Episode Details

Kevin Warshs new role as Federal Reserve chair is marked by a push for a smaller Fed role in markets, aiming to reduce the massive balance sheet built up from crisis interventions. However, rising federal debt and changes in investor views on U.S. Treasuries could hinder his plans. The convenience yield, a low-rate perk for Treasuries, is diminishing, potentially leading to higher borrowing costs. Experts are divided on the impact of the big balance sheet, with some arguing for clear rules on asset purchases and sales, while others see it as beneficial for bank liquidity. Warsh faces a challenge: shrinking the Feds footprint without letting rates spike, or risking a blurring of monetary policy and fiscal matters.

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