The nomination of Kevin Warsh to lead the Federal Reserve will not derail the global “debasement trade,” as mounting public debt makes the monetization of U.S. fiscal deficits inevitable.
Fiscal Reality
Despite the “bone-jarring” Friday crash that saw silver plunge 26% and gold drop 9%, the fundamental drivers of the precious metals rally remain unchallenged.
According to economist Robin Brooks, the market’s search for safe havens is fueled by a fiscal trajectory that no single personnel change can fix.
“On a fundamental level, the nomination of Kevin Warsh changes nothing about any of this,” Brooks noted in his Substack post, pointing to a “reckless path” of fiscal policy.
“Public debt is high and rising. This pushes up longer-term yields, which makes it inevitable that political pressure on the Fed to cut interest rates and cap longer-term yields will mount.”
‘Dovish’ Market Signal
Treasury yields fell following the announcement, and futures prices moved to reflect additional rate cuts. This …Full story available on Benzinga.com
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