Investors are starting to bet against America without shorting the dollar, Warsh may be the man who inflates America’s debt away

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Warsh will inflate the debt away.

It was clear in February…. and it’s even clearer now.

Back in February, there was speculation about a partnership between Bessent and Warsh to synchronize the Fed’s balance sheet with Treasury financing.

A few months later, Bessent called up Warsh to print USD and provide them to the BoJ so they wouldn’t have to keep dumping USTs.

Both are in favor of yield curve control.

– This means pegging US interest rates at an artificially low level
– The Fed commits to buying enough USTs to keep yields below that cap

This would be reminiscent of the WWII period.

Back then, US debt-to-GDP was at similarly extreme levels. YCC enabled the government to borrow vast amounts without blowing out interest expenses.

Those costs were pushed onto citizens via inflation.

From 1945 to 1980, the US gradually brought debt-to-GDP down to roughly 30%, which later gave Volcker enough room to raise rates toward 20% and crush inflation.

This increasingly looks like Warsh’s and Bessent’s playbook.

The idea that Trump would nominate someone more hawkish than Powell, after attacking Powell for over a year for being too hawkish, was ridiculous to begin with.

Inflating the debt away was always the plan…

Needless to say, hard assets outperform during inflationary periods.

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