Warsh, on the shortlist for Fed Chair, advocates for more QT, a smaller balance sheet, and lower short-term rates, in sync with Bessent.
By Wolf Richter for WOLF STREET.
Kevin Warsh, former Federal Reserve Governor and now on the shortlist of candidates to replace Powell as chairman of the Federal Reserve, came out with an editorial in the WSJ today that hammered away at the Fed’s current and former leadership – faulting them for years of QE and the large balance sheet that it produced, and advocating for a smaller balance sheet (more QT) and lower short-term interest rates.
He’d served as a member of the Federal Reserve Board of Governors from 2006 to 2011 under Ben Bernanke and supported QE-1 during the heat of the Financial Crisis, but opposed QE-2, and shortly after Bernanke pushed through QE-2 against all opposition, including from Warsh, he quit. He has been vocally opposed to the concept of “continued QE” and a large balance sheet ever since.
That’s his story, and he’s sticking to it (apologies to Collin Raye’s country song “That’s My Story”), including in today’s editorial in the WSJ, where he proposed four big changes of thinking at the Fed, one of which – his “second” point – dealt with the balance sheet and interest rates; he wants a smaller balance sheet and lower Fed policy rates:
“Second, inflation is a choice, and the Fed’s track record under Chairman Jerome Powell is one of unwise choices. The Fed should re-examine its great mistakes that led to the great inflation. It should abandon the dogma that inflation is caused when the economy grows too much and workers get paid too much.
“Inflation is caused when government spends too much and prints too much.
“Money on Wall Street is too easy, and credit on Main Street is too tight.
“The Fed’s bloated balance sheet, designed to support the biggest firms in a bygone crisis era, can be reduced significantly.
“That largesse can be redeployed in the form of lower interest rates to support households and small and medium-size businesses.”
Secretary of the Treasury Scott Bessent, who has been interviewing candidates for the job to run the Fed, including Warsh, has been making similar noises.
In an essay published by the WSJ in September, he blasted the Fed for its “extraordinary” and “nonstandard” monetary policies since 2008, such as QE; its “pursuit of the Wealth Effect”; its interventions that became a “de facto backstop for asset owners,” thereby concentrating “national wealth among those who already owned assets.” He skewered the Fed for having caused home prices to soar, while “younger and less affluent households, shut out of ownership and hit hardest by inflation, missed out on appreciation” (my discussion of Bessent’s essay).
So Bessent and Warsh are largely in sync on this topic.
Warsh, back in 2018, hammered at the problem of “continued QE,” and he seems to not have changed his mind since then:
“My overriding concern about continued QE, then and now, involves the misallocations of capital in the economy and the misallocation of responsibility in our government. Misallocations seldom operate under their own name. They choose other names to hide behind. They tend to linger for years in plain sight. Until they emerge with force at the most inauspicious of times and do unexpected harm to the economy.”
A “significantly” smaller balance sheet – continued QT – would likely mean slightly higher long-term interest rates, including higher mortgage rates. But long-term interest rates are predominantly driven by inflation fears and the onslaught of supply of government debt that markets have to absorb, compared to which the effect of QT may be relatively small. So if inflation gets worse and stays that way, amid mounting deficits, substantially higher long-term interest rates could be in the offing under this scenario.
Lower policy interest rates by the Fed would mean lower short-term interest rates. And they don’t determine long-term interest rates.
The combination of lower short-term interest rates and higher long-term interest rates would steepen the yield curve back into some kind of healthy position, after years being nearly flat or inverted. Higher long-term interest rates, including higher mortgage rates, could also have a dampening effect on inflation.
The fact that both Bessent and Warsh are speaking out against the Fed’s massive balance sheet and years of QE is very interesting.
Powell – architect of mega-QE during the pandemic, and of the “ample reserves regime” that is now keeping the balance sheet at the still inflated level though it has come down by $2.4 trillion – is on the way out as chairman.
The fact that Bessent put Warsh on the shortlist, even if Warsh doesn’t make it, could be a sign that a major balance-sheet rethink that has been circulating for a while is gaining momentum.
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If this policy shift is implemented with the same panache and elan with which tariffs have been introduced, we will be in for a very interesting transition. And I’m not sure the Trump team has the stomach for the implied repricing of risk assets associated with such a shift, although perhaps they are not foreseeing that.
