For the past two newsletters I’ve been tracking a sequence: crisis hits, governments intervene, intervention fails, and pressure builds for the real response. The Strait of Hormuz closed, then the IEA dumped the largest strategic reserve release in history and oil kept climbing anyway. The Fed held rates steady while quietly revising its inflation projections upward. I said the printing was coming and the only question was when.
I think the answer is already here, and most people are missing it because they’re waiting for the wrong signal. They’re watching the Fed. They’re waiting for a rate cut announcement or some dramatic press conference where Powell walks up and says “we’re printing now.” But I don’t think that’s not how it works. The monetary response doesn’t arrive as one big moment. It comes through a handful of separate decisions that, when you line them up, tell a very clear story.
The government is spending like it’s already in crisis mode. The legal framework that was supposed to pay for it just got demolished. And the one institution that’s supposed to hold the line is starting to split.
The Revenue Side Collapsed
In late February, the Supreme Court ruled 6-3 that the president can’t use the International Emergency Economic Powers Act to impose tariffs. That single decision wiped out the “Liberation Day” tariffs, the fentanyl tariffs on China and Mexico, and basically every major tariff action from the past year. The estimated revenue those tariffs generated was somewhere north of $175 billion.
That matters less as a number and more as a structural problem. The whole math behind the current administration’s spending plans assumed tariff revenue would be there to partially offset the cost. Now it’s gone. The replacement tariffs they scrambled to put up under different legal authority are weaker, temporary, and bring in a fraction of what the old ones did. The investigations they launched to build a case for new tariffs under Section 301 will take months, probably years, before they produce any actual revenue.
What you’re left with is a government that built its budget on a revenue source that a court just took away, and there’s no plan to replace it on any timeline that matters.
Stimulus With the Labels Ripped Off
On the spending side, it’s even more obvious.
Last July, Congress passed a massive tax cut bill. The details matter less than the size: the CBO estimates it adds $3.4 trillion to deficits over the next decade, with most of the economic boost front-loaded into this year. That means more money in people's pockets right now, in 2026, while inflation is still running above the Fed's target.
Nobody called it stimulus. They called it tax relief. When you sign a law that injects money into the economy while inflation is running above your central bank’s target, the label you put on it doesn’t change what it does. The economy doesn’t care whether the extra dollars came from a stimulus check or a tax cut. The effect on the money supply is the same.
The federal deficit is projected at $1.9 trillion this year. The government is spending $10 billion a week just on interest payments. These numbers were already unsustainable before the Strait of Hormuz closed, before oil crossed $100, before any emergency spending related to the Iran situation even started. There’s also been a partial government shutdown since February over DHS funding that still hasn’t been resolved, which tells you everything about how seriously Washington is taking fiscal discipline right now.
The point isn’t any single number but the direction its going. Every decision being made, on taxes, on spending, on tariffs, on emergency reserves, pushes in the same direction: more money into the system, less capacity to pull it back.
The Fed Is the Last Domino
I covered the March FOMC meeting in the last newsletter, but one detail got more significant with time.
Governor Miren voted for a rate cut while everyone else held. This was one vote out of the twelve. It sounds like a footnote but dissents at the Fed signal a view that’s gaining enough traction internally to go on the record, even when it can’t carry the vote yet. The last time this pattern started was late 2018 while the committee was still hiking rates into a slowing economy. One dissent became two, and within six months they reversed course entirely and started cutting.
The committee is stuck between a rock and a hard place. Hold rates steady while $112 oil, $5 gas in California, and a deteriorating job market grind the economy down. Or cut rates and add fuel to inflation that’s already above target and trending the wrong direction, with diesel topping $200 in some markets.
History tells you how this resolves. When the Fed has to choose between fighting inflation and preventing a recession during an election year, it almost always chooses the recession fight. Midterms are in November and the political gravity is overwhelming.
Most people haven’t fully processed this yet but by the time the Fed actually cuts, the printing will have been running for months through the fiscal side. The tax cuts are already in people’s bank accounts, the deficit is already blowing out, and the tariff revenue is already gone. The Fed won’t be starting the expansion but it’ll be ratifying one that’s already underway.
Gold Broke. Bitcoin Didn’t.
I didn’t expect to be writing this part yet.
Gold just posted its worst losing streak in over a century. Down 15% in March. Nearly $11 billion has come out of gold ETFs in three weeks. JPMorgan put out a note saying that liquidity conditions in gold have actually deteriorated below Bitcoin’s, which is something that has basically never happened before. The trend-following funds that piled into gold through late 2025 and early 2026 are now liquidating hard.
Bitcoin is sitting around $66,500. It hasn’t ripped higher, but it hasn’t broken down either. Spot Bitcoin ETFs are still pulling in net inflows while gold ETFs are bleeding. The BTC-to-gold ratio, which had dropped to historic lows around 12 ounces per Bitcoin, has bounced about 30% and sits around 16 now.
In the last newsletter I said Bitcoin was still trading like a risk asset and would respond to the monetary response, not the crisis itself. That still holds, but what’s happening between gold and Bitcoin right now is telling you something important about how the market is repositioning.
Gold is what you buy when you’re scared of a war. Bitcoin is what you buy when you think the government’s response to the war is going to debase the currency. The war panic trade ran its course, and gold is now giving back those gains. The next phase is the debasement trade, and that’s where Bitcoin lives. Capital is starting to rotate from one thesis to the other, and we’re still early in that rotation.
What I’m Watching
The deficit math only works if interest rates come down. $39 trillion in national debt with over $500 billion a year in interest payments is not a number that survives sustained high rates. The Fed knows this. The Treasury knows this. The math forces a cut eventually, regardless of where inflation is, because the alternative is a debt spiral.
The oil situation is getting worse, not better. On March 27th, the IRGC announced the strait is closed to vessels going to or from US and Israeli allied ports. Oil executives are saying if it’s not reopened by mid-April, shortages spread from Asia into Europe. More inflation pressure, more political pressure, shorter fuse.
What’s changed is that the sequence I laid out, crisis to intervention to monetary expansion, is no longer a prediction. The fiscal side has already moved and The Fed is the last piece, while the committee is already cracking.
People keep waiting for the moment when the printing starts. They’re going to be waiting until it’s already priced in. The $1.9 trillion deficit is the printing. The $3.4 trillion tax cut is the printing. A Supreme Court ruling that vaporized the government’s newest revenue stream with no replacement is the printing. A war that’s draining the strategic reserves while oil stays above $100 is the printing.
You don’t need the Fed to announce it. The rest of the government already did.