(Money Metals News Service) In this week’s episode of the Money Metals Midweek Memo, host Mike Maharrey issued a stark warning about the state of the U.S. economy, monetary policy, and the Federal Reserve’s quiet but significant moves.
Maharrey argued that the economy is addicted to easy money, comparing it to a drug dependency that requires larger and larger doses to maintain the same high. He used this metaphor to describe the Federal Reserve’s increasingly desperate efforts to keep the economy afloat through artificial stimulus.
According to Maharrey, the Fed’s latest policy shift may indicate that it is already out of control—and setting the stage for a larger financial crisis.
Monetary Policy Moves: The Real Headline
Although mainstream headlines focused on the Fed keeping interest rates steady during its March 2025 FOMC meeting, Maharrey emphasized a far more consequential action.
The Fed announced that beginning in April, it will significantly slow the pace of its balance sheet reduction. Treasury securities runoff will decline from $25 billion to just $5 billion per month.
This change was overshadowed by interest rate projections but represents a major loosening of monetary policy. Mortgage-backed securities will still have a $35 billion cap, but the Fed has never consistently reached that level.
Maharrey cited an analyst who described this as the equivalent of a rate cut without the Fed openly announcing it.
In other words, the Fed has quietly shifted back into an easing stance while still speaking the language of inflation concern.
Fed’s Forecasting Track Record: Not Reassuring
Maharrey took aim at the Fed’s so-called “dot plots,” which project future interest rate moves. Despite being produced by the very officials setting policy, these forecasts have only proven accurate 34 percent of the time.
Maharrey questioned whether this should be seen as sad or amusing, given the responsibility the Fed holds over monetary policy.
If the institution tasked with steering the economy can’t predict its own actions with better accuracy, it raises serious questions about the credibility of its broader economic outlook.
Quantitative Easing: The Inflation Engine
Maharrey explained how the Fed has used its balance sheet to inject money into the economy through quantitative easing.
Before the 2008 financial crisis, the Fed’s balance sheet stood at around $900 billion. By the end of the pandemic-era stimulus, it was just shy of $9 trillion. This represents more than $8 trillion in newly created money added in just 14 years.
The Fed claimed these were temporary emergency measures, but the promised unwinding never happened. Instead, it doubled down during the pandemic, expanding the balance sheet by nearly $5 trillion in a much shorter timeframe.
Maharrey reminded listeners that this is inflation by definition: an increase in the money supply. He pointed out that while the public focuses on rising prices, the root cause is monetary expansion.
Money Supply (M2) Trends
The M2 money supply, often used as a base measure of money in the economy, began shrinking in April 2022 as a result of rate hikes and quantitative tightening.
It bottomed out in October 2023 at $2.69 trillion and has since been climbing. By January 2025, M2 had reached $2.56 trillion, the highest since January 2022.
Maharrey concluded that since October 2023, the Fed has been actively loosening monetary policy again, even as it continues to publicly claim inflation remains a concern. The latest move to slow balance sheet reduction will only accelerate this trend.
Debt Ceiling and Monetary Policy Collision
Maharrey tied the Fed’s recent decision to a broader concern: the federal government’s rising debt and its inability to borrow more under the current debt ceiling.
In early 2025, the U.S. government hit the borrowing limit and began relying on “extraordinary measures” to fund operations. This includes suspending contributions to retirement funds and shifting money between accounts.
According to minutes from the Fed’s January meeting, policymakers worried that shrinking the balance sheet too aggressively could collide with these debt ceiling dynamics and destabilize money markets.
In other words, the Fed is backing off its tightening measures not because inflation is under control, but because it must accommodate the federal government’s spending addiction.
Maharrey predicted that within six months, the Fed may halt balance sheet reduction entirely.
The Fed’s Monetary Catch-22
Maharrey described the Fed as being stuck in a Catch-22. On one hand, it needs to keep interest rates high to tame inflation.
On the other, it faces mounting pressure to cut rates due to high levels of debt throughout the economy—including the national debt.
The Fed cannot both tighten and loosen monetary policy at the same time, but that is exactly what it appears to be trying to do.
Maharrey argued that this impossible balancing act makes the Fed increasingly vulnerable to losing control of the economic narrative and outcome.
History Repeating? The 2008 Parallels
To further his case, Maharrey drew a detailed comparison between today’s policy trajectory and the lead-up to the 2008 financial crisis.
Following the dot-com bust, the Fed slashed interest rates to 1 percent by 2002, igniting a housing boom. As inflation pressures emerged, the Fed began raising rates, peaking at 5.25 percent in 2006.
By mid-2007, early cracks were showing in the subprime mortgage market, but then-Chair Ben Bernanke claimed the issues were “contained.”
Maharrey noted how similar that language sounds to Jerome Powell’s current claims that inflation pressure is caused by tariffs rather than monetary policy. He warned that in both eras, policymakers and media downplayed growing risks until it was too late.
Today, just as in 2007, a small group of analysts is sounding alarms, while the mainstream insists everything is fine.
Recession on the Horizon?
Despite Powell’s insistence that there is no recession risk, data tells a different story. The Atlanta Fed’s GDPNow forecast dropped from a projected 2.3 percent growth in February to -1.8 percent in March. The Fed also quietly reduced its full-year 2025 GDP growth projection from 2.1 percent to 1.7 percent.
While not an outright recession call, this downward revision signals less optimism than Powell’s public remarks suggest. Maharrey reminded listeners that the Fed manages expectations carefully and never reveals its full concerns all at once. A gradual shift in messaging typically indicates deeper worries behind the scenes.
What Comes Next? Maharrey’s Warning
Maharrey made clear that, based on historical precedent, the next phase is predictable. When economic conditions deteriorate—whether through a stock market crash, commercial real estate collapse, or financial crisis—the Fed will return to zero interest rates and aggressive money printing.
That is the pattern, and he sees no indication it will change this time. The long-term consequence is a continued devaluation of the dollar and a further erosion of personal purchasing power.
The Fed’s policies have created enormous distortions and misallocations of capital, and when the bubble bursts, those consequences will be felt broadly.
Solution: Real Money = Gold and Silver
To protect against inflation and currency devaluation, Maharrey urged listeners to own physical precious metals. He emphasized that gold and silver represent real money and a hedge against fiat policy mistakes.
Money Metals now offers a monthly installment plan allowing people to begin investing with as little as $100 per month. This allows individuals to build a reserve of sound money over time without needing thousands of dollars upfront.
Maharrey encouraged listeners to call Money Metals or visit the website to learn more about how precious metals can fit into their portfolio.
Closing Notes
Maharrey closed by recommending his recent interview with G. Edward Griffin, author of The Creature from Jekyll Island, available on the Money Metals Friday Market Wrap podcast.
He urged listeners not just to worry, but to prepare.
The Federal Reserve’s actions are clear, and their implications for the dollar and the economy are significant. Maharrey stressed the importance of taking control of one’s financial future in the face of reckless monetary policy.
For updates and insights on gold, silver, and economic trends, he encouraged listeners to subscribe to the podcast and sign up for Money Metals’ newsletter.