Yes, if they screw up something like that, it could get rough. But Bessent strikes me as one of the adults in this administration. And Warsh isn’t a shoot-from-the-hip guy either (though I kind of doubt he will make it).
Bessent is throwing away $20 billion of taxpayer money to temporarily prop up the Argentinian Peso purely for political purposes. That is not “adult in the room” behaviour.
1. When you make an investment in something, such as buying stocks or currency, you only know afterwards if you threw money away or made a profit.
2. US hedge funds and US bond funds have forever ripped off US bond-fund investors with the default cycle of Argentine USD-debt. Hedge funds have gotten rich off this cycle. What Bessent did is pull the rug out from under those hedge funds by putting out a statement of confidence to support to peso. Currencies are dependent on confidence. And the hedge-fund profit cycle needed to be broken. Watch some hedge funds blow up over this.
classic crony capitalism, buy bonds at 30 cents on the dollar knowing before its announced that we (USA) are investing 20B maybe 40B in the future and the bonds go to 70 cents on the dollar making 133% from inside trading. Trump actually said people made billions as a result of the lifeline/bailout in his announcement right after the deal. look the video up, my jaw dropped!! our POTUS was proud that he created wealth for the lucky or well connected.
So… We can expect things to be “Not That Different” going forward? :-D
Not that different from 10 years ago or 2 years ago? It was Bernanke and Yellen who extended QE 4 years longer than needed. They created a massive bubble we are dealing with now
Well, if things don’t go right, he can always threaten to fight the rest of the Fed board members like he does members of the Cabinet.
I’m not sure why you have confidence in him. Hopefully, he’s better in the boardroom than he is on TV because it’s usually a trainwreck when he tries to explain what the policy is and why.
I really like Bessent.
I really don’t like Bessent and his hedge-fund bent at all.
WE, in this case WE the retired on income only from SS and treasury securities can only HOPE!!!
With any kind of ”reality orientation” toward the VAST destruction of our USD since the FRB was started, approximately 97%, (last time I looked, the ”official” rate was even a bit more) ,, it is definitely time and enough to transition the FRB to be PRIVATE and honestly made to PROTECT the banksters as it has actually always been in spite of the very clumsy efforts early on, as is SO typical of any ”central guv mint control!!”
Keep the FDIC and all other guv mint efforts to audit and regulate ALL the banks, but put the FRB completely OUT of any guv mint support and the absurd subsidies at the expense of WE the workers and savers…
You obviously have zero comprehension as to what the Federal Reserve does and its crucial role in the banking system in the US where it is the primary regulator along with the OCC.
SoCal
It may do all you say, but it also created the inflation by driving rates to ALL TIME LOWS and then engaged in QE buying 1/8 of a Trillion of paper EACH MONTH, with “new” money……all without the expansion of goods and services…..that creates an inflation bomb…and we got it.
SoCal, the thread Powell pimp.
I’ll go with Don Corleone’s quote on the matter:
Don Corleone: “Powell is a Wall St. pimp. He never could have outfought Volker. “
Waiono
Volcker (correct spelling) triggered the worst recession since the Great Depression just when I got out of grad school, and five years later, the unemployment rate was still 7%. His interest rates caused millions of small business and thousands of banks to collapse and threw 10 million people out of work, with an unemployment rate of over 10%. And when he left office in 1987, CPI inflation was still 4.3%. He seriously damaged the careers of millions of people, including mine. He is not such a great hero in my book.
If the Federal Reserve was an actual “regulator”, it wouldn’t allow loans to shadow banks that can’t be audited. Some time in the past, the Federal Reserve was a reputable operation. That all seemed to go out the window in the early to mid 2000s.
My daughter graduated law school in 2008. She did hourly pice work for those firms that had work for 3 years till she finally landed a gov’t job as an atty. She was cubicle working next to attorneys that had been knocking down over 300k/year and were now at $35/hour. I stepped up and paid her private loan so she didn’t end up homeless.
There are much worse than Volcker and there are a lot of them. How many went to jail for the liar loan slice n’ dice ponzi scheme? Zero. And 7,000,000 lost their homes. Maybe we can ask Larry Summers how get away with being a pervert crook and running Harvard.
Thank you, Wolf, for introducing some sanity against the vomit-worthy hagiographies of Volcker by those who weren’t around to suffer the consequences of his idiotic policy decisions. I was, and it wasn’t pretty.
