The Fed Meeting Isn’t the Main Story -

In this episode of the <a href="https://www.moneymetals.com/podcasts/2026/09/16/to-hike-or-not-to-hike-this-is-the-question-but-does-the-answer-really-matter-005207">Money Metals Midweek Memo</a>, host Mike Maharrey argues that investors are paying too much attention to the Federal Reserve’s September rate decision and too little attention to the larger fiscal pressures shaping the U.S. economy.
With CME FedWatch odds near 95% for a 25-basis-point rate increase, Maharrey said a hike by Fed Chairman Kevin Warsh appeared likely at the time of the recording (and the FOMC did, in fact, increase interest rates by 25bps). But he stressed that a single quarter-point move cannot resolve the forces driving the economy.
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<h2>A One-and-Done Rate Hike</h2>
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Maharrey said Warsh’s public commitment to the Fed’s 2% personal-consumption-expenditures inflation target has put pressure on him to demonstrate a hawkish stance. He also noted that the August jobs report was stronger than expected and that rising oil prices had reignited mainstream inflation concerns.
Still, Maharrey disputed the case for a sustained tightening cycle. CNBC survey respondents reportedly expected <a href="https://www.moneymetals.com/news/2026/09/15/while-everybody-obsesses-about-rate-hikes-federal-spending-marches-along-unabatted-005205">two rate hikes over the following 12 months</a>, while about one-third expected three. Maharrey said he believed rates would instead be lower in 12 months because the broader economy cannot tolerate significantly higher borrowing costs.
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An oil-price shock, he argued, is not the same thing as monetary inflation. Higher interest rates cannot create more oil, and he cited economist Daniel Lacalle’s point that monetary policy cannot directly remedy a supply-driven energy-price increase.
<h2>The $40 Trillion Constraint</h2>
Maharrey described the <a href="https://www.moneymetals.com/news/2026/08/20/40-trillion-debt-black-hole-is-a-financial-crisis-coming-005149">U.S. government’s roughly $40 trillion debt</a> as the issue markets should be tracking. He said the Trump administration recorded a $166.8 billion deficit in August, putting the fiscal 2026 shortfall at $1.97 trillion with one month remaining in the fiscal year.
He emphasized that calendar effects distorted the monthly data. Because certain Social Security and Medicare payments were moved into July, the adjusted August deficit was about $248 billion, or $7 billion higher than the comparable August 2025 figure, rather than the 52% decline reported in some headlines.
Through August, the federal government had received $4.85 trillion in revenue, up 3.3% from the same period in fiscal 2025, but spent $6.81 trillion, up 2.2%. Maharrey calculated that for every $1 in revenue, Washington spent $1.41, meaning 28.9% of federal outlays were financed with borrowed money.
Maharrey’s conclusion was that the problem is not inadequate revenue, but persistent overspending. In an economy reliant on debt and government-funded growth, he said, higher interest rates eventually threaten the financial structure itself.
<h2>All Roads Lead to Inflation</h2>
Whether the Fed raises rates or holds them steady, Maharrey expects the long-term outcome to be the same… economic stress followed by rate cuts, renewed monetary easing, <a href="https://www.moneymetals.com/news/2026/09/16/goldwin-smiths-dire-warnings-about-paper-money-matter-more-than-ever-005203">and continuing currency debasement</a>.
He argued that a rate hike would increase the <a href="https://www.moneymetals.com/news/2026/09/11/the-fed-will-hike-or-it-wont-it-really-doesnt-matter-005195">odds of a recession or market crisis</a>, prompting the Fed to return to near-zero rates and money creation. If the Fed does not hike, he said, it risks allowing inflationary pressures to continue. Either route, in his view, <a href="https://www.moneymetals.com/news/2026/08/31/gold-takes-a-hit-as-rate-hike-odds-surge-005176">reinforces the case for holding gold and silver</a>.
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Maharrey <a href="https://www.moneymetals.com/news/2026/09/12/daniel-lacalle-rate-hikes-wont-fix-inflation-or-solve-the-debt-problem-005197">referenced a recent interview with Lacalle</a>, who argued that selling precious metals solely because rates rise misunderstands the underlying problem. Gold and silver do not yield interest, but Maharrey contended that higher yields on the debt of an increasingly indebted government do not necessarily represent a superior long-term store of value.
<h2>Namibia Builds Its First Gold Reserve</h2>
Maharrey closed by highlighting Namibia’s new domestic gold-purchase program. In March, the Bank of Namibia signed an agreement with QKR Namibia Navachab Gold Mine to buy domestically produced gold on a phased basis as part of its reserve-diversification and financial-resilience strategy.
The first phase targets gold equal to 3% of Namibia’s international reserves, or roughly N$1.74 billion. As of July, Maharrey said the country had accumulated 8,574 troy ounces, valued at about N$573.4 million. Reaching the phase-one goal would require another approximately 17,000 ounces, bringing total holdings to about 25,721 ounces, or roughly 0.8 metric tons.
While small in global terms, Maharrey said Namibia’s program reflects a broader trend of central banks and governments seeking to diversify reserves amid concerns over debt, <a href="https://www.moneymetals.com/news/2026/09/10/debasement-trade-gains-ground-as-nations-reassess-dollars-bonds-and-gold-005191">currency debasement</a>, geopolitical uncertainty, and the dollar’s long-term role in global finance.

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