Howling About Treasury’s ‘Hocus Pocus’
Wolf Street howls about the Treasury’s hocus pocus announcement.
From Wolf:
The Treasury Department cannot create money, unlike the Fed. It has to sell new securities to buy back old securities. The buybacks are just a debt swap. And Bessent could accomplish the same thing but in much larger quantities by keeping auctions of long-term notes and bonds unchanged, and increasing the T-bill auctions, and thereby shifting issuance to T-bills, and it’s already doing that.
But Bessent wanted to soothe the bond market on the spooky day that the Treasury debt hit $40 trillion. So he came out with the hocus-pocus announcement, and long-term yields fell instantly, though the actual increase of the buybacks won’t start till September 9, and though the amounts are small compared to the $1 trillion in new debt that investors have to buy every three to five months going forward, and tiny compared to the $40 trillion in Treasury securities outstanding [my detailed analysis of Bessent’s hocus-pocus show is here].
This is similar to what I wrote yesterday:
The Treasury Announcement: What It Is and Isn’t
The Treasury announcement is broadly being mis-interpreted as usual, due to hype from the usual suspects including Fin TV.
It is just a twist, not money printing.
Whatever they buy more of on the long end, they will have to issue on the short end to finance the purchases.
And the dollars involved are limited.
Anyway, this is not QE or money printing, only the Fed can do that. Treasury has no authority or ability to print money.
BY Doug Kass · Aug 19, 2026, 12:01 PM EDT
Position: None
