Wall Street is screaming. Crypto Twitter is euphoric. Headlines everywhere declare the Fed just pumped $38 billion in ten days.
They are all wrong.
What you are witnessing is not stimulus. It is not quantitative easing. It is not the return of free money.
It is plumbing.
The Federal Reserve announced on December 10th a $40 billion monthly Treasury bill purchase program. The explicit purpose, stated in black and white on http: //federalreserve. gov maintaining ample reserves. Not growth. Not inflation. Not asset prices. Reserves.
This is 2019 redux. When repo markets seized that September, the Fed injected $60 billion monthly. The inflation rate? Unchanged. The mechanism? Identical. Technical operations to prevent funding market dysfunction.
The 25 basis point rate cut to 3.5 to 3.75 percent is separate policy entirely. Different lever. Different purpose. Different causal chain.
Yet millions will make investment decisions this week believing correlation equals causation. They will buy assets expecting stimulus that does not exist. They will position for inflation that these operations cannot create.
Here is the falsifiable test: If bank reserves exceed $3.5 trillion by January 15th absent external crisis, this thesis dies. Monitor the H.4.1 release. Verify it yourself.
The base rate from history: 80 percent of similar technical operations produced zero inflationary impulse.
The uncomfortable truth nobody wants to hear: The Fed is not saving you. The Fed is not pumping your bags. The Fed is preventing the plumbing from freezing while everyone fights over whether the water is hot or cold.
Those who understand the difference will navigate what comes next.
Those who do not will learn the cost of confusing pipes for pumps.
