The Bond Market is the House

Posted on September 18, 2026 by MN Gordon

New chapters of hubris in central financial planning are written on a regular basis. But rarely is one inscribed with such spectacular timing.

Treasury Secretary Scott Bessent recently stood before an audience at Southern Methodist University and dared currency traders to bet against his currency interventions. While doing so, he delivered a line for the history books.

Bragging about his access to policymakers in Tokyo and his inside track on foreign central bank maneuvers, Bessent declared, “I am the house now. You can bet against me if you want.”

Bessent believes that with enough bluffing, strategic bond buybacks, and coordinated intervention with the Bank of Japan, he can dictate terms to the financial markets. The global debt market, however, does not buy it.

While Bessent was playing risky currency games, the yield on the 10-Year U.S. Treasury note eclipsed 5 percent. Investors across the globe delivered a direct, explicit response to Washington’s market intervention. Bessent can claim to be the house all day long, but when the U.S. government’s running $2 trillion annual deficits while inflation is running hot, the bond market will inevitably price in the risk. Continue reading →

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How Kevin Warsh Inherited an Unwinnable Monetary War

Posted on September 11, 2026 by MN Gordon

“Alea iacta est”

– Julius Caesar

Out of Thin Air

When Julius Caesar marched his 13th Legion across the Rubicon River in 49 BC, he knew he was breaking a fundamental rule of the Roman Republic. But it was a calculated risk he chose to take. And, once crossed, there was no turning back.

In late 2008, Federal Reserve Chairman Ben Shalom Bernanke marched an unwitting American populace across a monetary Rubicon. Facing the vaporization of Lehman Brothers and a global banking system that had frosted over like the Alaskan tundra, Bernanke took the ultimate leap. In the process, he released a crude monetary experiment called quantitative easing that would alter the course of the American financial system forever.

Before Bernanke’s experiment, the central bank operated under a relatively straightforward rulebook. If the economy was running too hot, the Fed raised short term interest rates to cool things down. If a recession loomed, it cut short term rates to make borrowing easier. It was a mechanical, predictable system that left long-term market rates largely to the forces of supply and demand. Continue reading →

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Modest Reflections on Varying Tolerances to Extreme Pain

Posted on September 4, 2026 by MN Gordon

“We take our responsibility seriously, with humility and with resolve.”

– Federal Reserve Chairman Kevin Warsh, August 28, 2026

Same Old Price Fixing

Last week Fed Chairman Kevin Warsh delivered his debut alpha dog speech from Jackson Hole, Wyoming. It was titled “In Our Time,” and was billed as a broad blueprint for how he intends to govern. Namely, he wants a quieter Fed.

“We should not indulge a regime in which market participants are looking primarily to the Fed for their next trade.”

This is a nice sentiment. It sounds good coming out of Jackson Hole. But it doesn’t really change anything. Wash is merely smiling through his teeth, while talking out of his neck.

He says he wants to pull back the Fed’s verbal influence. Yet he wants to leave its mechanical influence completely intact. He wants a quiet central bank, but he still expects to sit in a room with twelve people every six weeks and fix the price of credit for a $28 trillion economy.

Philosophically, the core presumption remains unchanged. That a committee of central planners believes it can calculate the correct price for borrowing money better than the open market. Continue reading →

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Financial Graffiti

Posted on August 28, 2026 by MN Gordon

The financial reckoning continues to move towards its end.

The U.S. national debt has officially broken $40 trillion. This number is so massive it’s hard to comprehend. For example, if Washington paid down $1 billion of debt every single day, it would take nearly 110 years to settle the tab.

But Washington has proven it’s incapable of honestly tackling the debt problem. In fact, the debt clock is now ticking to the tune of roughly $7 billion added every 24 hours, with annual structural budget deficits heading toward $2 trillion.

For years, Congress could ignore the massive hole they were digging because record-low interest rates kept interest payments manageable. Now, as Treasury yields have increased, interest payments are consuming a massive part of the budget.

Rather than facing the problem head on, making difficult decisions, and cutting spending, America’s central planners are trying to override basic supply and demand. These efforts have triggered the return of the debasement trade that is pushing gold’s dollar price upwards. Continue reading →

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