Warning: the faint-hearted should abstain. The U.S. Federal Reserve announced last week that it will now purchase $40 billion per month of short-term U.S. Treasury securities, namely Treasury bills. Yes, the most powerful central bank in the world is once again engaging in Quantitative Easing (QE) — in plain language, and for those still skeptical, in outright money creation.

These injections of liquidity into the financial system are a forceful response to structural weaknesses in the U.S. debt market, as the federal government is increasingly refinancing itself at the short end of the maturity curve. Over the past twelve months, the U.S. Treasury has in fact issued more than $25 trillion in very short-term debt. In other words, the U.S. executive branch is deliberately choosing to finance its standard of living by borrowing for periods of one year or less.

Short-term securities (T-Bills) now account for roughly 70% of total federal borrowing, up nearly 28 percentage points over the past decade. This is a deliberate strategic choice by U.S. authorities, who are financing long-term obligations — healthcare spending, defense, Social Security — with credit instruments maturing in 90 days, six months, or one year.

Buried in the press release announcing last week’s 25-basis-point cut in the policy rate, this renewed phase of money creation will inject minimum $240 billion the next six months that will flow directly and unambiguously into the budget of the United States of America. The mechanical side effects of these liquidity waves will be lower borrowing costs, stronger investment incentives, and rising confidence.

The comparison between the U.S. Federal Reserve and the European Central Bank is disheartening — and devastating for the latter. The ECB remains trapped in a legalistic, timid, and defensive posture that marginalizes Europe, while the Fed unhesitatingly deploys the full range of its tools to support its economy. The ECB’s strategic abdication is irreversibly widening the transatlantic gap.

While Europe endures persistent financial fragmentation, credit contraction, and capital flight with no proportionate monetary response, the Fed fully embraces an activist, quasi-hegemonic role in steering the macroeconomic trajectory of the economy under its responsibility. The ECB moralizes, while the Fed acts.

European and national leaders persist in ignoring the fact that a modern central bank is undeniably a political actor in the noblest sense of the term — a systemic stabilizer. Europe’s economy will remain structurally underfunded, vulnerable to external shocks, and condemned to sub-potential growth as long as the ECB is unable to assume an activist role comparable to that of the Fed. This institutional choice, still in force within the Union, amounts to a renunciation.

There is also a profound misunderstanding among European political leaders of the true role and functioning of a central bank. Their blatant ignorance leads to strategic paralysis. In the United States, the mission of the central bank is culturally and politically embedded. In Europe, it arouses suspicion.

Americans understand that the central bank is a cornerstone of state financing and the real economy. They accept, without pretense, that the Fed supports the debt market and creates waves of liquidity when the system requires it. By contrast, our deficit of economic literacy at the top of the state, in France and across Europe, condemns us to miss every passing train — and consigns it to perpetual mediocrity.

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