No More Free Money
“The era of free money is definitely over,” Kim Crawford, fixed-income portfolio manager at JPMorgan Asset Management, told the Financial Times today. “The bond market is [now] looking for discipline.”¹
Investors remain preoccupied with what “the Fed” and new Federal Reserve Chairman Kevin Warsh will do with interest rates at the next Fed meeting. Meanwhile, there seems to be a lot of confusion sparked by Warsh’s “I’m not going to spoon-feed you” approach to central bank communication.
But if you take a step back and look at the big picture, you see the game has changed: a multi-decade savings glut is turning into a savings shortage, which has real implications for long-term rates. Therefore, the Fed’s tinkering with short-term rates is less important (unless, like the federal government, you have a lot of short-term debt). From Torsten Slok at Apollo:
“Too much saving pushed rates down for two decades. The problem was that there was more capital than projects to invest in. That has now changed. Today, there are more projects than capital. Think about what that does to price. When capital is abundant and projects are scarce, projects compete for capital, and they compete by accepting a lower return. When projects are abundant and capital is scarce, capital competes for projects, and it competes by demanding a higher return. The return that clears the market is a higher yield.”² Higher yields increase the likelihood of government intervention to prioritize the allocation of scarce capital. This is already happening to a degree (not so much—yet—with interest rates; more so with federal government ownership stakes in certain companies), and we are beginning to learn that free money is now reserved for whatever the government prioritizes (e.g., national security). And if the cost of capital is higher for everyone not on the government’s priorities list, it means the days of buying an asset (any asset!) with cheap money and watching the price go up are over. It may not feel that way right now because we’re in the grip of a bout of speculative excess around AI, but eventually, economic reality asserts itself.
Michael Avery is a global strategist at Rabobank. Speaking to Forbes Australia last year, he made this very point about government intervention and the implications for investors:
“What you need to be targeting, as an official who doesn’t want to blow society up, is to get the message through to everybody, ‘You’ve had a good run. You’ve done very well. That’s no longer our economic model’… …is the government going to start saying, ‘Look, we want to retain a lot of the free market, but there are areas here that are going to take priority. Capital is going to flow to them primarily, and if you want to borrow at 6% or 7% to build an app or want to buy an investment property, go for it, but you’re going to be taxed to the hilt. If you want to do it, it’s a lovely thing to do, but just don’t expect it to be easy money… No more free money. Free money is going to be for national security or industrial supply chains.”³ No more free money. Policymakers don’t say it in those words, but that’s the reality.
Which is good if you think that corporate execs and middle managers getting fabulously rich simply by borrowing at low rates to buy back a bunch of company stock wasn’t the best thing for the economy or society.
But probably not so good that the government is now picking economic winners and losers.
As for investors? You’ve had a good run. You’ve done very well. But the game has changed. No more free money.
https://www.grantspub.com/resources/commentary.cfm (09.08.2026)
The Daily Spark, Apollo Chief Economist Torsten Slok, “From a Savings Glut to a Savings Shortage,” September 12, 2026.
https://www.forbes.com.au/covers/magazine/where-im-putting-the-money-michael-every/
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