In 2026, TIFFIT-QE Infinity Train is Signal. New Fed Chair Is Noise.

TL;DR

In 2026, the real engine driving U.S. monetary and fiscal outcomes is no longer the Fed. It’s the Treasury, operating under the coordinated system I call TIFFIT (Treasury Is Fed, Fed Is Treasury).

It means that net liquidity management is now directed by Treasury, with the Fed largely sidelined.

Treasury is also now in charge of my metaphorical QE Infinity Train to nowhere (what some of you call money printing), keeping markets liquid, debasing the currency, and inflating assets prices and collateral to manage its US$38 trillion debt sovereign debt stack—while the next Fed Chair holds the title, but not the policy levers.

For investors and corporate strategists, understanding how capital flows and watching liquidity, not Fed statements, will be essential to navigating markets, financing, and corporate strategy in 2026.

If this framework is wrong, markets will expose it quickly. But here’s the challenge. Are the Fed and Treasury truly acting independently, or is liquidity moving in lockstep, regardless of who holds the Chair?

1. Background to what’s in store for 2026

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

But is this debate even relevant?

No, not in the slightest, and the fixation on personalities misses the structural shift already underway.

What do I mean? It misses the critical point 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 a coordinated construct, which I’ve been calling TIFFIT — Treasury Is Fed, Fed Is Treasury.

Under TIFFIT, the Treasury Department controls systemic liquidity. And while the Fed still has tools like quantitative tightening (QT), quantitative easing (QE) and reserves management, the Treasury uses its own tools in response to Fed policy to influence systemic liquidity.

Through this coordination, Treasury regulates the QE Infinity train to nowhere—my metaphor for what most call ‘money printing.’ Think of it as liquidity.

The QE Infinity train to nowhere is not new, but what’s different now is that Treasury is driving it, not the Fed.

It’s why the next Fed Chair will inherit a title, but not autonomy, and the real liquidity levers will vest in the Treasury.

And with new deficits and interest costs adding to the US$38.4 trillion federal debt, liquidity provision for refinancing will continue to take priority over textbook Fed inflation targeting.

Acknowledging that the train exists and that Treasury is driving it by coordinating policy so that it can refinance its sovereign debts, is no longer optional.

For investors and corporate strategists, recognising how capital now moves through the system will be key to navigating markets, growth and financing strategies in 2026 and beyond. IN 2026, Fed guidance and interest rate policy will take a backseat to TIFFIT liquidity.

The change in train driver is also why I’m adding TIFFIT to the train nomenclature. It will now be called the TIFFIT-QE Infinity train to nowhere!

But before we go there, let’s revisit what the train is, how it operates under TIFFIT (and what that means), what stealth liquidity is, and what’s going to be driving the Fed’s balance sheet, broad money (or M2), and asset prices in 2026.

That’s quite a task, so grab a beverage, buckle up and let’s dig in!

2. QE Infinity train to nowhere, TIFFIT, and stealth liquidity

Let’s start with the first element.

The QE Infinity train to nowhere

I first used the term QE Infinity over eight years ago to describe the point at which the size of U.S. federal debt and persistent fiscal deficits effectively locked 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.”

Why? Because to me it felt like a train without a predictable or viable destination was a train to just that—who knows where.

While I also postulated that “who knows where” might have been somewhere off the coast of Japan, I later concluded that “who knows where” was in fact “nowhere.”

That’s because QE had left the Japanese economy with persistently low growth and high debt. Nowhere.

And nowhere still feels like the right set of coordinates. Not because U.S. policymakers lack direction, but because like Japan, the U.S. debt stack and liquidity requirement had crossed a threshold.

The global debt stack had grown so large that constant refinancing became essential.

In short, the train circles around in a continuous loop of Treasuries issuance and monetisation (by the Fed or the banking system) so the Treasury Secretary can sustainably fund the Federal government’s deficits, and refinance its debt stack (i.e., sovereign debt).

Globally, the collateral needs to support well over $340 trillion in global debt (including sovereigns). And this is on the back of a mere ~$117 trillion in global GDP (both measured in nominal terms) that is not growing fast enough to cover these debts or the interest bill.

