Key Takeaways

Green calls Bessent's buybacks smart debt management, not a crisis. He argues the Treasury issuing new bonds to retire cheap, low-coupon ones shrinks the debt, "this is just debt management, and it makes perfect sense," likening Bessent to a medic with "a tourniquet."

He blames passive investing, not fiscal fear, for the long-bond selloff. Green says "the marginal buyer today is actually a passive bond fund," one that mechanically buys bonds in proportion to price, which he calls "the world's dumbest algorithm."

He does not see a real US Treasury crisis in the data. Credit-default swaps and inflation swaps are not flashing distress, he notes, and even low-debt Australia is seeing the same selloff, so he pins it on market mechanics, not solvency.

He argues high rates may be fueling inflation. By discouraging homebuilding and car sales, Green says, keeping rates high "preventing new homes from being built" props up rents and used-car prices.

He likes 30-year TIPS and treats gold cautiously. Green highlights inflation-protected 30-year bonds near a 3% real yield, and frames gold as a "negative trust asset" that is already somewhat expensive.

Key Moments

01:35 - Mike Green on the bond market and Scott Bessent His take on the buyback plan and the forex intervention.

04:23 - Why Treasury buybacks may be necessary Retiring cheap bonds to shrink the debt.

09:22 - Is the US heading toward yield curve control? Why he says minimizing interest expense is not classic YCC.

10:14 - Could high interest rates actually fuel inflation? The counterintuitive case on housing and cars.

22:09 - Is the US Treasury market really in trouble? What the CDS and inflation-swap markets are saying.

23:40 - How passive investing is distorting the bond market The changed marginal buyer and its "dumbest algorithm."

43:00 - The overlooked opportunity in 30-year TIPS Inflation-protected real yields with no principal risk.

49:07 - Gold, commodities and the "negative trust" trade How he thinks about gold as trust erodes.

What Are Treasury Buybacks? Mike Green on What Bessent Is Really Doing in the Bond Market

When Treasury Secretary Scott Bessent announced a bond-buyback plan in 2026, the reaction ranged from confusion to alarm. Mike Green, CEO and chief investment officer of the newly formed Tier 1 Alpha Asset Management, told Wealthion in September 2026 that the alarm is misplaced: the buybacks are, in his words, sensible debt management, and the real story in the bond market is not a fiscal crisis but a change in who is buying. This is Green's attributed, and deliberately contrarian, analysis, not investment advice, and it runs against a widely held view that the moves signal deeper trouble.

What are Treasury buybacks, and what is Bessent doing?

A Treasury buyback is the government repurchasing its own outstanding bonds, and Green explains the logic simply. After a decade of issuing low-coupon debt, many older Treasury bonds now trade well below face value. That, he argues, is an opportunity: the Treasury can "issue $1 of current coupon paper and retire $2 of low coupon paper," modestly raising cash interest expense while significantly shrinking the total debt outstanding. "This is just debt management, and it makes perfect sense," he says, comparing it to a household consolidating credit-card debt at a lower rate. His blunt framing is that Bessent is a medic holding "a tourniquet," asking whether the country wants him to apply it, and that the obvious answer is yes, while the deeper fiscal fixes remain the job of Congress and the President, not the Treasury.

Why are long-term Treasuries selling off?

Not because investors have turned against US credit, Green argues, but because the marginal buyer has changed. "The marginal buyer today is actually a passive bond fund," he says, one that weights bonds by market value and so, perversely, buys fewer of the cheap, deeply discounted bonds precisely because they are cheap. He calls this "the world's dumbest algorithm," since a high-quality bond trading at 150 and one at 50 both mature at the same par value, making the discounted bond far more attractive, not less. He notes this is a global phenomenon, even low-debt Australia is seeing the same long-bond selloff, which he says undercuts the fiscal-crisis story. For his related work on market structure, see Green's own bond market hiding a banking crisis, and for a complementary rates view, George Goncalves on stealth tightening.

Is the US heading toward yield curve control?

Green thinks the label is being misapplied. Classic yield curve control, he explains, is the Fed and Treasury conspiring to pin rates at an artificial level, and he sees no sign of that. Bessent minimizing the government's interest expense by retiring high-cost debt is, to Green, just prudent management, not YCC. It would only start to resemble yield curve control, he allows, if the Fed stepped in to assist the Treasury directly, which it has not.

