Warsh Channels Greenspan in Jackson Hole Remarks

The new Fed Chairman, Kevin Warsh, made some significant comments at Jackson Hole that seem to have had little impact on markets. This is likely by design, but it's interesting to note how pundits interpreted his words differently.

Warsh started with a discussion of Artificial Intelligence (AI) and its potential effects on growth and inflation. He asked the right questions, such as whether AI will lead to significant productivity gains, and whether it will be complementary or competitive to labor. While he mentioned Moore's Law, which suggests that computing power consumed by AI would decline over time if its growth rate slows down.

Warsh also discussed forward guidance, noting that the more the Fed gives, the more they box themselves in. He plans to stop giving forward guidance, a move that few people recognize as channeling the Dread Pirate Roberts' philosophy of 'Nothing of consequence.'

The Chairman's comments on humility and uncertainty were refreshing, as he acknowledged the limitations of economic forecasting and the need for modesty when making policy decisions.