What if Fed losses pass $350bn and Congress fights back?
A $350bn deferred asset plus a congressional IOR cap is a Fed-independence and remittance fight; the trade is long the long-end term premium and long gold/BTC as reserve-confidence hedges while DXY softens. Closest analogue is the slow-burn 2022 reserve-weaponization debate that bid gold structurally rather than any single crash. Forward: this is balance-sheet optics, not insolvency — the move is a grind-wider in 10s/30s, not a gap, so fade vol spikes.
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The butterfly cascade
How this trigger trickles across markets, left → right — the root shock, its first‑order moves, then the ripple effects. Drag any node; tap a market for its real price history.
Resolution timeline — how this probability is moving
Our model's odds (electric blue) over time vs the market's (Polymarket, amber), from the past toward the 6–18 months horizon. Each dot is a real macro event that nudged the probability — green pushed it up, red pushed it down. Tap a dot for the source. Loading the probability audit trail…
What it would mean
If this plays out, it is a mixed shock. Fed deferred asset blows past $350bn and Congress moves to cap interest on reserves, reigniting a fight over Fed independence and remittances. The trigger decomposes into signed root‑shocks — Dollar/reserve confidence ▼ · Fed policy path ▼ — which propagate through our causal graph to the markets below.