Editor’s Note: What if you could claim a stake in a technology set to become 100X bigger than Bitcoin… starting with just $2? Click here to see the details from investing legend and Washington D.C. insider Jeff Brown — the man who picked Bitcoin, Tesla, and Nvidia before they exploded higher. Or read more below.

Dear Reader,

Something strange is happening inside America’s financial system.

According to The Wall Street Journal, a brand-new kind of investment is sweeping the globe.

As soon as July, a new buzzword will almost certainly become front-page news.

In short, stocks and other assets are set to be completely transformed — or tokenized — for the first time in history.

In short, the way we invest is about to be revolutionized in ways nobody could’ve foreseen even a decade ago.

And today, technology expert Jeff Brown says: “If you miss out on this trend, it could be a long time until we see another opportunity of this magnitude.”

According to Brown’s research, tens of trillions…

Hundreds of trillions…

Ultimately, quadrillions of dollars could rush into “tokenized” assets.

And it’s set to begin this July, if Congress passes a key law and the working group behind tokenization launches a critical pilot program.

Already, BlackRock is participating, along with JPMorgan, Citi, Goldman Sachs, and more than 50 other major institutions.

In other words, time is short to prepare.

Click here to find out how you can move your money ahead of the quadrillions of dollars set to rush into this trend before it’s too late

Best,

Lindsey Hough
Managing Director, Brownstone Research

P.S. This enormous trend has nothing to do with the celebration of our nation’s 250th birthday, but it’s something President Trump has been calling his top priority.

When the money begins to rush in, Jeff Brown expects it will create new millionaires out of those folks who can see the shape of what’s coming and move their money beforehand.

Go here to find out how you can prepare today

Wednesday, June 17, 2026

Warsh wants to shrink it. The plumbing says not yet.

Kevin Warsh was confirmed as the next Fed chair on May 13. The Senate vote was 54 to 45. That is the closest margin for this job in the modern era.

The balance sheet he inherited stands at $6.7 trillion. Before 2008, that number was $900 billion. Two decades of bond buying pushed it past $9 trillion by 2022. It has come down some. It still equals 21% of GDP.

Warsh wants to bring it down much further. At his confirmation hearing, he said it plainly. "It took us 18 years to create this big balance sheet that's done quite a bit of harm." Three structural forces determine how far and how fast he can go.

Three forces limit how much the balance sheet can shrink. The federal deficit needs buyers for trillions in new debt. Shrinkage raises borrowing costs by a measured amount. The last time the Fed drained too many reserves, overnight lending seized in one session. These are mechanical constraints built into the system.

A small industrial company just secured its largest order in history.
$400 million.

But it’s what the order is for that gives the game away.

“Behind-the-meter on-site generation.”

That means power built directly on a customer’s property — bypassing the public utility entirely.

It’s the exact architecture you build when you can’t wait for a utility to upgrade.

When you’ve been running temporary turbines and need a permanent solution. Fast.

Sound familiar?

New orders surged 97%. Then came multiple mega-orders over $75 million. Now a $400 million record. Total backlog: $1.8 billion.

Dylan Jovine has the name.

See the company behind the $400 million order »

The CBO projects a $1.9 trillion deficit for 2026, or 5.8% of GDP. The 50-year average is 3.8%. That gap means the government must sell more bonds than it has in decades.

When the Fed holds trillions in Treasuries, it absorbs a large share of that supply. If the Fed steps back, those bonds need new buyers. New buyers demand a higher return. That pushes interest rates up. Mortgages. Corporate loans. Government debt itself.

The math is plain. The government borrows at historic levels. Pulling the Fed from the buyer pool means the remaining buyers set the price. They will charge more.

Observation: The CBO projects a $1.9 trillion deficit for 2026, at 5.8% of GDP.
Interpretation: Fewer Fed purchases force the government to find new buyers at higher rates.

Shrinking the balance sheet has a price. St. Louis Fed researchers YiLi Chien and Kevin Bloodworth measured it.

They tracked what happened after shrinkage began in June 2022. They focused on the convenience yield. That is what Treasuries are worth beyond their interest payment, as collateral and safe assets. When the Fed holds fewer Treasuries, more flow into private hands. The premium drops. Hanno Lustig at Stanford found that private markets end up holding more than they need.

Chien and Bloodworth found the convenience yield fell about 40 basis points. Treasury borrowing costs rose by nearly half a percentage point. Not from a rate hike. From the balance sheet, it is getting smaller.

Roy Henriksson at GMO, an asset management firm, put it bluntly. He told Axios that shrinking the balance sheet and cutting rates are "incompatible" goals. The two pull in opposite directions.

Observation: Chien and Bloodworth measured a 40-basis-point convenience yield decline since June 2022.
Interpretation: Shrinkage raises government borrowing costs, working against any goal of lower rates.

There is a floor under this system. We know because the Fed hit it.

Banks hold reserves at the Fed. That total stands at $3.08 trillion. Those reserves keep daily lending running. Banks borrow cash from each other overnight in the repo market, posting Treasuries as collateral.

In September 2019, the Fed was shrinking its balance sheet. Reserves had fallen below $1.4 trillion. Over two days, tax payments and bond deliveries pulled $100 billion from bank reserves. When the government delivers bonds to buyers, the buyers' cash leaves the banking system. Too much left at once. The repo market ran dry.

On September 17, intraday repo rates spiked to 10%. The Fed's target ceiling was 2.25%. The market blew past it by more than four times. The Fed reversed course within weeks.

Darrell Duffie at Stanford, who advises the Fed on this topic, put it simply. If you shrink too fast, "you will blow up money markets."

Observation: In September 2019, reserves fell below $1.4 trillion. Overnight repo rates hit 10% against a 2.25% ceiling.
Interpretation: The system has a mechanical floor. When reserves drop past what banks need, the plumbing breaks in hours.

The Fed's own research sets the boundaries. A staff paper estimates a reduction of $1.2 to $2.1 trillion is possible. But only after regulatory changes reduce banks' demand for reserves. That process takes "at least a year and quite possibly several" before any shrinking begins.

Roberto Perli runs market operations at the New York Fed. He confirmed the path is conditional. A smaller balance sheet is possible if banks need fewer reserves. That requires regulators to change the rules, forcing banks to hold large cash buffers. Getting it wrong risks rate control and market stability.

Dallas Fed President Lorie Logan framed it cleanly. "The minimum size of the Fed's balance sheet is determined by demand for our liabilities." The Fed can always supply more than the system needs, she said. "But if we don't meet the demand, financial pressures result."

Warsh said it took 18 years to build this balance sheet. The system's own engineers say the groundwork alone takes years.

The deficit needs buyers. Shrinkage raises rates. The 2019 reserve floor marks where the plumbing breaks. Until bank reserve rules change, the $6.7 trillion balance sheet stays large.

Until next time,
The Navigator