The Fed Chair debate isn’t even relevant, here's why

Background

For the past several months, market commentators have been arguing over who the next Fed Chair will be.

But is this debate even relevant?

Not really, and certainly not in the way markets are debating it.

The fixation on personalities misses the structural shift already underway, which is that the U.S. monetary system has moved beyond a world where the U.S. Federal Reserve (Fed) acts with independence, as a counterweight to fiscal policy.

We now operate under what I call TIFFIT — Treasury Is Fed, Fed Is Treasury. Under TIFFIT, liquidity, not interest rates, is the dominant force shaping markets.

It’s where Fed balance-sheet operations, Treasury cash management, regulatory settings, and refinancing needs are now coordinated within a single system.

Under TIFFIT, quantitative tightening (QT), quantitative easing (QE), and various Treasury policies become levers that either accelerate or decelerate the QE Infinity train to nowhere (what most people would simply call “money printing”), depending on the mood of Washington.

This train can’t be stopped, as doing so would destabilise the world’s collateral base, and today, Treasury is driving that train, not the U.S. Federal Reserve (Fed).

This is why the next Fed Chair will inherit a title, not autonomy. The real levers will remain with Treasury, and policy outcomes will continue to favour liquidity provision, asset-price support, and debt sustainability over textbook inflation control.

Acknowledging that the train exists and that the Treasury is driving it is no longer optional.

For investors, corporate strategists, and policymakers, recognising how capital now moves through the system under TIFFIT is key to navigating markets, growth and financing strategies in the years ahead.

But before we go there, there are two elements of modern-day liquidity management (and an example of them in action) that I need to explain if you are a first-time reader.

You’ll then see how futile the “next Fed Chair” debate really is, and what’s actually driving asset prices.

TIFFIT, the QE Infinity train to nowhere, and stealth liquidity

TIFFIT

Let’s start with element 1, In May 2024, I coined the term TIFFIT—Treasury Is Fed, Fed Is Treasury to describe the growing fusion of fiscal and monetary policy.

But what is it? Well, TIFFIT describes the point at which U.S. fiscal and monetary policy cease to operate as independent systems and instead function as a single, coordinated liquidity engine (some might even call this sacrilege).

Under TIFFIT, the Fed is no longer the arbiter of monetary liquidity.

Liquidity management shifts between the Fed and the Treasury and depending on debt-refinancing needs, market conditions, and political priorities, it is deployed jointly but overseen by the Treasury

Back in 2024, it was my working theory for modern liquidity management.

Today, TIFFIT is operational reality. The Fed and Treasury no longer act in isolation. Independence is no longer the guiding principle—coordination is.

Why is this important, and is it more important than who becomes the next Fed Chair when Jerome Powell finishes up next year?

Yes. Because under TIFFIT, the Treasury will retain direct control over fiscal liquidity management, while it also takes over the Fed’s QE Infinity train to nowhere, which is element 2.

The QE Infinity train to nowhere

I first used the term QE Infinity eight years ago to describe the point at which the size of U.S. federal debt and persistent fiscal deficits effectively lock the Fed into monetising those debts through QE, or QE-like mechanisms, on an ongoing basis.

And subsequent to numerous follow up articles, client newsletters and the odd raised eyebrow, I coined the term the “QE Infinity train to who knows where” because to me it felt like a train without a predictable or viable destination.

Next, I concluded that “who knows where” is actually “nowhere,” because the train must run on a continuous loop to protect the global collateral base that now supports well over $350 trillion in global debt. Pretty important, right?

I repeated this observation almost monthly.

Then in March 2024 I reminded readers that the QE Infinity train to nowhere would continue onwards, regardless of what tool or acronym was being used by either the Fed or the Treasury.

Where Stealth Liquidity comes in

Stealth liquidity describes how the U.S. Treasury can quietly add or remove money (liquidity) from the system in coordination with the prevailing Fed policy.

In early 2024, I wrote a blog titled “Stealth liquidity,” which illustrated that mechanism and exposed TIFFIT in action.

In that piece, I explained how during 2023 and early 2024 the Fed was running down its balance sheet under a restrictive QT program, with the explicit aim of withdrawing liquidity from markets.

Instead of buying Treasuries and injecting reserves into the banking system, as it does under QE, the Fed was doing the opposite—reducing the flow of liquidity into financial markets.

At the same time, the Treasury was running down the Treasury General Account (TGA) by spending aggressively, which had the effect of injecting liquidity back into the financial system.

Over the 12 months to February 2024, the two programs resulted in $500 billion in liquidity being injected into financial markets, despite the Fed signalling restrictive QT. Asset prices responded accordingly.

By early 2024, TIFFIT and the QE Infinity train to nowhere could be clearly seen, if you were looking.

Finally, by July 2025 we had progressed to a point where the idea that the Fed could remain independent under a Trump administration, had become pure folly.

At that time, and in the context of the size of the debt stack and the reality that the QE train was in fact an infinity train, I posed the following:

“Bessent is blunt when he says America can’t grow its way out of its debt problem without unleashing capital formation at scale. That means rates must come down, and stay down, so that they can grow GDP faster than debts, deficits and the interest bill with nuclear powered data centres and robots.
The implication is clear. The Fed can no longer be left to act as an independent brake on the national interest. The QE Infinity train with both monetary and fiscal cargo, under the control of the Treasury Secretary (aka the White House) must steam on.
We’ve seen this movie before but just not at this scale. In the post-war era, the Fed was functionally a servant of the Treasury until the Treasury-Fed Accord of 1951. But under TRUMP 2.0, that independence may again become politically untenable, and not out of ideology, but out of perceived necessity.”

