The recent actions of the Federal Reserve are indeed interesting. Starting from December 22nd, they began injecting liquidity, releasing 6.8 billion at a time. Data from 10 days earlier is even more exaggerated—total releases reaching 38 billion. It seems like a big move, but why is the market response so muted?

The problem lies in the fact that: on one hand, they are injecting liquidity, while on the other hand, they are frantically draining it.

The daily repurchase volume has already exceeded 13.5 billion, which is what the market often refers to as "ending QT while simultaneously executing reverse repos." This combination is a bit outrageous—like someone drinking water while spitting it out, ultimately leading to dehydration instead of replenishing.

Why do this? The fundamental reason is the US government shutdown. In just three months, the national debt has artificially increased by 700 billion dollars. The market’s liquidity has been drained, interbank borrowing rates have soared, small business financing has become even more difficult, and layoffs have become routine.

Who benefits the most? Wall Street. The S&P 500 has soared all the way up, and gold has surged even more—up 68% in a year. This is no coincidence. The funds injected by the Federal Reserve have not flowed into the real economy at all; they have all flooded into the financial markets.

What’s even more painful is that banks themselves are running out of money. This may force the Federal Reserve to directly step in and buy government bonds to stabilize the situation. The divergence in liquidity is becoming more and more apparent—while the top is popping champagne, it’s already very hard to breathe at the bottom.