The critique that travelled on buyback day (Schiff, Kobeissi, 08/19/2026): the average coupon on Treasuries beyond ten years is 3.44%; buying that debt back and funding it with ~4% bills is “a homeowner refinancing a 3.44% 30-year fixed into a 4% one-year ARM. Who would be dumb enough to do that?” Kobeissi’s version: “replacing longer-term, lower-cost debt with shorter-term, higher-cost debt… now apply that to trillions.”
Half of it is wrong, and the half that is right is a different point. The homeowner must repay 100 to retire a 100 mortgage; the Treasury retires a 3.44% coupon bond by paying its market price — roughly 75–80 cents on the dollar at a 5.2% long yield. Funding 78 of bills at 4% costs ~3.1 a year against the 3.44 the bond paid, and 22 of face value is gone for good. In present value the swap is close to neutral by construction — that is what the market price means — and the bondholder, not the Treasury, is the one crystallizing the loss (Paper losses are real when you need cash). Comparing the old coupon to the new bill rate is the Stock vs flow repricing family of error: the coupon is not the cost of that debt at the margin, its yield is.
What is right is Schiff’s other post (https://x.com/PeterSchiff/status/2090081609466659320): in a rising-rate world the smart issuer terms out; the Treasury can’t, “as increased issuance of longer-maturity debt would crash the economy now. So instead they’ll crash the economy later when short-term debt matures.” That is a duration argument — every buyback funded by bills shortens the debt and moves rollover risk to the front end, which is Activist Treasury issuance (stealth QE)‘s trade-off and the reason Fiscal dominance deepens. The ARM analogy is right about the reset risk and wrong about the rate.