These two theories have collided under Trump/Bessent

When we put the TIFFIT conductor in charge of the QE Infinity train to nowhere, it’s no surprise the train now carries liquidity from both the Fed’s balance sheet and broader money growth.

It creates a system where liquidity flows relentlessly, credit expands, and markets stay awash with capital.

And the train keeps moving in a circle with no real destination, only stopping briefly for political reasons, or when the next debt agreement comes up.

So regardless of who becomes the next Fed Chair, it doesn’t matter because Treasury IS Fed and Fed IS Treasury and Scott Bessent (under orders from his boss) is in charge of the QE Infinity train to nowhere.

As the money supply (M2) expands and monetary debasement increases over the long term, asset prices should also rise. That means, aside from short-term ups and downs (the “air pockets” and “thermals”), investors are generally better off staying invested.

The TIFFIT machine in 2026 versus the Fed Chair

The Fed Chair title still carries weight, but the real levers of policy lie elsewhere.

Liquidity flows define the new system. And the key flows or motions that we need to keep an eye on to judge the speed of liquidity additions or subtractions are:

Motion 1. The Fed’s Reserve Management Program, or RMP (see my last blog on the subject) will inject ~$40 billion per month into bank reserves, keeping the infinity train on its tracks, increasing liquidity and debasing the currency. Incidentally, calling this program “RMP” rather than QE does not change its effect.
Motion 2: Treasury operations through the TGA add another layer of fiscal liquidity because as balances decline following the end of the shutdown, additional liquidity enters the system. It’s worth noting that the last episode of QT which ended on 1 December 2025, was not QT at all, because the stealth liquidity injected through the TGA cancelled out the Fed’s balance-sheet run-off.
Motion 3: Regulatory easing (following upcoming relaxation of regulations applicable to the eight largest U.S. banks) allows banks to purchase Treasuries directly from the Treasury, bypassing the Fed (and that’s TIFFIT in full force!), reshaping reserve flows, increasing systemic liquidity, and debasing purchasing power.

The sum total of this is that Treasury is now pulling all the levers, and liquidity, not interest rates, will shape the next decade.

The TIFFIT evolution began under President Biden, with Fed Chair Powell and Treasury Secretary Yellen coordinating policy.

It is now accelerating under Treasury Secretary Scott Bessent while Fed Chair Powell presides over the restarting of QE (that he’s calling the RMP), and as regulatory easing is about to release liquidity from banks.

Today, Scott Bessent, is actively shaping monetary strategy to align with broader national priorities.

And his involvement in the Fed succession process clearly signals that whoever takes the Fed Chair will operate within a framework already defined by Treasury strategy. Fed independence has become largely symbolic.

What impact will this have?

The result is a sidelined Fed and a powerful Treasury Secretary, with day-to-day oversight of monetary policy by the President.

It means more liquidity, more debasement of currency and purchasing power, and sticky inflation that will likely keep a floor under long term bond yields and the cost of capital.

It also means lower yields at the shorter end of the curve, intentionally. The purpose here is to facilitate refinancing of the Federal debt at the shorter end of the yield curve, at a lower cost. That is until the bond market loses faith and demands higher returns.

It also subjects the USD to periods of strength and weakness, but since USD denominated debts continue to rise globally, demand for dollars is unlikely to dissipate over the medium term.

Prudentially, it means a machine in which monetary conditions are no longer set by the Fed alone. Treasury and Fed injections together guide broad money growth, credit, liquidity, and capital allocation in real time.

TIFFIT is real and it is now the new and improved operational engine behind the QE Infinity train to nowhere that never stops.

Positioning for what comes next

Make up your own mind how this affects you, but generally speaking for investors, and corporate strategists, the implications are concrete.

Interest rates still give clues, but the real driver is how much liquidity is flowing through the system.
Bond markets will interpret growth and inflation, not the Fed Chair’s speeches.
Capital flows are increasingly directed toward sectors aligned with Trump priorities rather than neutral macro signals.
Inflation targeting may take a back seat to strategic economic (and Federal debt refinancing) objectives and geopolitical positioning.

In short, the next Fed Chair may hold the title, but the real power lies elsewhere. Liquidity pathways, balance-sheet decisions, and strategic credit flows are already shaped by Treasury policy under TIFFIT.

For all intents and purposes, Scott Bessent is already the Fed Chair.

At this point, it should be clear that the QE Infinity train to nowhere is an engine that never stops, and TIFFIT is not a framework anymore, it’s operational reality.

Acknowledging these forces as the drivers from here on in is key for anyone navigating the next few years in business and financial markets.

If you think I’m wrong, here’s the challenge. Watch the money. Are the Fed and Treasury truly acting independently, or is liquidity moving in lockstep regardless of who holds the Chair?

If the Fed still has real autonomy, the markets will show it, but so far, the QE Infinity train keeps steaming on to nowhere, and Secretary Bessent is clearly at the controls.

See you in the market in 2026 and happy holidays!

Mike

Michael GanonDecember 23, 2025