—the first time, he says, there have been three dissents since 2019.
Maharrey argues this is part of what he calls “openmouth operations”—central banker rhetoric designed to steer expectations and move markets. He says investors react to the words in the short run, but the real story is always the actions, and the actions here were dovish.
Markets Reacted Like They Heard the Truth
He describes the market response as predictable: stocks rallied on the return of easier money. Gold posted modest gains as the dollar weakened, rising $88 from the post-meeting Powell press conference to the day he was prepping the show, with additional gains afterward. He says silver was trading over $66 an ounce.
His point is that inflation doesn’t only show up in consumer prices. It shows up in asset appreciation and bubbles as well.
The Money Supply Picture: Why He Says Inflation Is Re-Accelerating
Maharrey argues you don’t need a single CPI report to understand what policy is doing. He points to money supply growth as the clearer signal, noting the November CPI report was due “tomorrow,” and that October inflation data was missing due to the government shutdown.
Using the True Money Supply (TMS) measure associated with Murray Rothbard and Joseph Salerno, he says money supply grew 4.76% year-over-year in November, up from 4.06% in September, and far above the 1.27% year-over-year growth rate in October of last year. He highlights strong month-on-month TMS gains in August, September, and October of 1.18%, 1.4%, and 1.14%.
He adds that by the Fed’s M2 measure, year-over-year growth rose to 4.63% in October from 4.47% in September, with M2 at nearly $22.3 trillion, the highest level ever recorded. TMS, he says, is at a 34-month high even if it hasn’t revisited its 2022 peak—evidence, in his telling, that the money spigot is opening again.
The Catch-22: Inflation or the Debt Black Hole
Maharrey frames the Fed’s predicament as choosing between two bad outcomes: keep rates high to fight inflation and risk the debt-heavy economy cracking, or cut rates and expand liquidity to stabilize the system while letting inflation run hotter.
In his view, the Fed has already chosen. Whatever the rhetoric, the policy path prioritizes keeping the debt machine operating, even if that means persistent monetary debasement.
Deflation “Fear” and the Hard-Money Argument
He then challenges the conventional claim that deflation is inherently disastrous. He references economic historian Tom Woods, arguing that growing economies can function with a stable or inelastic money base because prices can fall as productivity rises, allowing the same money stock to handle more transactions.
Maharrey also cites a 2004 paper by economists Andrew Atkeson and Patrick J. Kehoe titled “Deflation and Depression: Is There an Empirical Link?” published in the Economic Review, saying their review of 17 countries over a 100-year period found virtually no link between deflation and depression.
His Practical Bottom Line: Protect Yourself With Real Money
Maharrey closes with what he presents as the actionable takeaway: you can’t vote away the structure of the current system, so you have to respond to it. He argues that if you save purely in dollars, those dollars will buy less in the future, and that the ongoing rise in gold and silver is a signal of continued currency devaluation.
He encourages listeners to contact a Money Metals precious metals specialist at 800-800-1865, or buy at moneymetals.com, including the option to store metals at the Money Metals Depository in Eagle, Idaho. He points people to moneymetals.com/news for more information and notes that next week’s Midweek Memo will be released on Tuesday instead of Wednesday because it falls on Christmas Eve.
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