The post How will incoming Fed chairman Kevin Warsh handle $6.6T balance sheet and QE legacy? appeared on BitcoinEthereumNews.com.

President Donald Trump picked Kevin Warsh to run the world’s most powerful central bank on earth in 2026, and the biggest problem on his desk is the Fed’s $6.6 trillion balance sheet. Everyone keeps talking about interest rates, but the real weight is this pile of assets the Fed’s been sitting on for years. This isn’t new for Kevin. He’s spent over a decade yelling about how big the Fed got. He called out his former colleagues for letting the balance sheet explode after 2008 and during COVID. When news hit that he might slash it, bond yields jumped, the dollar climbed, and gold and silver took a nosedive. “He’s been very critical of the Fed’s balance sheet expansion,” said Zach Griffiths from CreditSights. Kevin may cut the Fed’s balance sheet while Trump tries to lower borrowing costs There’s a problem though.Kevin’s plan doesn’t line up with what President Trump wants. In January, Trump told Fannie Mae and Freddie Mac to buy $200 billion worth of mortgage-backed securities to help people get cheaper home loans. But Kevin’s against the Fed holding so many assets to keep rates low. “If you take Kevin at his word that he dislikes balance sheet expansion as a way to compress yields, then it means it falls onto Treasury,” said Greg Peters at PGIM Fixed Income. Treasury Secretary Scott Bessent agrees with Kevin. They both want the Fed to do less and let Treasury handle more. Kevin’s thinking is simple: shrink the Fed’s role, and let the private market breathe. But that could mean higher long-term rates, which is exactly what Trump’s trying to avoid. Stephen Miran, who’s also at the Fed now and was appointed by Trump, said on Bloomberg TV, “In theory, you can move the short rate to offset whatever you’re doing…

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Filed under: News - @ February 2, 2026 7:28 am