Fed’s Money Printers Are Warming Up — And the Melt-Up May Be Inevitable

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Back in 2024, the prediction was simple: the Federal Reserve would be forced to restart money printing by 2026. Now, 2026 is almost here — and recent signals suggest this forecast may play out exactly on schedule.

In November, the New York Fed President John Williams quietly said the central bank will “soon need to grow its balance sheet again.” That is a polished way of saying: the Fed will need to turn the money printers back on — not someday, but “not long” from now.

And now, the most important milestone is locked in:
Quantitative Tightening officially ends on December 1.
No speculation — the Fed has confirmed this.

To make sure we’re aligned:

The last three years have been QT. The Fed shrank its balance sheet from $9T to $6.6T to tame inflation after the pandemic-era money surge. That tightening is now stopping — and the groundwork for QE is already being laid.

It’s not because the economy is collapsing.
It’s not because unemployment is spiking.
It’s because the financial plumbing system is running dry.

Modern banking depends on:

Think of it like a water system.
When reserves fall too far, repo rates spike.
When repo rates spike, money markets break.

This happened:

The Fed now sees the warning signs early. That’s why Williams, Powell, and Dallas Fed President Lorie Logan all said the same thing:

Even Evercore — one of Wall Street’s top macro firms — expects the Fed may need to buy $50B per month in Q1.

This is QE, even if they refuse to call it QE.

And whenever the Fed expands its balance sheet, the effects follow:

This is the fuel for a melt-up in risk assets.

Ray Dalio of Bridgewater has been blunt:
The Fed is stimulating into a bubble.

He lists the ingredients:

Dalio’s view: liquidity will push markets higher and higher until inflation gets out of control, forcing the Fed to slam the brakes — triggering a severe correction. But before that correction?

A melt-up.
Dalio’s advice: ride the wave up, but exit before the crash.

Jerome Powell’s term ends in May 2026.
Guess who appoints the next chair?
President Trump.

Trump has repeatedly argued:

A Trump-appointed Fed chair is likely to be more dovish, more tolerant of inflation, and more aggressive with rate cuts and liquidity support.

Add this to the mix:

This combination has melt-up written all over it.

Call it QE.
Call it balance sheet “normalization.”
Call it “reserve management.”
The label doesn’t matter.

Liquidity is coming.

The sequence is clear:

And remember: each new money-printing cycle requires a larger dose than the last. Like an addict, the system becomes dependent — and every cycle ends more chaotically.

Understanding liquidity is one thing. Positioning for it is another. Here are four grounded rules to navigate a melt-up environment.

Markets react to liquidity, not political statements or economic narratives.
When the Fed adds liquidity — whether they call it QE or not — markets behave the same way:

Headlines distract. Liquidity drives.

A melt-up doesn’t move in a straight line.
There will be pullbacks — use them.

Smart investors:

The goal is to participate, not to compete with parabolic moves.

No one knows which asset will be the “fastest horse” during liquidity surges.

Historically:

Diversify across:

If you’re heavily concentrated — like “all-crypto” or “all-gold” — shift some exposure into other assets.

Diversification doesn’t mute upside — it protects against blind spots.

This one destroys more people than bear markets do.

Even in a melt-up:

If you use margin:

For example:
If you have $100,000 and use margin to buy $300,000 in assets, a 33% fall wipes you out entirely.

A melt-up is a bull market with a landmine under your feet. Don’t let leverage be the trigger.

The Fed is preparing the system for another liquidity wave.
QT is ending.
Reserve shortages are emerging.
Powell’s term is closing.
Political pressure for lower rates is building.
And asset markets are primed for a liquidity-driven surge.

Whether you like the system or hate it, understanding the mechanics gives you an edge.

A melt-up is increasingly likely.
But surviving it — and profiting from it — depends on discipline, diversification, and avoiding leverage traps.

Stay positioned. Stay rational. Stay liquid.