Risk and trust are being repriced globally, whether any politician likes it or not. I suspect they all know this already and are positioning themselves accordingly. They Fed has said they will stop QT this year. If they drop the FFR any further, bond yields will go higher faster.
Can you clarify what you mean by the implied repricing of risk assets in this scenario?
He means a sharp drop in the valuations of assets.
“And I’m not sure the Trump team has the stomach for the implied repricing of risk assets associated”
which currently, like housing , are grossly overpriced because of QE.
The truth is that it’s only love can break your heart.
What’s up with the rationale thinking and making sense? I find that strangely refreshing.
It’s almost as if some people can learn from experiments, even long-lived-clutch-until-you-drown experiments like QE.
“What’s up with the rational thinking and making sense? ”
“Americans can always be trusted to do the right thing.
After they have tried everything else.”
– Winston Churchill
Just watched a movie about Churchill…I try to read his quotes and listen to acouple of his speeches every few years…keeps me sane and gives me hope!
Warsh’s comments sound good.
But if you trim the balance sheet, are you not putting more debt supply into the market? How does that jibe with expecting lower rates?
And doesnt the recent “hot” activity in the SRF and the demand for money at these rates suggest they are currently too low?
Re-read the article more carefully. I answer your question in it.
‘It should abandon the dogma that inflation is caused when the economy grows too much and workers get paid too much.’
Oh please. Can we stop worshiping capital and give labor some credit? I would love to see Walsh in a minimum wage job for even a week. Raise your hand if you are overpaid…..
Reading comprehension not doing so well to start the day? He is clearly saying wages do NOT cause inflation.
Inflation has multiple causes.
This seems like a pretty reasonable point of view.
The problem is that certain inflation-triggering parties (ahem) have historically refused to put down what is ultimately one of their most powerful (and dangerous) tools…which they have used in the service of…frequently very (very) flawed policies.
All economists know that wages are the primary cause of inflation and that has been proven QED over many decades.
LOL! Aren’t supposed be in hiding Larry Summers? “Inflation is always and everywhere a monetary phenomenon, in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output.” – Milton Friedman
I’ll give one example – subsidization of education by the government. Take a look at the cost of education over the last 30 years relative to wages.
Now consider how the government provides funding for food and housing.
LMFAO!
Inflation analysis cannot be delimited to the volume of wages and salaries spent. To do so is to overlook the principal “engine” of inflation – which is of course, the volume of credit (new money) created by the Reserve and the commercial banks, plus the expenditure rate (velocity) of these funds. Also overlooked is the effect of the expenditure of the savings of the non-bank public on prices. The M*Vt figure encompasses the aggregate effect of all these monetary flows.
The Fed’s longest running economic time series, up until the time it was discontinued in September 1996, was the G.6 Debit and Demand Deposit Turnover release.
It was the casualty of President Bill Clinton’s The Paperwork Reduction Act (PRA) of 1995 which “gave the Office of Management and Budget (OMB) authority over the collection of certain information by Federal agencies. It is intended, “among other things, to ‘ensure the greatest possible public benefit from and maximize the utility of information created, collected, maintained, used, shared and disseminated by or for the Federal Government’ and to ‘improve the quality and use of Federal information to strengthen decision-making, accountability, and openness in Government and society.”
dougzero
He took the opposite stand of what you said. He blames the Fed for putting a lid on wage growth. He is saying that wage growth is NOT causing inflation. Read it again.
Milton was just plain dead wrong as many economists always are.
Re-read that sentence a few times, Dougy.
“Raise your hand if you are over paid”. I love that visual. You made my day!
So my interpretation is that prices and assets are getting too expensive for the millionaires and billionaires. Inflation is only good up to a point and then money is worth less. Conservative money never minded a good downturn when they could profit from it. It’s part of my reason that the US has a deflationary bent.
“assets are getting too expensive for the millionaires and billionaires.”
Coulda fooled me as I watch them pay $28,000,000 cash for a vacay house at Kohanaiki.
The Fed went from helicopter Ben to C-17 Powell…
That said, maybe some sanity will return to the Fed…
I get “Helicopter Ben” (I hope he gets his too – I personally prefer “Zimbabwe Ben”).
But C-17 Powell? Are you saying he is dumping/has dumped more money into the system than Ben? I guess I just like ZB less because he coughed out that “We have a technology called a printing press…” quote that is an almost perfect distillation of the arrogance and incompetence of the Establishment view that brought America from unparallelled global economic power to the edge of macro ruin.