So, what happens? New debt issued by governments becomes the gap filler, but to enable that debt you need strong and valuable collateral (Treasuries, bonds, bunds, gilts, gold, silver, real estate, etc).

Stopping the QE Infinity train to nowhere is therefore not an option. To do so, in the absence of a debt forgiveness like we had at the time of the GFC, would undermine the value of the collateral base that supports that debt! In reality, once the train carries a certain amount of freight, you can no longer bring it to a stop, but from time to time you can speed it up and slow it down.

Then in March 2024, I reminded readers that regardless of the specific kind of freight being carried by QE Infinity train to nowhere, it all has the same effect. It all adds to liquidity.

And without liquidity to support asset/collateral prices so that they cover debt obligations when it comes time to finance/refinance those sovereign debts, everything stops.

Let’s now turn to TIFFIT.

TIFFIT

Later on, in May 2024, I coined the term TIFFIT—Treasury Is Fed, Fed Is Treasury to describe the growing fusion of fiscal and monetary policy under the coordinated policies of then Treasury Secretary Yellen, and Fed Chair Powell.

But what does TIFFIT really mean?

Well, it describes the point at which U.S. fiscal and monetary policy cease to operate independently (with an independent Fed).

Instead, it now functions as a coordinated policy platform, giving Treasury control over the liquidity engine.

Under TIFFIT, the Fed is no longer the arbiter of monetary liquidity. Liquidity formation shifts between the Fed and the Treasury.

Whether Treasury is accommodative while the Fed is restrictive depends on whether Fed policy opposes or supports Treasury’s debt financing needs. If against, Treasury injects liquidity. If in support, Treasury sits back.

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

Today, TIFFIT is operational reality.

While Fed and Treasury are still separate offices, they no longer act in isolation. In short, independence is no longer the guiding principle. Liquidity coordination is.

The result: Treasury now drives the QE Infinity train to nowhere, not the Fed.

Stealth Liquidity, the TIFFIT-QE love child

Now we come to the love child that resulted from the Fed and Treasury co-piloting the QE Infinity train to nowhere. Stealth liquidity.

Stealth liquidity describes how the U.S. Treasury can quietly increase systemic liquidity while the Fed is withdrawing it. I alluded to this phenomenon above.

What do I mean?

In early 2024, my blog ‘Stealth liquidity’ explained how the Fed ran down its balance sheet under a restrictive QT program during 2023–2024

The explicit aim was to withdraw liquidity from markets.

That means instead of buying Treasuries and injecting reserves into the banking system, as it does under QE, the Fed was doing the opposite and reducing the flow of liquidity into financial markets. Withdrawing the “punchbowl”, if you like.

But at the very same time, the Treasury was running down the Treasury General Account (TGA) by spending aggressively.

This had the effect of adding liquidity back into the financial system.

Over the 12 months to February 2024, the two programs resulted in a net $500 billion in liquidity injected into financial markets. This was despite the Fed’s signalling of restrictive policy under its QT program.

As liquidity expanded, asset prices responded accordingly. They increased.

By early 2024, TIFFIT and the QE Infinity train to nowhere could be clearly seen, but only if you knew what to look for.

Finally, by July 2025 we had progressed to a point where Treasury was regulating liquidity, and the idea that the Fed could remain independent under Trump2.0, had become increasingly implausible.

At that time, I posed the following:

“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.”

And the truth is that what is really necessary for orderly money markets and government debt refinancing—is liquidity.

Liquidity from expanding (a) the balance sheet, and (b) M2, increases asset prices, keeps the collateral base ahead of the debt stack, and enables Treasury to inflate away its debts.

3. The TIFFIT-QE Infinity train to nowhere is under new management

Why this matters: If Treasury controls the speed and direction of liquidity, it also controls asset prices, debt refinancing, and the practical limits of monetary policy.

And so that you fully understand the importance of that statement and what comes next, I’m going to stop and provide a refresher on how the money system actually works, for existing and new readers.

Refresher on how the money system works

Deficits and debts

When the government spends more than it collects in taxes, it creates a gap between what it wants to pay for and the money it has.

