Scott Bessent Just Changed the Liquidity Setup | Macro Mondays: August 24, 2026

**Mikkel Rosenvold** (0:23)
Hello there, welcome to Real Vision, welcome back to Macro Mondays. My name is Mikkel Rosenvold, And as usually, I'm joined by you, Andreas. And Andreas, let me kick off the show. We have a great agenda today, but let's kick off with the good old question. I've been missing this.
How back are we right now?

**Andreas Steno** (0:41)
We're back. At the very least, we're back. And I actually think what we got out of the news outlets this morning supports the notion that we're back. But we can get into the details of that in a second.
But I'm willing to say we're back.

**Mikkel Rosenvold** (0:59)
We're obviously hinding, or I am at least hinding at crypto, the Bitcoin trade, the long-suffering crypto trade here.
I know lots of our listeners are still in crypto. Some may have opted out during the past slide here, but things looking up. Andreas, let's dive in on that initially, then we'll get back to talking a little bit about more into the dollar trade, Warsh speech on Friday and also the big Bessent. The other thing Scott Bessent is doing right now, the economic D-Day. We'll get back to that a little later, but let's start with Bessent's treasury gymnastics or the sledgehammer, as I called it. How much of this Bitcoin rally that we've been seeing, and gold, is brought along by Scott Bessent, and what's more fundamental in your opinion?

**Andreas Steno** (1:47)
Okay, Mikkel, let's start with the laugh of the week because I actually think it relates to what we're going to discuss now.

**Mikkel Rosenvold** (1:53)
I love this.

**Andreas Steno** (1:55)
I posted this, I think, a day or two after the SpaceX IPO, and at the time, it was mostly meant as a joke, but who knows? I mean, at least that's kind of the direction of travel currently, even though SpaceX has made a comeback as well. Having said that, I think what Bessent did last week mattered more optically speaking than fundamentally speaking. Let me show you why on page 5, because I actually think this was a very clever way of doing it, from one of the Bloomberg strategists in my feed on the Bloomberg screens.
They basically calculated the amount of times that the word debasement is mentioned in financial media on a running basis, and then you have the gold price in the white line. You typically see a spike in the storyline, the narrative around dollar debasement when we have these rallies in gold and in Bitcoin, the same trade.
Having said that, I'm a bit surprised to see this many stories around dollar debasement based on what Scott Bessent did last week. He essentially decided to double the buybacks of longer-running US Treasury bonds. Initially, which was my reading of it as well, a buyback basically means that, well, you issue a T-bill to buy an already existing, already issued, say, 30-year bond.
And during that exercise, you don't really create a new dollar, right? You issue one bond to remove the other bond from the market. Of course, you absorb so-called duration risk, the risk of holding Treasury bonds for longer, and the corresponding risk of long-term inflation running wilder than what's penciled in and all of that. That risk is removed to some extent by this twist of the issuance. But you don't create new dollars. You can argue that there are some indirect sources of dollar creation in such a debt buyback. If you manage to remove volatility from the Treasury market, it may be easier to post Treasury as a collateral, meaning that you could borrow against it. There are some indirect impacts on liquidity. But this morning, which may be the most relevant news of the day, even though we've had tariffs news, we have the upcoming D-Day against Iran and all of that, a couple of officials from the US Treasury leaked to CNBC that they may use the so-called TGA to fund these buybacks.
Let's look at page 6 and a timeline of what's been going on here.
On August 20, he said that they could more than double the buybacks per operation to $4 billion from $2 billion. And then this morning, they said that they could use the TGA to fund these buybacks. So we've essentially had a development here from what was initially, in my opinion, an offing burger from a liquidity perspective, more or less, to something that becomes incredibly relevant as soon as you include the TGA in this equation. And let me go through the mechanics on the next page, because they're not irrelevant for investors in gold and Bitcoin and the likes. So I typically look at two types of liquidity. One is the very narrow liquidity that is used to settle transactions between banks. And that's what we have in the top panel here. So we're talking trillions of dollars used in interbank settlements. And you need an account of the Fed Reserve to be able to use these dollars. And why is that a relevant metric? It's a relevant metric because it's basically the oil of the system. Without sufficient structural liquidity between banks, you'll start to see higher interest rates on repurchase agreements. So the exact repurchase agreements that I referred to when I said that liquidity is needed to ensure that treasury markets functions properly. And now that they potentially intend to use the TGA, which is the red line in the second panel here, they intend on using dollars that have already been issued. So they're already created. They issued a bond a while ago, and then they used the proceeds to put in a war chest basically. So those dollars are currently parked at the Fed. If they use those exact dollars to buy back bonds, those dollars will go from the Fed into the banking system. So it will eventually turn that idle dollar into a live dollar for the financial system. My best guess, and I'm guessing right now because we don't have the details from the Treasury yet, is that they may be tempted to use as much as $350-$400 billion worth of ammunition here over the next years. They can actually run this program for quite a while if they do it via the TGA. That is a running liquidity addition, meaning that you can see the dotted line at the very top of the panel. If you forecast that, we're going up. I've said, based on my calculations, it's a long technical calculation, how much do we actually need to ensure that the market is really functioning well? We probably need, say, between 3 and 400 billion more than what we have right now. Those dollars may be delivered by the Treasury now, instead of the Fed, because I think initially, Bessent probably hoped that the Fed would deliver those dollars. They can also create them. It's big news.