Core Viewpoint - Kevin Warsh, a potential successor to the Federal Reserve Chair, criticizes the current Fed's policies and suggests significant reforms to address inflation, which he claims is a result of poor policy choices rather than external factors [1][5][20]. Group 1: Warsh's Critique of the Federal Reserve - Warsh argues that inflation is a choice made by the Federal Reserve, emphasizing that the central bank has the power to control price levels [5][20]. - He criticizes the Fed's complacency during the "Great Moderation" period, suggesting that the failure to reduce the balance sheet led to the current inflation crisis [1][5]. - Warsh believes that the Fed has deviated from its core mission of maintaining price stability and has engaged in excessive monetary interventions [5][20]. Group 2: Proposed Reforms - Warsh advocates for a "restoration" of the Federal Reserve rather than a complete overhaul, suggesting that the existing framework should be preserved while correcting past mistakes [2][5]. - He proposes reducing the Fed's balance sheet, which currently stands at $7 trillion, to create room for lower nominal interest rates [2][5]. - Warsh emphasizes the need for a clear division of responsibilities between the Federal Reserve and the Treasury, arguing that both should focus on their respective roles without overstepping boundaries [2][5]. Group 3: Economic Outlook - Despite his criticisms, Warsh expresses optimism about the U.S. economy, predicting a productivity boom driven by AI, similar to the economic growth seen during the Reagan era [2][5]. - He believes that rational policy adjustments can lead to significant resilience in the U.S. economy [2][5].