Warsh and Bessent Coordinate Capital Flows for AI Supremacy

Former Fed Chair Kevin Warsh and US Treasury Secretary Scott Bessent are coordinating efforts to advance U.S. dominance in the AI arms race, according to a report from KuCoin.

The two have a long history of working together, having traded under renowned macro trader Stanley Druckenmiller, who said that Warsh understood international capital flows better than anyone else.

Druckenmiller's career has been built on understanding and betting on the mechanisms driving global capital flows, which he believes are the root cause of economic and financial challenges. He notes that these flows have led to significant imbalances in the past, including the 2000s, when foreign official institutions purchased $4 trillion in US assets.

This has resulted in a system where excess savings from countries like China flow into the US, inflating asset prices and fueling inequality. The report warns that this mechanism is still at play today, with trillions of dollars flowing into the US market without regard for price.