When the U.S. Federal Reserve changes course, it can shift the path of markets for years. Felix Prehn, former investment banker and founder of Goat Academy, explains that the latest move by the Fed is not just a small rate cut. It is a return to large‑scale money creation, even if they use complex language to hide it.
What the Fed Is Really Doing
The Fed recently cut interest rates by 0.25%. Many people focused on this. But Felix points out that the bigger story is what the Fed calls “reserve management purchases.” This is a technical term for buying government bonds with new money.
In simple words, the Fed is printing money again.
- The Fed plans to buy about $40 billion of government bonds per month.
- That adds up to almost half a trillion dollars a year.
- This new money flows into the banking system, which is called liquidity.
Liquidity means how much money is easily available for banks, companies, and investors to use. More liquidity usually pushes prices of assets higher, because there is more money chasing the same number of investments.
The Fed says this is just a “technical” step, not stimulus. But Felix stresses a simple rule:
If it looks like money printing and acts like money printing, it is money printing.
Why This Matters More Than a Rate Cut
Interest rate cuts make borrowing cheaper. That is important, but slow. Money printing is stronger and faster. When the Fed creates money and buys bonds:
- Banks get more cash.
- Banks can lend more to businesses and households.
- Extra money looks for a home in assets like:
- Stocks
- Bonds
- Real estate
- Sometimes commodities and crypto
History supports this. In past rounds of money printing, often called Quantitative Easing (QE), stock markets soared. After 2008, during QE1, QE2 and QE3, the S&P 500 roughly tripled over several years. In 2020, another huge wave of money printing pushed stock prices sharply higher again.
Quantitative Easing (QE) means the central bank buys large amounts of government bonds or similar assets with new money to support the economy and markets.
Felix believes that once the Fed restarts this process, it becomes very hard to stop. In his view, money printing is likely to continue into 2026.
A Divided Fed and an Uncertain Economy
The recent Fed meeting showed deep disagreement inside the bank:
- One official wanted a bigger rate cut, because he thinks the economy is too weak.
- Two others wanted no cut at all, because they worry about inflation rising again.
When experts inside the Fed cannot agree on the basic direction, it signals confusion. Markets do not like confusion. However, once the path becomes clear—especially if it is clear that the Fed will keep cutting rates and printing money—markets often move very strongly.
The Fed also publishes a “dot plot” every quarter.
A dot plot is a chart where each Fed official marks where they think interest rates will be in the future. It looks like a group of dots on a graph. It is meant to guide the market, but in practice it is often wrong. Right now, the dot plot shows only small cuts over the next years, but markets are betting on more cuts than the Fed admits.
The Main Risk: Inflation
Money printing is rarely free. One main danger is inflation.
Inflation means prices of goods and services go up over time. When inflation is high, the value of each dollar falls; people can buy less with the same amount of money.
If inflation rises too much:
- The Fed may be forced to slow or stop rate cuts.
- It may also reduce money printing to avoid losing control of prices.
- This could hurt stocks and other risk assets after a strong run.
Felix describes the “Goldilocks” dream scenario:
- Moderate economic growth
- Falling or stable inflation
- Lower interest rates
- Ongoing money printing
In that world, risk assets like stocks, real estate, and some commodities could perform very well.
Which Assets Tend to Benefit
Felix highlights that not every stock will react in the same way. In an environment of falling rates and fresh money:
- Growth and tech stocks often do best.
- These include software, AI‑related companies, and other firms expected to grow earnings fast in the future.
- Financial stocks can benefit because more liquidity means more lending and more activity.
- Real estate and utilities may gain from lower borrowing costs.
- If inflation picks up, commodities and energy stocks can become very attractive. He mentions gold and silver, which have often reacted well in periods of heavy money printing and rising inflation fears.
He warns against low‑quality “meme” stocks and speculative names with weak fundamentals. Easy money can lift everything for a while, but weak companies can still fail when conditions change.
Why Cash Is at Risk
In a world where rates are likely to fall and more money is printed, cash loses some of its power. If inflation is higher than the interest you earn on savings:
- The real value of cash drops over time.
- Savers may feel poorer, even if the number in their account looks the same.
Felix’s view is that staying in cash on the sidelines could mean missing one of the most important wealth‑building windows of the coming years. Instead, he prefers exposure to “risk assets” such as:
- Quality stocks
- Selected real estate
- Possibly commodities or crypto for more aggressive investors
However, he also stresses the need to focus on quality and to avoid blindly chasing hype.
Learning to Read the Signals
Many everyday investors feel lost when they hear terms like “reserve management purchases” or “non‑reserve liabilities.” Felix argues that the finance world often uses complex language on purpose. It can make simple actions, like money printing, look confusing.
But he also believes that regular people can learn to read these moves in a few weeks with the right guidance. That is part of the mission behind Felix Prehn’s Goat Academy: to help normal investors understand how central banks and markets work, so they are not always a step behind professionals.
At Goat Academy, students learn how to interpret Fed decisions, watch liquidity trends, and link them to market behavior. Over time, this can turn overwhelming news into clear and practical insights. You can learn more about Felix Prehn Goat Academy on the about page.
Big Picture: A New Phase of Money Printing
Putting it all together, Felix sees the current moment as the start of a new phase:
- The Fed has restarted money printing, even if it hides behind new names.
- Internal disagreement and political pressure add to the sense that the Fed is “flying blind.”
- History suggests that more liquidity usually lifts stocks and other assets.
- The key trade‑off is between asset growth and inflation risk.
For investors and even simple savers, the coming years could be shaped by how they respond to these changes. Those who understand what money printing means, and how it flows into markets, are better placed to protect and grow their wealth in a world where central banks are once again creating money at scale.