The Words Washington Won’t Say

America has already lost the war it’s fighting. And I don’t mean Iran.

I mean the war that lit the fuse on a bomb everyone is pointing at—but nobody in Washington dares say the name.

The bomb is America’s egregiously large, $39 trillion federal debt. But the name nobody will say out loud… is Fiscal Dominance.

It’s not a phrase you hear tossed around the water cooler. Purely academic stuff that economists mutter about at conferences and write about in exceedingly dry research papers.

But it’s the name of the weapon that is going to lose this war for America.

And here’s how you know that it’s serious: Former Treasury Secretary Janet Yellen—the ultimate Washington insider—has started using the term fiscal dominance in public.

In her words: America is on, quote, “the road to becoming a banana republic.”

When someone like Janet Yellen starts throwing ‘banana republic’ into her interviews, she’s not being dramatic. She’s yelling for help in econo-speak.

Like I said, this is economics at its darkest…

And you and I are in the kill zone.

Fiscal dominance means a few things… all bad.

One: Inflation doesn’t come down. The tool the Fed uses to fight it—raising interest rates—is broken. Only a crisis breaks the cycle… and that crisis likely takes your job on the way through.

Two: Your savings evaporate like a rain puddle in the desert. Persistently elevated inflation—that the Fed literally cannot fight—destroys your wealth. Retirees on fixed incomes get hit first, and hardest.

Three: Your money buys less of everything America has to import. Everything from the new iPhone and every laptop, to bananas, coffee, and the uranium that generates 18% of America’s electricity.

And four: The people who already own assets—gold, real estate, stocks—quietly get richer, while everyone who earns a paycheck quietly gets poorer.

So—what the hell IS fiscal dominance?

It’s the end result of the government’s debt growing so large that the Fed has no choice but to stop setting interest rates based on inflation and unemployment—the Fed’s legal mandate – and start setting them based on what the Treasury can afford to pay on America’s $39 trillion pile of IOUs.

Fiscal dominance is, literally, the Fed losing its independence—not because a president bullies a Fed chairman to lower interest rates… but because of the bomb that explodes inside Treasury.

And inflation runs the economy while the Fed waits for the crisis it knows is silently hunting it.

Which brings us to the part nobody wants to talk about.

Critics, including me, have assumed the threat to the Fed is Donald Trump. His pressure on Powell. His attempted firing of Governor Lisa Cook. His demand that the new Fed chairman give him 1% interest rates.

But that’s just Trump being loud, like an obnoxious cough when you have COVID.

Like that cough, though, Trump is just a symptom.

The debt is the disease.

You can see fiscal dominance operating inside the Fed’s own voting record in the 18 or so months that Trump has been back in the Oval Office.

Start with Stephen Miran. In 2024, Miran co-authored an academic paper accusing Biden’s Treasury secretary – Janet Yellen – of a slick trick. Instead of funding the American government at what were then relatively cheap long-term rates, Yellen was borrowing at the short end—through the even-cheaper Treasury bills—to disguise how expensive the debt was really getting.

Miran had a name for it: “stealth QE,” stealth quantitative easing, when the Fed prints money to hold rates down. Miran said Yellen was doing the same thing through the back door, without accountability.

Then Trump returned to the White House. Miran took over as Chair of Trump’s Council of Economic Advisers.

Scott Bessent became Treasury Secretary.

And the very first thing Bessent’s Treasury did was run the exact same stealth QE playbook Miran had spent two years attacking. Only Bessent has been running it harder, like he’s trying to whip a donkey into winning the Kentucky Derby.

This year, Treasury is expected to issue more than $800 billion in short-term bills. More than double last year’s count.

That’s move one.

Now watch move two.

Trump appointed Stephen Miran directly to the Federal Reserve’s Board of Governors—the seven-person body that helps set US interest rates.

At every one of the six Fed meetings Miran attended, he dissented from the majority. Three times he pushed for half-point rate cuts. Three times he pushed for quarter-point cuts.

He publicly called for a full one-and-a-half percentage point cut across 2026—a scale of aggression the Fed hasn’t seen outside a full-blown financial crisis.

Why?

Because lower rates mean cheaper debt service costs for a Treasury drowning in T-bills that have to be rolled over every few months.

THAT is fiscal dominance appearing in the Fed’s official voting record.

Miran spent 2024 attacking the Yellen Treasury for using T-bill issuance to hide the true cost of the debt. Then he joined an administration doing exactly that—only harder.

Then he went to the Fed to vote for the rate cuts that made the whole scheme cheaper. That’s not a dove having a policy disagreement. That’s Miran advancing the same goal from both the Fed and Treasury sides—regardless of what inflation or unemployment were actually doing.

Then, when Miran’s seat on the Fed came available in May, Kevin Warsh replaced him—and was sworn in as Fed Chair the same day. Two Fed meetings in, when three of his colleagues voted to raise rates to fight inflation, Warsh held steady, even while insisting the Fed’s singular focus was bringing inflation back to 2%.

That’s fiscal dominance cosplaying as a paper tiger whose roar sounds more like a kitten’s mew.

Somewhere out there Janet Yellen is watching all this and wondering: When the banana republic finally arrives—will it still take dollars?