Warsh Warns: Cheap Money Over, Interest Rates Rising

BTC gained about 26% in August, but Federal Reserve Chairman Kevin Warsh says it could be over. He argues that cheap money is over and growth is picking up, which pushes interest rates up, not down.

Warsh spoke at the G20 meeting in Asheville, North Carolina, where he mentioned that the world of too much idle cash and too few good projects is finished. He made a similar case at Jackson Hole on Friday, saying 'It wasnt so long ago when economists and policymakers were speaking of secular stagnation and a global saving glut.'

Warsh pointed out that money is now pouring into artificial intelligence, and he cannot call today's conditions tight despite inflation still running at 3.7% a year.

Treasury Secretary Scott Bessent sat beside him on Monday in Asheville, where he denied critics' claims that the real goal of doubling the size of Treasurys bond buybacks to at least $4 billion each was to push borrowing costs down. However, the market is not listening, with the 30-year Treasury yield reaching about 5.26% and the 10-year yield surging to 4.76%

Stanley Druckenmiller has seen this film before, having run the 1992 bet that broke the Bank of England. He believes Bessent is repeating the mistake, but Bessent addressed the row directly on Monday and suggested he has spoken with Druckenmiller since the op-ed ran.