Could high interest rates actually cause inflation?

This is one of Green's most counterintuitive claims, and he stresses others share it. By keeping rates high to fight inflation, he argues, the Fed is "preventing new homes from being built," which creates a relative housing shortage and props up home prices and rents. The same logic, he says, applies to cars: fewer are sold, which supports used-car prices. So the high-rate policy meant to suppress inflation may, at the margin, be sustaining it. It is a contested view, which he attributes to a small group of like-minded analysts, but it frames his read that the Fed will eventually need to cut. For the Fed backdrop, see Wealthion's coverage of a Fed now led by Kevin Warsh.

What is the real risk, the debt or passive investing?

Green does not see a solvency crisis in the market's own pricing: US credit-default swaps have contracted, not widened, and inflation swaps are not flashing fear, so the "unsustainable debt" narrative, in his view, is not confirmed by the instruments designed to detect it. The deeper risk he worries about is structural: passive investing. He argues a 1978-era shift toward self-directed retirement plans channeled savings into market-cap-weighted index funds that ignore value, distorting both stocks and bonds, and that this "is going to end very badly." He also ties the public anger around these debates to a broader loss of trust and a K-shaped, and generational, economy, echoing Ed Yardeni's G-shaped economy, where "the macro economy sees resilience while the household experiences depletion." (Disclosure: Green's new firm, Tier 1 Alpha, is built to analyze exactly these passive flows; this is described for context, not as a recommendation of any product, and no fund is pitched here.)

Where does Green see opportunity?

His stand-out idea is 30-year Treasury Inflation-Protected Securities. Green notes they recently offered close to a 3% real yield, which he calls extraordinary: an investor could fund most of a 4% withdrawal rule with inflation protection and "no principal risk whatsoever" over 30 years, yet almost nobody wants them. He contrasts that with the crowd chasing complexity, and frames his own firm's "passive-aware investing" approach as targeting ordinary S&P 500 owners rather than exotic bets, again as context rather than a pitch. As always on Wealthion, this is his attributed view, not advice.

What about gold?

Green treats gold analytically and with some caution. He calls it "the ultimate negative trust asset," citing Jim Grant's definition of gold as one divided by faith in central bankers, so its value rises as that faith falls. But he is measured: by his own yardsticks gold looks "expensive relative to everything else," and he explains recent price behavior through changing marginal buyers, central banks shifting out of Treasuries after 2022, then Gulf states selling gold to fund defense and social spending, rather than a broken relationship with real rates. He expects gold can still respond as trust erodes and the Fed eventually cuts, but pairs it with a clear "beware the buyer." This is his attributed analysis, not a recommendation, and gold is volatile.

What Investors Should Watch

• Treasury issuance and buyback activity: the debt-management strategy Green says is shrinking the debt.
• CDS and inflation swaps: the market instruments he watches for genuine Treasury or inflation stress.
• The passive marginal buyer: the flow dynamic he blames for the long-bond selloff.
• 30-year TIPS real yields: the near-3% inflation-protected yield he highlights.
• Faith in the Fed: the "negative trust" driver he ties to gold.

FAQ

What are Treasury buybacks? A Treasury buyback is the government repurchasing its own outstanding bonds. Mike Green explains that by issuing new bonds to retire older, deeply discounted low-coupon bonds, the Treasury can shrink its total debt with only a modest rise in interest expense, which he considers smart debt management.

Why are long-term Treasury bonds selling off? Green argues it is not a buyers' strike or a credit-quality fear but a change in the marginal buyer to passive bond funds, which mechanically buy less of the cheap, discounted bonds. He notes CDS and inflation swaps are not signaling a crisis, and that even low-debt Australia is seeing the same selloff.

Do high interest rates cause inflation? Green makes the contested case that they can, at the margin, by discouraging homebuilding and car sales, which supports rents and used-car prices. He attributes the view to a small group of analysts and uses it to argue the Fed will eventually cut.

Are 30-year TIPS a good investment? Green highlights 30-year inflation-protected Treasuries near a 3% real yield as an overlooked opportunity with no principal risk over the term, though whether they suit any individual is a personal decision. This is his attributed view, not advice.

