The Fed's intervention in funding markets, while not officially labeled Quantitative Easing, directly helps the Treasury finance its debt, effectively monetizing it and providing critical liquidity to markets.

Despite official rhetoric, the Fed is creating money out of thin air to buy short-term government debt. Labeled "reserve management purchases," this is functionally quantitative easing, designed to keep the government's borrowing costs from exploding.

The post-Powell Fed is likely to reverse the QE playbook. The strategy will involve aggressive rate cuts to lower the cost of capital, combined with deregulation (like SLR exemptions) to incentivize commercial banks to take over money creation. This marks a fundamental shift from central bank-led liquidity to private sector-led credit expansion.

The common narrative of the Federal Reserve implementing Quantitative Tightening (QT) is misleading. The US has actually been injecting liquidity through less obvious channels. The real tightening may only be starting now as these methods are exhausted, signaling a significant, under-the-radar policy shift.

The post-COVID paradigm shift occurred when stimulus moved from Wall Street (QE) to Main Street (direct checks, MMT-style policy). Injecting money directly into the real economy, especially amidst severe supply constraints, was the true catalyst that broke the decades-long disinflationary trend.

Unlike past crises, the Federal Reserve is unlikely to provide the next wave of market liquidity via its balance sheet. With rates far above zero, its primary tool is rate cuts. Instead, any new liquidity will likely originate from commercial banks, which are being deliberately deregulated to encourage credit creation.

The US is moving beyond traditional economic policies like inflation targeting. It's now using energy, swap lines, stablecoins, and supply chains as tools of national strategy to achieve geopolitical goals, marking a fundamental policy paradigm shift.

Citing the 1940s playbook, future administrations may force the Fed to fix interest rates at low levels. This makes government borrowing cheap, enabling massive spending to revitalize industry and defense, similar to how war efforts were financed.

The Federal Reserve under Kevin Warsh is expected to pivot from its independent, inflation-targeting mandate. It will likely become an integral part of US economic statecraft, aligning its policies with national security and strategic industrial goals, a significant change from past regimes.