The Return of Contractual Yield

Thesis: Why a post-QE credit regime could usher in the return of attractive contractual yields as a durable feature of the economy.  Certainty itself becomes a competitive investment characteristic, not merely a defensive compromise.

In his recent article “Princes of the Dollar: Why QE is Over”, Kane McGukin^[1] argues that the U.S. may be moving toward a fundamentally different monetary and economic model. This paradigm shift, he says, is from quantitative easing (QE), financial engineering, and Wall Street-driven asset inflation toward directing private-sector credit into productive investment, infrastructure, manufacturing, AI, and other strategically important industries.  Mr. McGukin describes the emerging strategy as Hamiltonian, a reference to Alexander Hamilton's approach of using government financial architecture to encourage private capital formation and build national industrial capacity. That approach ushered in a prolonged period of prosperity for a fledgling US in the 1790s. The author’s central argument is based heavily on economist Richard Werner’s Princes of the Yen^[2] and his “Quantity Theory of Credit.” The idea is that what matters isn't simply how much money exists or what interest rates are, but where newly created credit goes. Credit directed toward factories, infrastructure, technology, small and medium businesses, and productive capacity generates real economic growth; credit directed primarily toward financial assets tends instead to generate asset-price inflation, leverage, consolidation, and financial instability. 

Mr. McGukin’s Thesis

In short, Mr. McGukin sees the post-2008 QE model as having largely run its course. After the Global Financial Crisis, households and businesses were highly leveraged, so the Federal Reserve expanded its balance sheet dramatically and absorbed financial-system risk. Today, he argues, the situation is almost reversed: the government's/central bank's balance sheet is heavily burdened while much of the private sector still has borrowing capacity.

Consequently, the next phase would not primarily involve the Fed buying trillions of dollars of securities. Instead, government policy would encourage banks and private financial institutions to expand credit—but channel that credit toward economically productive and strategically important purposes.

Are we in a Post Q/E World?

Before we discuss the details of Mr. McGukin’s thesis and Genex’s view on potential consequences for investing, lets explore recent policy announcements and commentary from the Trump Administration 2.0 to assess whether this paradigm shift is merely hypothetical or, in fact, real:

• Secretary of the Treasury Scott Bessent’s March 2025 Economic Club of New York speech was entitled “Blueprint to Reprivatize the Economy”.

• The US Department of the Treasury doubled down in its April 29, 2025 Press Release “Restoring America’s Industrial Base” stating “tariffs would provide an incentive for “reindustrialization”, while deregulation would make it earlier to invest in “[domestic] energy and manufacturing projects”.

• In his February 2026 testimony to Congress Secretary Bessent said “financial regulation should not stifle pro-growth lending, capital formation, and innovation.” “Economic security “reinforces domestic production capacity” and reduces vulnerability to supply-chain disruptions. ^{[3]  [4]}

• The White House's July 2026 science and technology strategy is even more concrete. It calls for investment in “advanced manufacturing, the skilled trades” and reports that more than $1 trillion of investment commitments had been secured for advanced domestic manufacturing infrastructure and technology companies “building in the physical world.” ^[5]

Meaningful evidence, therefore exists, to  support important parts of McGukin’s thesis concerning a shift from government/Fed initiated balance-sheet expansion toward private capital formation, bank lending, reindustrialization and productive investment. 

Before:      Liquidity → financial markets → higher asset prices.

Now:      Capital → factories/infrastructure/technology → productive capacity.

That is not to say QE is gone for good. Rather, Fed balance sheet management will shift to “monetary plumbing” and away from QE being the primary economic-growth mechanism.^[6]

What does this Mean for Investors?  Our thoughts

The post-2008 environment was unusually supportive of indexed products. QE deliberately pushed down longer-term interest rates and eased financial conditions; Federal Reserve research confirms that large-scale asset purchases lowered yields and term/risk rewards across asset classes. 

When safe fixed yields were extremely low, the sales proposition behind an indexed product became powerful, "Why lock in 2–3% when you can protect principal and participate in equity-market upside?"

Fixed indexed annuities don't normally invest the customer's principal directly in an equity index. The insurer provides contractual guarantees while index-linked interest credits are determined under the contract; derivatives are commonly used by insurers to hedge/manage the resulting exposures. The NAIC distinguishes indexed annuities from traditional fixed annuities on precisely this basis. ^[7]

But suppose we really do move from the QE/asset-price-support regime described in the article toward a productive-credit/capital-formation regime. That changes the comparison considerably. If government policy deliberately shifts capital away from financial-asset inflation and toward manufacturing, infrastructure, energy, AI, defense, transportation and other productive investment, we would not automatically assume that the extraordinary equity-market environment of the QE period continues.

QE was expressly designed to reduce longer-term yields and loosen financial conditions. Removing that persistent monetary tailwind doesn't mean stocks collapse. Productive investment could produce excellent corporate earnings. But it could mean that capital once pushed into financial assets has more alternatives. That potentially produces a world of higher real investment + higher interest rates + more attractive credit yields + less dependence on multiple expansion for investment returns. Such an  environment can be much friendlier to fixed-income products than the zero-rate world was.

The crucial change would be the opportunity cost of certainty.  If long-duration productive credit can generate, say, 6–8% contractual yields, an investor no longer necessarily needs an equity-linked formula to obtain an attractive nominal return. That is quite different from the 2010s. The mathematics becomes compelling:

For illustration only, compare $500,000 compounded for 20 years:

At 3%, approximately $903,000.