Full Transcript (cleaned)

Speakers: Maggie Lake (Wealthion host) and Michael Green (CEO and CIO, Tier 1 Alpha Asset Management). ASR errors corrected (names, terms) and filler removed; meaning preserved. A mid-interview membership message and several off-topic or crude asides have been trimmed, keeping the market and economic analysis.

Michael Green (cold open): This is a very dangerous wound and situation that we have. This is just debt management, and it makes perfect sense. It's exactly what he should do. Scott is sitting there with a tourniquet saying, do you want me to put it on or not?

Maggie Lake: You wrote an open letter to Treasury Secretary Scott Bessent earlier this year, and in August he intervened in the currency market and announced a Treasury buyback plan. What's your take?

Michael Green: What we're largely seeing is a global phenomenon in which duration is selling off because of an absence of the marginal buyer of the longer-dated bond. I don't actually think that buyer is missing the way others do; they've just assumed a different approach. A long-dated bond used to be bought by an insurance company matching assets and liabilities, or by a levered buyer who shorts the short end to finance the long end. The marginal buyer today is actually a passive bond fund, and that fund doesn't care about any of that; it simply matches its exposure to the index on a notional basis. Perversely, after a decade of low-coupon issuance followed by rate hikes, those old bonds trade well below face value, and a passively weighted index fund buys them in proportion to price times notional. So as their price falls, demand for them falls, which creates the perception that nobody wants the bond. But a bond at 150 and a bond at 50 both mature at par, so treating the one at 150 as more attractive, which skews you toward losing a third of your capital rather than doubling it, is absurd. That's the algorithm they're programmed with. So the Treasury is going to be forced to address this, and ironically it's an opportunity: they can issue one dollar of current-coupon paper and retire two dollars of low-coupon paper, modestly increasing cash interest expense while significantly shrinking the debt. That's a great strategy for any debt manager, and that's exactly what the Treasury is.

Maggie Lake: So the narrative out there, unsustainable deficits leading to yield curve control, inflation, a move away from the dollar, soaring precious metals, sounds much scarier than what you're describing.

Michael Green: It is absurd that this was treated as the financial crime of the century. This is just debt management, and it makes perfect sense. People tell Bessent to get the fiscal house in order, but he doesn't control tax or spending policy; the only spending he controls is interest expense given rates set by the market and the Fed. What is he supposed to do? This is a very dangerous wound, and he's sitting there with a tourniquet asking whether to apply it. The answer is yes, and then Congress and the President need to do their jobs, but those aren't his. If you could consolidate your credit-card debt at the lowest rate available, you'd be foolish not to.

Maggie Lake: Is the Treasury on a path to yield curve control?

Michael Green: Am I engaged in yield curve control when I minimize the interest on my credit-card payments? In that sense, sure. But yield curve control in the classic sense, the Fed and Treasury conspiring to keep rates artificially at a level, there's no sign that's what we're doing. It could become that the minute the Fed steps in to assist. And frankly, several of us, John Cochrane, Zoltan Pozsar, myself, are saying the Fed's current high-rate policy is actually creating inflationary conditions. By keeping rates high to forestall inflation, you're preventing new homes from being built, which means a relative shortage and higher home prices and rents. Fewer cars are sold, so used-car prices are supported. Keeping rates high until the economy breaks, then cutting rapidly, is like feeding a teenager drinks until they seem responsible enough to hand you the car keys.

Maggie Lake: Why has yield curve control become such a dirty word, with so much panic?

Michael Green: It comes broadly from a loss of faith in the institutions of government to let people achieve their objectives. As I've written, the macro economy sees resilience while the household experiences depletion. There are two kinds of votes: votes with dollars, where those at the top are doing extraordinarily well and high rates give them a net stimulus, and the soft data, one household one vote, which shows what the median person actually experiences. We as a profession have largely chosen to ignore the bottom of the K, to the point that many funds say they only invest in what's sold to the top of the K. That's corroding trust. [Membership message noted.] When necessities rise in price, households have to buy them, so they deplete savings and go into debt, which shows up as spending and looks like activity, until they hit a breaking point and consolidate, moving back in with parents, a catastrophic reduction in spending. More and more people tell us they're near that point, and you're seeing it in unusual election results.

Maggie Lake: Do you see a risk to the US Treasury market itself?