So Powell as *worse*?
May be true to an extent in operational terms – but at least unZIRP was allowed to proceed starting in 2022 and (while not having the profound, rapid effect on SFH housing prices it could/should have) as least unZIRP likely kept the insanity from getting worse.
I am far (far) from a Fed fan (mainly because they feel they have to be so inherently *dishonest* about why and how they do the things they do – which I think has done long term damage to the country, starting a long time ago) – but I do understand that from year to year the Fed is in a box (largely of its own creation) and that it is constantly trying to keep the wheels from completely flying off of a badly debilitated macro-economy in the US.
By floating more government debt at market rates, those rates will go up. That is the necessary and missing feedback loop needed to force Congress into more harsh spending restrictions. It’s the nasty medicine we have been avoiding for about 15 years now.
I’d say 54 years…
When the French called Nixon and CONgress out.
Pretty much agree with WB.
The forced exit of the US from Bretton Woods quasi-gold standard was a *bad* warning sign, reflecting the reversal of US international trade supremacy and internal fiscal control.
That was the early *1970’s*.
But that (and essentially every other intermediate) warning sign of US decline over the next 50 years was systematically ignored by DC – for whom transient political pimp-ery always mattered more than the long-term economy health of the US.
The Plaza agreements in the 80’s at least reflected an “attempt” to bring global trade imbalances under control.
But contrast that response to the annual refusal to admit/respond to the fact that China was using internal macro/currency policies to strangle the very mechanics of international trade balancing – from the very second it was admitted to the WTO.
Of course, a pusher is powerless without an eager addict – a role that America/political America was happy to play.
Interestingly, it is almost like China recast the Opium Wars – with China playing Britain and the US playing China.
The specifics of course differ vastly – by the broad underlying dynamics…well, they rhyme.
My understanding of monetary policy has gone from very little in 2020, to “just enough to be dangerous” since ;) Thank you Wolf for you explanations during these years! I find this topic fascinating. I generally think Powell has done a decent job since 2022 of cleaning up the mess they caused during COVID. I have concerns about Fed independence going forward, but I have no idea how this possible change in policy will go. I’ll wait for the data. In the 2010’s I wasn’t as knowledgeable about QE, but it seemed like the Fed was slow to raise rates because they were worried about triggering a recession. In their defense, inflation was low. I appreciate the nuggets about policies 20 years ago because there should be something to be learned from history.
“I wasn’t as knowledgeable about QE, but it seemed like the Fed was slow to raise rates because they were worried about triggering a recession.”
True – but the very famous quote about “taking the punch bowl away just as the party was getting started” was made in 1950-frigging-5…by the *head of the frigging Federal Reserve* – William McChesney Martin.
So the dynamics and dangers of QE (translation – money printing) have long been bred into the bone of the Federal Reserve.
It wasn’t like they didn’t know about Weimar too.
It is just that political pimpery and an arrogant Keynesian over-optimism about “knowing” the optimal growth frontier of the inconceivably vast US (and World) economies led the Fed to engage – since 2000 – in basically unprecedentedly loose monetary policies that played the primary role in the 2003-2006 SFH bubble and subsequent bubbles (including the current “Everything Bubble”).
“In their defense, inflation was low. I appreciate the nuggets about policies 20 years ago because there should be something to be learned from history.”
Inflation was low because the historically unprecedented 2002+ “China price” allowed US importers/”manufacturers” to slash their costs – by dumping US employees for Chinese – keep US prices constant-ish and yet reap unprecendented profits.
But that was a dynamic that could not last – if for no other reason than the increasing impoverishment of the US “consumer” (ex manufacturing employee, new barrista).
The Fed/DC knowingly papered over this dangerous erosion in US employee international competitiveness by printing money (in various ways) to,
1) Allow DC to spend trillions it could not honestly/openly raise via taxation to hire/subsidize the millions/tens of millions of US employees losing the competition with China
2) Strangle US interest rates (by having the Fed buy – with unbacked money – US Treasuries at historically low interest rates that no free economic actor would ever accept) – in order to create *asset* inflation in order to gin up a phony “wealth effect” to hopefully re-boot the US economy – at the very real risk of making things *worse* – see 2009…and subsequent repeats.
