The First Phase of the Federal Reserve Wind

First, let's clarify what the Federal Reserve serves—employment and inflation are just two covers; its main purpose is to serve the financial hegemony of the US dollar.
That is its ultimate goal.
Analyzing from this perspective, it's basically impossible for them to raise interest rates, with the $40 trillion in US debt sitting right there.
Raising rates would cause an immediate explosion.
Now let's look at the newly appointed Federal Reserve Chairman, Warsh.
This guy is quite interesting; the whole market says he's a hawk, but I remain skeptical.
1. Who is Warsh? Born in 1970, graduated from Stanford, climbed the social ladder by marrying a daughter of the Estée Lauder family, became the youngest Federal Reserve Governor in history at 35, and was nominated by President Trump as the new chairman in January 2026. The big boss of Estée Lauder is one of Trump's main donors. The relationship is right there.
2. Three unusual things about his tenure. The president personally presided over the inauguration ceremony—the last time was 39 years ago when Reagan did it for Greenspan; Powell didn't step down as a governor, breaking a tradition of over 70 years; after taking office, gold outperformed US bonds.
3. The impossible triangle. Political pressure demands rate cuts, Middle East conflicts push up inflation, and US debt has skyrocketed to $39 trillion—three fronts stuck. Warsh came up with a "rate cut + balance sheet reduction" combo as a fig leaf.
4. Two tricks under the fig leaf. One is the AI total factor productivity hypothesis, claiming AI can suppress inflation so they can safely cut rates; the other is switching to the "trimmed mean PCE" new indicator, stripping out extreme price movements, so the inflation number naturally comes down. Pretty slick. As I said, the Federal Reserve serves financial hegemony, not employment or inflation.
5. Hard to implement. Currently, it's a stagflation-like situation; the strait hasn't been fully unblocked, oil prices won't come down, inflation can't be suppressed. So at that June meeting, they first acted hawkish to make the market anticipate rate hikes. Without spending a cent, they can steer the market in their desired direction—that's a good thing. So overall, whether it's political pressure, dollar hegemony, or human relations, he only has one path: rate cuts, or at least keeping rates stable.
6. Warsh's flexibility is remarkable. He voted in favor of the massive 2008 liquidity injection. He has a very close relationship with the Republican Party, and has always worked on Wall Street—he can be both literary and martial, very adaptable!