The Federal Reserve is widely understood to balance two responsibilities: jobs and inflation.
But tucked away in its founding charter is a third instruction that has barely been mentioned for decades — and it’s now being pulled back into the spotlight by the Trump administration.
President Donald Trump’s nominee for the Fed board, Stephen Miran, has highlighted the requirement for “moderate long-term interest rates,” an objective written into the 1913 Federal Reserve Act but largely treated as symbolic. By reviving it, officials could justify sweeping interventions in bond markets, including yield curve control and aggressive quantitative easing.
From Obscure Clause to Policy Weapon
The push comes at a time when Washington faces record debt of $37.5 trillion and rising mortgage costs. Trump, a long-time critic of tight monetary policy, has argued for cheaper borrowing across the board. Citing the “third mandate” provides legal backing to force long-term yields lower — whether by issuing more short-term Treasury bills, launching buybacks, or directly purchasing government debt to hold rates down.
Why Crypto Traders Are Watching Closely
For traditional markets, the move would likely weaken the dollar and fuel concerns about financial repression. But in crypto circles, the tone is very different. Christian Pusateri, founder of Mind Network, described it as a signal that “the price of money is coming under tighter control,” warning that debt dynamics are increasingly unsustainable.
Bitcoin advocates see opportunity in that instability. Former BitMEX CEO Arthur Hayes has argued that if the Fed commits to yield curve control, Bitcoin could be one of the biggest beneficiaries — even floating a long-term target of $1 million.
A Turning Point for Monetary Policy
Whether or not the Fed embraces the forgotten clause, the discussion itself is significant. It shows a willingness to expand the central bank’s role in actively steering borrowing costs, a shift that could ripple across global finance. For bond investors, it means suppressed returns. For crypto holders, it could mark the start of a new era where digital assets stand out as the clearest hedge against manipulated interest rates.
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Alex is an experienced financial journalist and cryptocurrency enthusiast. With over 8 years of experience covering the crypto, blockchain, and fintech industries, he is well-versed in the complex and ever-evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His approach allows him to break down complex ideas into accessible and in-depth content. Follow his publications to stay up to date with the most important trends and topics.
Source: https://coindoo.com/hidden-fed-rule-may-trigger-the-next-crypto-boom/