Kevin Warsh's proposal for a new Fed-Treasury Accord has sparked debate about its potential impact on markets. Here's the lowdown: The Plan Warsh wants to redefine how the Fed and US Treasury work together on debt, money printing, and interest rates. His plan might involve: Short-term focu Fed holds more short-term Treasury bills instead of long-term bonds Smaller balance sheet: Reducing the Fed's massive $6.59 trillion balance sheet Limited bond buying Restrictions on large bond buying programs Coordination Closer collaboration with Treasury on debt issuance
History Lesson
The US has done something similar before. During WWII, the Fed controlled interest rates, and yields were capped. When controls ended, inflation surged, and the Fed lost independence. Japan and Australia also experimented with yield curve control, with mixed results
Market Impact
If Warsh's plan leads to lower real yields and easier liquidity, it could support risk assets like equities, gold, and crypto. However, bonds might face volatility due to reduced Fed support and heavy Treasury issuance.
Key Risks
Inflation Potential surge in inflation if Fed loses independence Currency weakening Possible yen-like effect on the USD Bond market volatility Steeper yield curve and higher term premiums
Markets are treating this as a long-term debate, not an immediate liquidity shock. The 10-year Treasury yield is steady at 4.247%
#vanar $VANRY "@vanar ($VANRY) is revolutionizing gaming with high-performance blockchain tech! Scalable, secure, and immersive experiences are here. Get ready for the next-gen gaming era! 🚀 #Vanar #GamingBlockchain
#plasma $XPL "@plasma ($XPL) is reshaping DeFi with innovative plasma solutions, enabling faster, cheaper, and more secure transactions. The future of decentralized finance is here! 🚀 #plasma #DeFiRevolution
#vanar $VANRY "Gaming meets Web3! @vanar ($VANRY) is powering the next-gen gaming revolution with high-speed, scalable blockchain solutions. Get ready for immersive experiences & true digital ownership! 🚀 #Vanar #GamingBlockchain
#dusk $DUSK "Privacy meets innovation! @dusk_foundation ($DUSK) is leading the charge with confidential smart contracts, enabling secure & scalable Web3 apps. The future of private finance is unfolding! 🚀 #Dusk
#dusk $DUSK "@dusk_foundation ($DUSK) is pushing the boundaries of Web3 privacy with confidential smart contracts. Secure, scalable, and private – the future of finance is bright! 🚀 #Dusk #Web3Privacy
#vanar $VANRY "Vanar Chain is revolutionizing gaming with Web3! @vanar ($VANRY) offers high-speed, scalable blockchain solutions, enabling true digital ownership and immersive experiences. The future of gaming is here! 🚀 #Vanar #GamingBlockchain
#walrus $WAL "Data management just got a Web3 makeover! @walrusprotocol ($WAL) is transforming decentralized data pipelines with speed & security. Say hello to a more efficient Web3! 🚀 #Walrus #DecentralizedData