Michael Green: If I saw a real risk, I'd expect it in CDS contracts and inflation swaps, and I'm not seeing it; US CDS has contracted. If it were a US-specific fiscal problem tied to debt above 100% of GDP, why is Australia, at 25% debt to GDP, seeing the same selloff? These are unthoughtful characterizations not reflected in the markets. Equities are roughly 55% passive; bond markets are only about 15% passive, but that understates their influence, closer to 50% of marginal activity, and because they ignore value, value is being ignored in fixed income just as in equities. Meanwhile traditional buyers like Japanese life insurers only needed about 2% yields; now that they can get that at home, they've stopped reaching around the world. We simply lack the will to fix the deficit, which you do by marginally raising revenue and marginally cutting spending, and it falls below the growth rate and shrinks as a share of the economy, exactly what Bessent is highlighting.

Maggie Lake: Is this understanding part of why you launched your new firm?

Michael Green: Yes. About a year ago I had a breakthrough: I'd been treating a fund as if it were the same as its underlying securities, but a fund like an ETF is distinct, and that distinction is almost absent from the academic literature. So at Tier 1 we started aggregating the flow information from all funds down into each individual security. It took 45 minutes per security at first, then 45 seconds, and now under a second, so we can build portfolios around it. I call it passive-aware investing: rather than beat the fundamental or passive players, we accept that passive is now the marginal source of flows and analyze what they'll have to buy and how it reacts. In general we think the passive factor explains about half of an individual security's price move today. Do I still think this ends very badly? Yes. So we've embedded that into products aimed at people who already own the S&P 500 and want a little better return with low relative risk, not a leveraged black box.

Maggie Lake: Where would you point people who are seeking safety?

Michael Green: Perversely, they could obtain it in something like a 30-year TIPS currently offering around a 3% real yield. Stop and think: you can fund almost all of a 4% withdrawal rule with an inflation-protected security for 30 years with no principal risk, and nobody wants it. The objection is that the dollar will be devalued, but this is inflation-protected, so you're really saying you think the government will lie to you about inflation every step of the way. I can point to the CPI methodology, owner's equivalent rent, which was actually created to stop the Fed from repeating a Volcker-era mistake where it misunderstood how mortgage rates fed into CPI. It's absurd, but it's what happens when people don't understand the systems they build.

Maggie Lake: I have to ask about gold, since that's where many people go for safety.

Michael Green: Commodities are a tiny share of most people's spending; you spend far more on the depreciation of your car than on gasoline. When people suddenly allocate to commodities, that's an outward shift in demand borrowed from the future that pushes prices higher near term. As for gold specifically, it's the ultimate negative-trust asset: it's always going to be gold, with no obligation from anyone else, whereas storing wheat requires guarding and processing. Gold tends to move with real interest rates, but events like the 2022 seizure of Russian reserves caused counterparties to shift from Treasuries into gold, so for a period it stopped tracking real rates; that just means a marginal buyer appeared, as with passive. Then Gulf states, facing higher defense and social costs and getting less benefit from oil, had to sell some gold, which suppressed the price even as real rates rose. People are waiting for it to break out, and I think it probably will, because I expect the Fed will eventually cut. Jim Grant's definition is still the best: gold is one over n, where n is faith in central bankers, so as faith falls, the multiple of gold rises. But by most reasonable metrics gold is already expensive; it's benefiting from this period of low trust, and some of that is priced in. So it has a role, but beware the buyer.

Maggie Lake: You come across as either insanely bearish or insanely optimistic.

Michael Green: And the answer is both. The choices we're making as a society are creating the conditions we're unhappy in. The first step to improving happiness is diagnosing why you're unhappy and what choices contribute to it. I think we're getting painfully close to realizing this is largely not outside forces but our own choices. My strong hunch is that market events will eventually force us to make the harder choices we've been avoiding. Interestingly, I think America is more unified than we give ourselves credit for; tools like AI, unlike search, tend to give a more holistic answer and pull people toward the center, and I sense people are exhausted with the extremes and asking what actually secures their grandchildren's future.

Maggie Lake: Fascinating conversation, Mike. Thank you, and please come back with an update.

Michael Green: Thank you. I appreciate it.

Wealthion editorial content is for informational purposes only and is not investment advice. Yields change frequently; verify current rates before acting. If you want a professional read on how much cash fits your own plan, you can request a free portfolio review at https://www.wealthion.com/advisors/