3) You could say these were all efforts to “help” but you could also say they were efforts to maintain/acquire political power by aggressively blocking/hiding the signals being put out indicating the need for massiver, urgent US economic and political reform.
I like this analysis. I always thought that the bottom-level cause of the GFC was bad lending standards and credit ratings — but the top-level was inequity in global labor markets.
Wolf, another excellent/insightful read.
From above: “Inflation is caused when government spends too much and prints too much.”
Does this statement and others that say that government debt causes inflation mean that the Fed is increasing the money supply in concert with and to support deficit spending?
All things equal, isn’t any debt issued by the Treasury supposed to be absorbed by existing money in the money supply?
I remember reading that government deficit spending potentially “crowded out” other necessary and productive forms of borrowing and thus was economic slowing (generally not productive). If no money is added to the system for this increased debt, then wouldn’t deficit spending be economically slowing?
Can you help shed some light on this? Thanks.
“government deficit spending potentially “crowded out” other necessary and productive forms of borrowing and thus was economic slowing,”
I don’t know the answers (as multi- trillion dollar economic analysis is difficult), BUT I have always understood government deficit spending as a game of diminishing returns.
The number to watch seems to be the debt:GDP ratio.
When it’s below 100%, the “excess spending” is seen as a way to juice economic growth. Beyond that, the debt-spending of $1, tends to yield less than the $1 of GDP growth (as opposed to the lower ratio that presumably elicits more than the $1 growth).
This is a very simplistic view, and YMMMV, depends on the myriad factors of where/ how the money is spent.
For reference, I think we’re in the 130% debt:GDP range: past the ability for the juice.
The difference is in debt monetization by the FED. That’s what the Treasury -Federal Reserve 1951 Accord was all about (In March 1951, the US Treasury and the Federal Reserve reached an agreement to separate government debt management from monetary policy).
To appraise the effect of the federal budget deficit on interest rates, it is necessary to compare the deficit to the volume of current net private savings made available to the credit markets.
Well that is all well and good while the obvious cause is staring us in the face. Tax cuts payed for with deficit borrowing
Why the focus on anti-QE all of a sudden? This feels like fighting a war from 2013. We already are done with QE. We already have QT. We already abandoned ZIRP. We already have high interest rates.
So what exactly are we talking about?
More QT.
The Fed plans to end QT on Dec 1. Warsh is advocating for a smaller balance sheet than now, and more QT until the balance sheet is small enough.
I like a smaller balance sheet for many reasons. It also gives the Fed more horsepower to act when the next financial crisis comes along. But I wouldn’t throw Powell under the bus too much (maybe a little). When everyone thinks the world is ending, it is somewhat calming to know the Fed has some levers to pull to save the world from total disaster (like 2008 or COVID). 20/20 hindsight is too easy for Bessent and Warsh.
A sustained drop in asset prices to trendline and the bankruptcy of some banks is a “total disaster” in your opinion?
I think the total disaster is what happened as a result of the Fed’s 2009 and 2020 panic. Millions of families shut out of home ownership. Erosion of trust in a government that picks winners and losers. Highest wealth concentration in history.
These people consider a drop in their NVDA stonk holdings to be total disater.
Panic? LOL! You mean scheme. Wall St. bought hundreds of thousands of homes for next to nothing and has been renting and flipping these homes for for over 15 years. They’ve made hundreds of billions.
As Dylan wrote:
Someone’s got it in for me, they’re planting stories in the press
Whoever it is I wish they’d cut it out but when they will I can only guess
They say I shot a man named Gray and took his wife to Italy
She inherited a million bucks and when she died it came to me
I can’t help it if I’m lucky
The disaster is the fed pulling levers to “fix” the economy, the hubris of these people.
It is not as if the size of the Fed balance sheet can be measured on a sliding scale. Rather, the size signals the policy. The abundant reserves regime, the excess reserves regime, and the old time, required reserves,
QE puts the onus on the taxpayer rather than the criminal cause of the mortgage market collapse in 2008
Ask yourself, have monetary, fiscal and governance policies of the past resulted in sustainable socioeconomic conditions for both this moment and the foreseeable future?
If things can’t go on they will stop.
If not now, when? Or what? And who?
Best wishes to all
“Inflation is caused when government spends too much and prints too much.”
