The announcement that quantitative tightening will end on December 1, 2025 tells us one thing: the Fed wants more money flowing into the economy. And when the Fed wants the economy flushed with cash, assets rise, borrowing gets cheaper, and investors at least the prepared ones tend to come out ahead.

To understand why this matters, you have to understand the difference between quantitative easing (QE) and quantitative tightening (QT). QE is when the Fed prints money and buys assets to inject liquidity into the system. QT is the opposite tightening credit conditions by reducing the money supply. We saw massive QE in March 2020 when the pandemic hit. Trillions of dollars flowed into stimulus checks, unemployment boosts, business loans, and emergency programs. That money didn’t just keep the economy afloat—it ignited one of the strongest stock market booms in history.

But that money printing also created inflation. Some people doubled their wealth, while others watched their cost of living skyrocket. Even today, wages still haven’t kept up with the inflation surge. QT began in 2022 to cool down prices, but now the Fed says it’s time to switch gears again.

Why? Because cracks are showing. Credit liquidity is tightening. Banks have the lowest reserves since 2020. Job losses are accelerating. October 2025 saw the highest layoffs in 25 years and AI automation is replacing workers at a pace most people still underestimate. When businesses can’t borrow, consumers slow their spending, and unemployment rises, the Fed steps in.

Ending QT is the Fed’s way of saying: “We need more cash in the system.”

Mortgage rates are one of the biggest places this shows up. Mortgage rates don’t move just because the Fed cuts or raises interest rates—they move based on Treasury yields. When the Fed sells Treasuries, supply goes up, yields rise, and mortgage rates follow. When the Fed buys Treasuries, like during quantitative easing, yields fall, and mortgage rates come down. The goal is clear: get housing moving again, reduce borrowing costs, and stimulate buying instead of freezing the market.

So what should you expect heading into 2026? Historically, when the Fed ends QT, markets rise. Between 2020 and 2025, wages grew about 22%, but official inflation clocked in around 25%. Real inflation felt closer to 50% for many households. Meanwhile, the stock market surged roughly 90%. That gap between wage earners and investors is only widening.

When the Fed prints money, savers lose and investors win. The dollar gets diluted. Prices rise. Assets inflate. You can’t save your way out of inflation you invest your way out.

This is why understanding how the system works is so important. The Fed’s job is to stimulate the economy and keep markets stable—not necessarily to protect the purchasing power of the average worker. When QT ends, money becomes more available, credit loosens, and capital flows where it always flows first: to people who already have assets.

If you’re investing, these conditions can help accelerate your wealth growth. If you’re not, inflation will continue eroding your purchasing power year after year.

And the long-term economic landscape? It’s being reshaped by automation and AI at a speed we’ve never experienced before. Entry-level jobs are disappearing. Traditional career ladders are collapsing. But the flip side is that enormous opportunities are emerging for people who learn new skills, build businesses, invest early, and take calculated risks.

The Fed ending QT is not just a policy change it’s a reminder that wealth is created by understanding the economic game, not by sitting on the sidelines. The people who adapt will thrive. The people who wait for the old economy to return will struggle.

Jaspreet Singh is not a licensed financial advisor. He is a licensed attorney, but he is not providing you with legal advice in this article. This article, the topics discussed, and ideas presented are Jaspreet’s opinions and presented for entertainment purposes only. The information presented should not be construed as financial or legal advice. Always do your own due diligence.

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