20th June 2026 > > The Fed.

tl;dr

My take on the Fed under its new Chairman, Kevin Warsh.

Market Snap

Market Wrap

BTC’s emerging negative correlation to stocks, particularly the high vol sector, seems to be growing by the day. BTC as a macro hedge? Interesting.

Curious Cryptos’ Commentary – The Fed

Gotta love The Milk Road. Here is a very handy cut-out-and-keep guide to the Fed’s new and immediate initiatives under its new Chairman Kevin Warsh:

I say immediate, but that is in the context of the bureaucratic mindset within which Kevin must work. The task forces will be in place soon but are not expected to report back before the end of the year.

Why does the government work so slowly? Get an interim report out by the end of next month at the latest and take it from there, would be my approach.

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The price of BTC, and hence the whole crypto market, responds to several different factors, but one cannot ignore that an important element is the amount of fiat liquidity, and specifically the change in that liquidity. Given that the world is essentially dollarised and destined to travel further down that path as USD stablecoins become the financial instrument of choice for settling commercial transactions, these five topics may impact our bags. Let’s look at each in turn.

Communications Strategy

The explicit dumping of “forward guidance” in the official Fed statement this week is a very welcome development. It was a ridiculous idea that should never have seen the light of day. Removing this destructive and limiting practice allows the Fed to respond to more than just faulty and misleading economic data. Instead, it can incorporate real stuff particularly with reference to the capital markets. Well done, Kevin, productivity has just gone up across the board.

Balance Sheet Policy

Kevin has long been highly critical of the policy implemented by all central banks in the recent past, the objective of which is to make the rich richer, and the poor poorer aka quantitative easing. In this respect, he is the most progressive central banker of all time bar none, if the label progressive is important to you.

Shrinkage of bloated central banks’ balance sheets is very important, but by simply leaving them alone that happens naturally as the bonds held on balance sheet reach maturity. Actively selling bonds at a large capital loss – which is what the Bank of England is doing costing taxpayers tens of billions of dollars a year – is almost as dumb as announcing you are selling your gold reserves into a falling market. Let us hope that Kevin is content with the passage of time doing its work.

Data Sourcing

Economic stats are notoriously unreliable and always subject to revision. The most important monthly data point – Non-farm Payrolls – is based upon a small survey on a small number of days. Back-testing has suggested that it is usually not only materially wrong but can also be wrong in direction too. Finding higher quality data that is sourced outside of government economists, allied with the change in communications strategy, will shock many people but will lead to improved decision making.

Productivity & Jobs

This is all about AI of course. Kevin is on record saying that in his opinion AI will prove to be one of the great deflationary forces of all time, presumably eclipsing the deflation exported by China over the last three decades or so. Once this personal view of his becomes official Fed thinking, that will have a dampening effect on the market’s view of the future trajectory of interest rates.

Inflation Frameworks

This is a great initiative. Inflation stats are one of the least reliable economic indicators created by civil servants. An overhaul is long overdue, again shocking some who would much prefer the status quo to never be upended.

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Taken in the round there is only one reasonable conclusion.

If you agree with Kevin about AI – which I do – we are likely heading for a prolonged period of significantly reduced interest rates across the curve, lowering the cost of capital, raising productivity, and making everyone wealthier.

Oh, and that is good for our crypto bags too.