To cover that gap, it borrows by issuing bonds, promising to pay back later. The bonds themselves are just promises. They don’t create new money on their own. This is called government debt.

M2 expansion and debt monetisation

Commercial banks or primary dealers buy these bonds, but they don’t just use existing money.

Instead, when they pay for the bonds, they create new deposits in the accounts of the sellers.

These are not central bank reserves, which only enter the system later if the Fed intervenes. Instead, these deposits function as money immediately.

This is called M2 expansion. M2 approximates broad money, which is all of the money that’s available for spending and saving in the economy, at a moment in time.

Meanwhile, the government spends the money it raised, paying wages, contractors, and suppliers (or keeping it in its general account during a government lockdown).

Once spent, these new deposits circulate through the economy, and everyone can now use this money to buy goods, services, or assets.

This process is part of what is called debt monetisation, because previously issued government debt has been turned into usable money.

QE and reserves monetisation

The central bank (i.e., the Fed, for example) can support this process by providing reserves and liquidity to the banking system and by buying government bonds in secondary markets.

This makes it easier for banks to absorb the debt and keep borrowing costs low. This is QE. QE is a second, distinct, and indirect form of debt monetisation, best understood as reserves monetisation.

When the Fed swaps newly created bank reserves for existing bonds or notes, government liabilities are effectively converted into central bank money.

Although this occurs via the secondary market, the outcome is the same: demand for bonds pushes up their price, yields are suppressed (fall), broad money (M2) expands, and government borrowing is enabled at scale, and at a lower cost.

Fractional banking

Banks can then use those reserves to meet reserve requirements, or lend them out, creating even more deposits in the banking system.

This is how fractional-reserve banking works, and it further increases the amount of money circulating in the economy. This is another channel of broad money or M2 expansion.

Monetary debasement

The economy now has more money than goods, services, and assets. Each unit therefore claims less of real resources. This is monetary debasement.

While today it occurs digitally, the historical equivalent to debasement involved coinage. Take four solid gold coins and one silver coin, melt them down, and mint five coins that still circulate as “gold,” but each now delivers only eighty percent of their original purchasing power.

Asset price inflation versus consumer price inflation

The extra coin (money) created, first pushes up the prices of assets like stocks, bonds, and property. Only later do everyday consumer prices and wages catch up, due to wealth effects.

Finally, assets seem more valuable, but nominal prices rise because money is worth less. This is asset price inflation.

Asset price inflation should not be confused with consumer price inflation! If you’d like a refresher on consumer price inflation, see here.

That’s essentially how the money system works and feeds into asset prices (wall street), and eventually the real economy (main street).

And all that’s left to say here is that it won’t be lost on you that if you control all of the levers that can speed up or slow down money, credit, and systemic liquidity—you’re driving the only train that matters.

Until (and if) debts are forgiven, the TIFFIT-QE Infinity train must continue

The train to nowhere chugs forward relentlessly, because once the total debt stack grows too large relative to GDP, the system cannot service new debt or roll over maturing obligations through organic growth alone.

The gap is filled with more Treasuries issuance, which requires more absorption/monetisation, and more QE fuels broader money growth and liquid markets.

Markets stay awash with capital, keeping asset prices elevated and refinancing is enabled and well-oiled. In the case of Treasuries and discounted securities, prices go up, yields come down, and refinancing is made easier.

The process is self-reinforcing. If it were to stop, asset prices collapse, asset prices collapse, and the collateral base underpinning the system comes under threat, and refinancing fails.

Essentially, the game is as follows: the TIFFIT-QE Infinity train inflates asset prices just enough to keep the collateral base ahead of the growing debt stack. QE and M2 expansion are not policy accidents; they are the mechanisms that allow Treasury to roll, service, and ultimately inflate away its debts. And Scott Bessent is now in control of that process because under TIFFIT, he can adjust the levers in the train’s engine room, from his corner office.

Read that again 👆

4. The train to nowhere v. the new Fed Chair

In 2026, the Fed Chair title still carries weight, but net liquidity in markets is controlled by the Treasury.

