The Warsh Era: Federal Reserve Orthodoxy Under Political Pressure (legrandcontinent.eu)

• Return to traditional central banking frameworks and price stability.
• Systemic conflict expected between monetary goals and expansionary fiscal policy.
• Liquidity challenges persist as the Fed weighs balance sheet reduction.

"Kevin Warsh's appointment as Fed Chair marks a pivot toward 1990s-era monetary conservatism. Moving away from unconventional balance sheet expansion, Warsh aims to assert central bank independence against an expansive US fiscal policy. However, the current environment—characterized by a trade war, labor shortages, and energy price volatility—differs significantly from the "Great Moderation." Warsh faces a high-stakes test: forcing fiscal discipline upon a government favoring strong executive power. Failure to balance these forces could lead to market instability as the Fed attempts to navigate inflationary pressures and systemic liquidity concerns."