At 5%, approximately $1.33 million.

At 6.8%, approximately $1.86 million.

At 8%, approximately $2.33 million.

So a genuinely dependable 6.8% contractual return would approximately 3.5x the original capital over 20 years, before considering taxes.  The point is not that 6.8% necessarily beats an equity index. It may not. The point is that it may no longer have to. The investor is being paid substantially more for accepting certainty rather than uncertainty. There is another potentially important consequence. Volatility.

Institutional Investors

This gets especially interesting for institutional liability matching. We think this becomes particularly relevant for our credit union investor clients.  A pension, employee-benefit fund, credit union benefit program or similar institution doesn't necessarily need to "beat the S&P 500." It needs to pay liabilities when they come due. Suppose the fund knows that it needs approximately $X per month from 2037 through 2047.  A stable fixed income/fixed term A rated asset producing predetermined monthly payments over exactly that period potentially creates a natural asset/liability match. Known liability → known payment date → known contractual cash flow.  This is fundamentally different from saying, known liability → indexed investment → unknown future crediting → eventual conversion to cash.

For long-horizon benefit funding, certainty itself has economic value. And that is precisely what we have been seeing in our credit union model we have been building. ^[8]  Once future benefit obligations are projected over 20–30 years, the ability to layer future fixed cash-flow streams against those projected liabilities can become more important than simply maximizing headline accumulation value.

There is an interesting irony here. For the last 15 years, the investment industry became very good at manufacturing products designed to compensate investors for the absence of attractive fixed yields. Caps, participation rates, spreads, volatility-control indices, options, buffers, floors, index-crediting methodologies were not irrational structures.  They solved a genuine problem. Traditional fixed returns were simply not particularly attractive.  But if the underlying economic environment changes, the problem changes too. If an investor can obtain an attractive contractual long-term yield, the relevant question increasingly becomes, "How much additional expected return am I receiving for giving up the certainty of the fixed return?"

That is a much tougher hurdle for an indexed product.  But we would not conclude that indexed annuities will become obsolete. There is still an important role for them.  An investor who wants principal protection but also wants exposure to potentially strong equity appreciation may rationally prefer an indexed structure in a balanced portfolio. Likewise, if inflation stays persistently above the fixed contractual yield (not currently the case), a long-duration nominal fixed investment has meaningful purchasing-power risk.

Genex’s Fixed Rate Runner

This is where the Fixed Rate Runner comes into play.  Our rates hit a sweet spot 6 to 8% annual yield, year in and year out, for up to 40 years. These rates are significantly higher than inflation. The defined payment stream is excellent to match institutional obligations etc.  This is why we believe the FRR will become more favorable as the FIA market peaks. 

Fixed Rate Runner as Funding Infrastructure, Not a Market Substitute

The more consequential positioning shift is to stop viewing an FRR primarily as an alternative way to accumulate investment value. For institutions with identifiable future obligations, an FRR can instead be viewed as funding infrastructure. If a pension, employee-benefit program or other long-horizon fund knows approximately when future cash requirements will arise, it can seek assets whose contractual payments are deliberately aligned with those dates.

That reframes the investment conversation. Rather than asking only, “Which product might produce the highest account value?”, the institution can ask, “What portion of our future obligations can we fund today with known future dollars?” An FRR can potentially convert part of an uncertain future funding requirement into a scheduled contractual asset. The value is therefore not confined to its stated yield; it also includes the planning value created by reducing uncertainty around the timing and amount of future cash availability, Projected liability -> matched contractual cash flow -> reduced funding uncertainty

In Conclusion

In a world dominated by QE and very low interest rates, investors often accepted complexity to escape inadequate fixed yields. In a world of productive credit and attractive contractual yields, certainty can once again become an investable return characteristic. The FRR opportunity is therefore not to imitate indexed products, but to occupy a different category--predictable long-term cash-flow infrastructure for investors and institutions that know what they will need, when they will need it, and value the ability to fund that requirement in advance.

Important Considerations

This scenario does not eliminate the risks of fixed-rate investing. Long-duration fixed cash flows remain exposed to inflation, interest-rate opportunity cost and credit quality etc. The strategic case for FRRs therefore depends on the quality and durability of the underlying contractual cash flows, not simply the headline yield.  At Genex we publish the credit ratings of each issuer and point out the investment risks in our Buyers Guide and Receivable Purchase Agreement.

This is a discussion paper and contains opinions and viewpoints. It is not a prediction of government or Federal Reserve policy and not individualized investment advice.

^[1] Zerohedge, 2026.  Kane McGukin is a senior wealth advisor at Arkos,

^[2] 2003 and 2014 Documentary.

^[3] This point is particularly poignant given that the US is a net producer of oil but lacks the necessary domestic refineries to create energy independence, making it necessary, for example, to import diesel from Russia. Russia’s diesel refineries in turn are being bombed by Ukraine.

^[4] The emphasis isn’t “raise financial asset prices so households feel wealthier” but it is “get capital flowing into economic activity that increases productive capacity and therefore inherent wealth.”.

^[5] The White House Report to the President July 2026.

^[6] US Department of Treasury Press Release, February 4, 2025.

^[7] NAIC Newsroom, January 1, 2014.

^[8] See September 22, 2026 Genex Capital President’s Message.