TIFFIT rising

Back in 2024, I wrote a 5-part blog series on the NLC blog.

In it, I coined TIFFIT—Treasury Is Fed, Fed Is Treasury—to describe the growing fusion of fiscal and monetary policy under the dynamic job share duo of Treasury Secretary Yellen and Fed Chair Powell.

TIFFIT is my view and the idea that whether the Fed is buying assets in exchange for new reserves (monetary) or the Treasury is ramping up spending and jawboning the dollar (fiscal), the result is the same. Liquidity.

If you’ve got the time, take a look at the series, or at least part 5, here.

At any rate, my QE Infinity Train, or whatever acronym you prefer, never really stopped. Liquidity must flow, and the only thing that changed is that Powell agreed to job share.

Trump, Bessent and the reunification of church and state

Enter Trump2.0. And with him, new Treasury Secretary Scott Bessent, whose mandate isn't subtle.

Mandate? Lower rates, more credit, and the capital boom of the century.
Goal? Rewire the U.S. energy grid, build out AI-focused factories and data centres, and outpace China in the global intelligence arms race.

I’ve often spoken about this when it comes to how we should be growing our way out of Australia’s economic dependence on natural resources sent to China. And the answer is nuclear robots.

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.

Why? The AI race.

The AI Race is the new Cold War

The stakes are no longer inflation versus unemployment.

This is industrial scale-up versus global subordination. China is not just investing in AI, it’s exporting its operating system to the world. Meanwhile, the U.S. is still running on legacy infrastructure, fragile power grids, and a fragmented energy policy.

As Trump appears to see it (and echoed by both Treasury Secretary Bessent and Howard Lutnick) the strategic survival of the U.S. depends on a federal mobilisation of capital akin to wartime footing.

And that logic turns Fed independence into a liability, not a safeguard.

If the Fed maintains high rates, the private sector can’t fund the buildout. If the Fed blinks and drops rates too slowly, China wins the intelligence and manufacturing race.

Under Trump2.0.ai, the traditional role of the Fed as a neutral, countercyclical actor is outmoded.

And if you stop listening to President Trump for a few minutes and watch what he is doing, you might conclude that he doesn’t really care if Jerome Powell remains in the Fed Chair until the bitter end, just as long as the Fed becomes subordinate to the Bessent Treasury!

TIFFIT is rising.

TIFFIT becomes the operating model

Under this emerging TIFFIT framework, Treasury and Fed are no longer parallel institutions with separate mandates. They are arms of a single strategic doctrine that’s rooted in using intelligence to MAGA and inflate away the national debt stack.

TIFFIT isn’t just a clever acronym anymore, I believe it’s a working model and part of the Trump2.0.ai solution to debts, deficits and the interest bill—and it’s also driving geopolitics and tariffs.

Under Trump2.0.ai TIFFIT it is quite likely we will see:

The Fed jawboned into submission through coordinated political and public pressure.
The Treasury using quasi-fiscal tools to ease credit directly.
Internal interest rate policy determined by geopolitical imperatives, not just domestic economic data, with inflation not a huge issue if means inflated dollars can be used to pay fixed interest debt obligations.
Fiscal programs designed to attract industrial investment into “strategic assets,” like energy grid, data centres, chips, and AI.
Higher tariffs for countries with lower defence spend/GDP and direct U.S. investment, versus lower tariffs for sovereign partners with high defence/GDP ratios and healthy investments into the U.S., as that helps to decrease deficits.

Either way, get ready for liquidity. But are you positioned?

What Trump 2.0.ai TIFFIT means for CorpDev and investment

For corporate strategists and capital allocators, the implications are massive:

Policy risk is now policy coordination. Investors must assume the Fed and Treasury will act as one. Traditional hedges around interest rate independence are less reliable.
Capital is about to get cheaper, but more politically directed. If you're in energy transition, critical minerals, AI, robotics, chips, infrastructure or sovereign capability manufacturing, funding will flow. If you're not, don’t expect the same tailwinds.
Onshore U.S. avoids tariffs. If you critical mineral assets, manufacturing, assembly and sales inside the U.S., you get to avoid tariffs.
Private capital must move faster. The public sector is building a track and setting the train schedule. Strategic private capital must align or risk being outcompeted by state-backed initiatives.
Inflation targeting may be sacrificed for industrial dominance. That doesn’t mean runaway prices, but it does mean pricing power in critical sectors and supply chains will be tolerated, even welcomed.
Monetary inflation/currency debasement gets worse. The dollar will debase even more, with equities, crypto and anti-debasement assets rallying, versus fixed income declining.

Independence is illusion

TIFFIT is no longer just a lens, it’s the blueprint for the next 3.5 years at least. In a world where national security, AI supremacy, and industrial resilience take precedence over 2% inflation (which in any event may no longer be possible to achieve), Fed independence is not just outdated it may be in the way.

The deeper the fiscal hole and the higher the strategic stakes, the more likely it is that a central bank becomes an arm of national economic strategy, whether overtly or covertly. The TIFFIT Trump-Bessent doctrine would likely formalise this dynamic in the U.S., just as other great power governments already do under less democratic guises.

Don’t believe me? Well, consider these examples. The PBoC is firmly under the control of the Communist Party. No pretence of independence. The Central Bank of Russia is technically independent but closely aligned with Kremlin priorities, especially post-2014 sanctions. The Reserve Bank of India is owned by the Indian government, which appoints key officials and often pressures policy. The Bank of England is state-owned and has “independent” monetary policy, but in crises (e.g., Truss 2022), it bows to fiscal dominance.

And the Reserve bank of Straya? It’s wholly owned by the government, i.e., the people. It has operational independence, but policy is often coordinated with Treasury.

Bank of Japan and the rest are a mix of either quasi-independence or pretend-independence.

Bottom line

Smart founders, CEOs and corporate strategists should get on the front foot. Align your capital and investment strategies with this new era of “strategic liquidity.”

Because the rules are changing. And under Trump2.0.ai TIFFIT, they may not change back.

See you in the market.

Mike

TIFFIT rising. Why Fed Independence is a liability under Trump2.0.ai