Try weaning “heroin addicts” (voters) off gov’t benefits and see how many congressmen back down to control spending, and how the mainstream media will shape the narrative to favor the addict.
No, that is not what causes inflation, but rather sheer greed by companies engaged in egregious price gouging.
Greedflation lol.
All companies try to charge the maximum price they can all the time. It’s called supply and demand.
Consumers choosing (or refusing) to pay higher prices is what determines how much companies can charge. The companies themselves don’t get to decide this.
“Inflation is always and everywhere a fiscal phenomenon.” Or is it? Government spending of money they borrowed just recycles that money back into the economy. The Fed buying government debt with new money created from thin air increases the money supply. The effect of each of these on inflation is different. Policymakers who conflate the two are, well, whatever.
How would this potential shift in policy impact “T-bill and chill” retirees who are relatively pleased with a 4% return without much risk?
Would retirees be compelled to move into other asset classes?
I explained my thinking about this in the article further down. In my estimation, this policy shift would lead to lower short-term yields and higher long-term yields with a relatively steep yield curve. This implies that long-term investors would once again get higher yields from their 10-year securities (such as 5-6%) than short-term investors from T-bills (maybe 3%). It is an unusual phenomenon where T-bills yield more than long-term debt (inverted yield curve). So when long-term yields rise enough, they become attractive again for long-term investors. T-bills were never designed for long-term investors.
What are your thoughts on a balance between t-bills and long term treasuries with the increased issuance t-bills to refinance an ever increasing debt load? For instance, if the percentage of t-bills hits 50-75%, would this put US debt in a vulnerable position?
NO ONE in this administration is talking about a T-bill share of 50-75%. That’s totally nuts. Bessent said the change will be slow and relatively modest.
The percentage is now at 22%:
https://wolfstreet.com/2025/11/14/government-sold-694-billion-of-treasuries-this-week-debt-hits-38-1-trillion-treasury-yields-rise-further-shift-to-t-bills-has-begun/
The last time yields on 10-year Treasury Notes increased by 2% rapidly there was some turmoil in the banking system as assets on the books were repriced (early 2023, SVB and its ilk). I wonder if a replay could be avoided this time.
Warsh for Fed Chair
I think Janet Yellen had Powell ear, as far as “workers get paid too much”, I think this is the foundation of future inflation and why unemployment rate will become inverted to the CPI inflation report in 26. Thursday we get a look back at sept labor report, my guess is it was pretty good and if weekly unemployment numbers come in below 220k, The Fed should sit put with 2 dissenters, Walsh and Mirian who are looking for a job promotion. I am fan of Warsh too, but if the capital markets are where I think they will be. My guess is on Janet Yellen will return as the Fed chair to bring the $vix down. That’s full circle irony HA Trump will nominate Janet Yellen as Fed chairperson.
Perhaps the fed ought to just swap the “excess reserves” for the stuff they don’t want on their balance sheet any more and let the banks etc., figure out how to dispose of it.
Perhaps the fed could explicitly allow this stuff alone to be pledged as AAA treasury-esque collateral for repo land etc,. to sweeten the deal. Thought, it may well be the case that much on their balance sheet is no longer all that dirty.
The legal profession would be happen with such an arrangement at least.
Like the MBS bonds they bought that were conjured from 3% mortgages? Swap that stuff?
Works for me.
The editorial might be a hint to sell, sell, sell. And if there is a downturn there may not be any extraordinary help besides the $2000 dividend that Trump said will probably be distributed in the middle of next year or a little later.
Coincidentally right before the midterm election.
The $2,000 dividend isn’t happening. Congress has to approve, and they won’t.
Trump has zero authority to send out a single penny in checks to taxpayers without authorization and appropriation by Congress which runs all of the funds for our totally insolvent US government which is running deficits in excess of $2 trillion a year. Do you not understand that?
“Trump has zero authority…”
…”authorization…by Congress…”
“Do you not understand that?”
I don’t know which of those made me laugh more.
One sometimes think they can predict the future. The democrats are the least deserving of an electoral tsunami in the mid terms. But they will defeat the republicans that have enabled Trump in both the House and the Senate.
