The Fed Just Ended QT, Here’s What will Happen Next (Massive Money Reset)
The Fed Just Ended QT, Here’s What will Happen Next (Massive Money Reset)
Mark Moss: Fox News: 12-7-2025
The Federal Reserve’s decision to end its quantitative tightening (QT) phase on December 1st marks a significant turning point in monetary policy mechanics.
Contrary to being a final endpoint, this move signals a critical shift in the Fed’s approach to managing liquidity in the financial system.
As we’ll explore in this blog post, the implications of this shift are far-reaching, with potential consequences for investors, asset prices, and the broader economy.
The Fed’s QT phase, which involved shrinking its balance sheet by reducing securities holdings and draining reserves from the banking system, came to an end due to the scarcity of liquidity in the market.
Indicators such as rising repo rates and increased usage of the Fed’s standing repo facility (SRF) revealed that the system was approaching its operational limits.
Prominent Fed officials, including Jerome Powell, John Williams, and Lori Logan, have publicly acknowledged that the Fed must begin expanding its balance sheet again to maintain adequate reserves as banking system liabilities grow.
The Fed frames this shift as technical reserve management, rather than a return to quantitative easing (QE) or stimulus.
However, history suggests that expanding the balance sheet can have a significant impact on liquidity conditions and asset prices.
In 2019, the Fed ended QT, only to resume asset purchases shortly after due to a spike in repo markets. Despite labeling this action as non-QE, the balance sheet expansion correlated with significant rallies across major risk assets, including the S&P 500, NASDAQ, gold, and Bitcoin.
The current environment parallels the 2019 cycle, but with larger deficits, a bigger balance sheet starting point, and elevated inflation.
As a result, investors may be on the cusp of a significant liquidity wave, potentially beginning in 2026.
While this shift is not intended as economic stimulus, it is likely to improve liquidity conditions and drive asset prices higher. Historically, the transition from balance sheet contraction to expansion has been associated with improved market performance.
As the Fed embarks on this new path, investors must be prepared for continued volatility. To navigate this environment, it’s essential to avoid margin and focus on scarce assets that hedge against monetary debasement, such as gold, commodities, and Bitcoin.
These assets have historically performed well in periods of liquidity expansion and monetary easing.
While the base case is for a relatively smooth transition, a “gray swan” risk – domestic political instability – could potentially disrupt the timing or trajectory of this liquidity cycle. Rising institutional conflicts and legal battles across the U.S. government could reshape market dynamics, making it essential for investors to remain vigilant and adaptable.
As the Fed’s shift in monetary policy mechanics sets the stage for a potential liquidity wave, investors must prepare strategically for the coming financial cycle. By building a robust wealth engine and focusing on scarce assets, investors can position themselves for success in a rapidly evolving market environment.
For further insights and information, be sure to watch the full video from Mark Moss, which provides a more in-depth analysis of the Fed’s shift in monetary policy and its implications for investors.