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The Federal Reserve announced it will begin ongoing purchases of short-term Treasury bills starting December 12, buying roughly $40 billion per month to ease tightening liquidity conditions in money markets.
The program, described as “reserve management” rather than a change in monetary policy, is designed to maintain ample bank reserves and keep control of the federal funds rate following the recent end of quantitative tightening.
Fed Chair Jerome Powell emphasized that the move is not intended as a renewed stimulus, but many analysts see it as quantitative easing in all but name, one that risks swelling the Fed’s balance sheet again while inflation remains above target in multiple categories.
The larger-than-expected pace of purchases has fueled concern that the line between a technical adjustment and a liquidity injection is quickly blurring.
Despite the Fed’s characterization, markets see the move as an early step toward broader balance-sheet expansion, a form of “stealth QE,” according to some analysts, including economist and gold advocate Peter Schiff.
QE by any other name is still inflation. The Fed just announced it will be buying T-bills “on an ongoing basis.” Given that long-term rates will rise on this inflationary policy shift, it won’t be long before the Fed expands and extends QE5 to longer-dated maturities. Got gold?
— Peter Schiff (@PeterSchiff) December 10, 2025
Traditionally, quantitative easing targets longer-dated Treasuries to suppress yields and stimulate lending. But even short-term bill buying increases system liquidity, which can amplify risk appetite and, ultimately, inflation pressures.
Notably, large-scale Fed purchases during and after the COVID-19 pandemic inflated what was later dubbed the “everything bubble,” from equities to real estate to crypto, before tighter policy forced a painful reset.
With the economy now showing slower growth, rising unemployment (edging up to 4.4%), and fragile credit conditions, some see it as primarily intended to maintain liquidity, as observed in the repo markets.
Equities initially rallied on expectations of easier funding conditions but later pared gains as investors parsed Powell’s comments on inflation vigilance.
Bond markets saw short-term yields decline, reflecting increased demand for bills, while the 10-year Treasury yield rose modestly toward 4.65% on renewed inflation concerns.
Bitcoin (BTC) mirrored that split behavior. The world’s largest cryptocurrency briefly climbed above $92,000 before retracing toward $90,000, tracking shifts in liquidity sentiment. Traders say BTC has increasingly traded as a liquidity barometer, responding more to central bank balance sheets than to on-chain metrics.
Crypto analysts warn that while liquidity injections could reignite speculative demand, persistent inflation or a hawkish Fed tone could keep risk assets range-bound into early 2026.
LAST TIME THE FED STARTED T-BILL PURCHASES, U.S. EQUITIES RIPPED AND BITCOIN BOUNCED HARD.
Only afterward did real QE begin triggered by COVID but by then the markets had already crashed.
This time isn’t guaranteed to follow the same crisis driven path, but the setup rhymes. pic.twitter.com/EaLdXFQbsb
— Senior 🛡🦇🔊 (@SeniorDeFi) December 11, 2025
The next phase of market reaction will hinge on upcoming inflation prints and labor data, which could determine whether this program evolves into outright balance-sheet expansion.
The Fed’s renewed T-bill purchases may be technical in name, but markets see them as the first spark of a new liquidity cycle.
For risk assets, from Treasuries and equities to Bitcoin, the Fed may be done hiking, but monetary easing is creeping back in through the side door.
The coming months will reveal whether this is a brief liquidity fix, or the early stage of QE5 disguised as “reserve management.”
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