Nasdaq and Russell 2000 inch closer to correction territory with Dow and S&P set to extend losing skids to four days
DJIA -0.71%
SPX -0.32%
COMP -0.57%
1:04 PM 11/18/2025
Dow 46,091.74 -498.50 -1.07%
S&P 500 6,617.32 -55.09 -0.83%
Nasdaq 22,432.85 -275.23 -1.21%
VIX 24.02 +1.64 7.33%
Gold 4,068.90 -5.60 -0.14%
Oil 60.78 +0.87 1.45%
Silver $50.545 -0.166 -0.33% (YTD +72.57%)
Silver is worth around $1.00 to $2.00 per ounce which is what it has historically sold for which is around $20.00 per troy pound.
What is anything worth? Answer: Whatever anyone will pay for it.
Woo hoo! Wolf’s Exchange Place is open!! I’ll take everything you’ve got from 0.750 to 0.999 at that price. Spoons, teapots, candlesticks, and all. Deal! I’m spittin’ in my palm right now. We don’t even need to inform the government. F**k ‘em…this is an American private transaction.
LOL! You’re an idiot. The market is clearly setting a different price.
LOL just like the “worthless USD” comments.
I’ll gladly buy your silver for $2/oz if you really feel it’s worth that little. I’ll gladly take your “worthless” dollars off your hands too – complimentary disposal included!
There is no way to gage whether the quoted value is fair or not.
The question is, what is Mr. Warsh meaning with “a significantly smaller balance sheet?” We know all that the pre GFC balance sheet levels are dead, but i think the Fed should continue QT until they reach the 4.5 -5 trillion US-Dollar zone. On the other site, i didnt understand why the Fed needs a ample reserve regime when they introduced the SRF to tackle short term liquidity borrowings?
Currently we the people pay the criminal banks interest to hold onto the QE reserves that the Fed created, gave them for free, and provides excess liquidity to an overpriced asset market/
Wolf…
I suspect you will disagree.
But IMO, the stampede in the repo market, on occasion, tells me that current rates are very attractive to some and thus too low.
It makes me sense some big operators are “dancing on the razor’s edge” when they have to make last minute knee jerk reactions. ( ie over leveraged.)
Will the Fed intervene in a Crypto “event”?
I suspect BTC is being used for collateral, margin, etc….and the 25% drop makes one wonder who is soiling their trousers.
The Fed will be happier than anyone when crypto gets put back in the box.
Wolf. I’ve left comments before that I’m building a manufacturing facility as we speak. We are using debt financing. Not a finance guy, just someone who has to know enough to run our business. As far as I can tell, my rate for that facility is pinned to long term interest rates. Are there a lot of uses of short term credit for businesses?
Short term credit being cheap allows cheap margin investing.
So are the comments about main st vs wall st really true? (I genuinely don’t know, I only know the way I use credit/debt, I don’t know broader trends)
What there is a lot of is floating rate debt (such as SOFR+ 300 basis points), some of it interest-only, some of it with an amortization. Floating rate debt taken out when interest rates were low some years ago now comes with much higher rates, and we’ve discussed many defaulted CRE loans here than no longer penciled out at these higher rates.
There are also lots of term loans with short maturities, such as 3 years or 5 years so, and those too need to be refinanced now at much higher rates, and that’s where another big part of the CRE defaults are coming from.
So plenty of businesses would benefit from lower short-term rates, esp. in real estate.
But these loans are risky as we’re now seeing in CRE.
If you’re building a manufacturing facility, the much safer route to go is a fixed-rate longer term loan, rather than floating rate loans or shorter-term loans. The last thing you need is a big surprise down the road.
We already have low short term interest rates. We already have relatively low long term rates.
We only consider 3.7% 6 month rates high because of the pile of debt that has to be serviced.
We only consider 4.5% 10 year rates high because of the pile of debt the government has to service.
A 7% mortgage is only a big problem because the house you could buy for 250k 4 years ago, now costs 500k. A decade of 7% mortgage rates will solve the house affordability problem. But it wont be fun and who will vote for pain or even mild discomfort?
Fiscal and Monetary prudence is a bit like pregnancy – you can’t really be half pregnant. It seems that Treasury and FED want to be half prudent.
I guess we will find out. We will also find out if StableCoins can fool the markets and help the Treasury monetize it’s debt
I think this is in the right direction, but the genie is out of the bottle. Talk about this is pretty much about adding more stores to the granary and draining it when there’s a crisis, manufactured or otherwise.
Inflation is running hot for the fifth year running above the benchmark of an average of two percent,
I think perhaps Linda McMann may be the secret Trump coreographer