Liquidity flows define the new system, and the ones to watch to judge the rate of liquidity additions or subtractions, are:

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. This is QE.
Treasury operations through the TGA add another layer of fiscal liquidity because as balances decline following the end of the government shutdown, additional liquidity enters the system. 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 it out (here’s a refresher on the TGA).
Regulatory easing (following upcoming relaxation of regulations applicable to the eight largest U.S. banks) will allow 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. This could release ~$2.1 trillion in balance-sheet capacity for Treasuries market-making.

While these are not all QE, they are TIFFIT-QE as they all have the same general effect of liquidity expansion, monetisation, debasement, and asset inflation that keeps the collateral base intact and enables Treasury to manage its debts.

And this is why my metaphorical train has become the TIFFIT-QE Infinity train to nowhere.

Result: Fed independence under Trump2.0 has become largely symbolic. Treasury will regulate net liquidity, prop up asset/collateral prices and allow the party to continue.

5. TIFFIT will now drive financial markets

Why this matters: In a system driven by the rate of liquidity entering or exiting a market, traditional monetary signals like interest rates lose power, and capital allocation changes.

TIFFIT results is a sidelined Fed and a powerful Treasury Secretary.

By managing the level of Treasury deposits within the banking system and adjusting for whether the Fed is adding or withdrawing reserves through QE or QT, policymakers can exert significant influence over broad money growth (M2), system net liquidity, credit creation, and capital allocation.

And since refinancing sovereign debt is priority number one, Treasury will pull levers to create more net liquidity and/or a lower cost of capital.

With this will come more debasement of currency, loss of purchasing power, and asset price inflation.

It should also result in lower yields at the shorter end of the curve. Why? To facilitate refinancing of government 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.

But if consumer price inflation proves to be sticky, it will likely keep a floor under the cost of capital (10-year Treasuries) and longer-term bond yields.

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

TIFFIT is now the new and improved operational engine behind the TIFFIT-QE Infinity train to nowhere that steams on to infinity.

In practice, the TIFFIT-QE Infinity train inflates asset prices just enough to keep the collateral base ahead of the growing debt stack. QE and M2 expansion are not policy accidents; they are the mechanisms that allow Treasury to roll, service, and ultimately inflate away its debts.

And guess what, from a personal investing perspective, that also pushes up share, ETF, bond and crypto prices! So how are you going to benefit from this game?

6. Positioning for 2026 and beyond

Why this matters: Strategy in 2026 will depend less on forecasting policy announcements and more on tracking liquidity flows in real time.

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

The Federal Funds Rate still gives clues, but the real driver is how much liquidity is flowing through the system, and at what rate of change.
Fiscal and monetary tools will be coordinated to regulate that flow, making net TIFFIT liquidity more complex to track.
Bond markets will interpret growth, inflation and express a view through the yield curve as normal, but with less reliance on the new Fed Chair’s speeches. Not sure we’ll be glued to each FOMC meeting press conference! And by the way, that’s a relief.
Capital increasingly flows to sectors aligned with Trump priorities, not neutral macro signals.
As the Trump2.0 mercantile strategy (economic and kinetic) reshapes supply chains and liquidity flows back into the U.S., the USD should strengthen, regaining a “safe haven” premium and potentially making developments in other parts of the world, less affordable when paying in USD.
Inflation targeting will likely take a back seat to strategic economic (and Federal debt refinancing) objectives and geopolitical positioning.
Debt monetisation, broad money expansion, debasement, war, and supply chain uncertainties will continue to make precious metals the most heavily government-subsidised metals on the planet.
In a system where liquidity expansion is structural, holding excess cash becomes increasingly costly, while real assets tend to benefit from debasement over time.
Shares and crypto also go up (but not all).

The next Fed Chair may hold the title, but our system of money and credit (and risk asset prices) will be increasingly shaped by TIFFIT policy.

This is the framework I’ll be using in 2026.

If this framework is wrong, markets will expose it quickly. But 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, markets will show it, but so far, the TIFFIT-QE Infinity train to nowhere is still on schedule—and we’re all aboard!

Happy new year, keep both eyes on the signal, and now that you know how it works don’t get lost in the steam as we circle the track again.

Mike

Michael GanonJanuary 6, 2026