一文读懂，沃什究竟会怎么做？

Core Viewpoint - The article discusses the implications of Kevin Walsh's potential appointment as the next Federal Reserve Chairman, focusing on his critical stance towards the Fed's balance sheet expansion and the potential for significant policy changes regarding interest rates and government borrowing [1][4][5]. Group 1: Walsh's Critique and Potential Actions - Walsh has been a vocal critic of the Federal Reserve's asset expansion, leading to speculation that he may quickly initiate a balance sheet reduction if appointed [4][5]. - His views align with Treasury Secretary Scott P. Mnuchin, advocating for a reversal of the Fed's overreach, which could impact long-term interest rates and the borrowing activities of major financial institutions [5][6]. - Walsh emphasizes the need for a new Treasury-Fed agreement to redefine their relationship, similar to the 1951 accord, to clarify the Fed's balance sheet goals [7]. Group 2: Market Reactions and Implications - Speculation about Walsh's potential policies has already led to increased long-term Treasury yields and a significant rebound in the dollar, while gold and silver prices have dropped [4]. - If Walsh opposes expanding the balance sheet to lower yields, the Treasury will bear more responsibility for managing borrowing costs, especially as the national debt exceeds $30 trillion [5][6]. Group 3: Challenges of Implementing Policy Changes - Reducing the Fed's footprint is expected to be challenging, given the significantly larger balance sheet compared to Walsh's previous tenure [9]. - The financial markets are sensitive to liquidity changes, as evidenced by past instances where the Fed had to intervene to stabilize short-term lending rates [9]. - Analysts suggest that Walsh may need to build consensus within the Federal Open Market Committee (FOMC) to implement substantial policy changes, as many members still support maintaining ample reserves [11][12].