This is a new regime called FISCAL DOMIMANCE. The US Treasury Department is essentially dominating over the Fed and the way they are doing so is by reducing its percentage of long term debt (US treasury bonds) and increasing its percentage of short term debt (US T-bills). Historically T-bills made up 15% to 18% of marketable debt. Today, T-bills make up 22% to 23% of that debt. What this means is that if the Fed raises rates tomorrow that when the short term T-bills mature and news ones are issued they will be issued at then new, higher rate which instantly raises the interest the government pays.
So why is the government even doing this? They have no choice. They can’t afford to issue new long term debt at the current interest rates over 5%. Currently the US government is already paying over $1.2T/yr in interest on its debt, which more than its spends on its DEFENSE BUDGET. Interest expense on our debt is already the second largest expense in our budget, second only to social security.
So if a higher percentage of our debt is now T-bills, which the yield is directly controlled by the Fed, the Fed can’t raise rates because then the interest the US pays on its debt will grow even more! So the Fed is TRAPPED. Inflation will stay high and that’s by design. The US government plans to inflate away the debt which is nothing but a tax on US citizens and bond holders.
This all explains why gold, bitcoin/crypto is surging. Smart money knows the Fed is now trapped. They might talk tough but the government debt ensures that they can’t raise rates unless they want to blowup the US budget.