Warsh is overhauling the Fed’s “brain”—this is a hundred times more important than whether or not to cut interest rates.

On July 9, Kevin Warsh, who had been Fed Chair for less than two months, announced the leading members of five external working groups, a lineup spanning venture capital tycoons, Nobel laureates, and former central bank governors from multiple countries — unprecedented in Fed history.

The market's first reaction was to ask: which working group is responsible for rate cuts? But that question underestimates the matter. What Warsh is really doing is not swapping out a single interest rate decision, but replacing the entire cognitive system the Fed uses to make decisions. From what data to look at, how to interpret inflation, how to assess AI's impact, how large the balance sheet should be, to how much to communicate with the market — five directions struck simultaneously, all pointing to the same endgame.