Warsh Wields Axe on Inflation with Ballooning Balance Sheet Target

Kevin Warsh's commitment to reviving monetary restraint has brought hope for tackling persistently elevated inflation. The Federal Reserve Chairman emphasized his committee's intolerance for high inflation, echoing a stance reminiscent of Paul Volcker's measures in the 1980s.

The problem started decades ago when Alan Greenspan began printing money and manipulating interest rates at the end of the 1980s. This led to four decades of inflationary policies that have kept inflation above the Fed's 2 percent target for almost a decade.

Warsh must now decide whether to continue shrinking the bloated balance sheet he inherited, which has grown to $6.7 trillion, and keep interest rates above what politicians would ideally want in an election year. This could risk triggering a recession, but it's a necessary step towards undoing four decades of inflationary folly.