🏛️ Backtracking U.S. monetary policy

Over the past five decades, who has happened in each era? What crisis has happened and how to deal with it? Until recently, the stick was like "Kevin Warsh."

Over the decades, the Fed has served as an economic "firefighter," with Fed presidents in each era facing challenging crises and completely different financial choices:

1.The Arthur Burns era (1970-1978)

Beginning in the midst of historic volatility, both the collapse of the Bretton Woods system, which tied the value of money to gold, and the confrontation with the Oil Shock, which plunged the U.S. economy into high inflation with a stagflation, or stagflation. In this era, Burns chose to pursue a "stop-and-go" policy by raising interest to fight inflation. But when the economic signs began to slow, it quickly lowered interest, resulting in the loss of interest tools. This hesitation knocked inflation out of control, and the dollar of that era was constantly depressed and weakened by belief. Declining market stability

2.G. William Miller era (1978-1979)

Coming in to take the timber for one of the shortest and most turbulent periods of time, faced with the accumulated hyperinflation from an earlier era, incorporating the second round of the energy crisis, Miller's monetary policy during that period was heavily criticized for its lack of arbitrariness and timed policy interest hikes away because of concerns that if raised, strong interest would affect the business sector and employment stability, the results of the slow response caused inflation to soar completely out of control in his short term, and dragged the dollar index to collapse rapidly to reach historic lows.

3.Paul Volcker era (1979-1987)

Volcker's policy was to use "raw" drugs, shock the money supply in the system, coupled with a 14% surge in Hyperinflation, which became the country's number one economic security threat. Volcker's policy was to use "raw" drugs, shock the market with a strict limit on the amount of money in the system. Coupled with a 20% surge in interest rates, the world record rose to 20%. This action, despite being traded for a recession and a short-term rise in unemployment, was magnificently successful in subduing inflation, and the hike in interest to this extreme that led to a huge inflow of capital into the United States, pushing the dollar index to the point. It peaked in history so far that a Plaza Accord was required in 1985 to help dampen the heat of the dollar.

4.Alan Greenspan era (1987-2006)

It was the Fed chairman who led the U.S. economy through a series of monsoons and minor crises, from the Black Monday 1987 crisis shortly after his inauguration, the Tom Yum Shrimp crisis on the Echetai side (1997), the dot-com bubble crisis (2000), to the 9 / 11 sabotage. Greenspan's hallmark was the rapid and flexible use of aggressive monetary policy. He often lowered interest immediately to inject liquidity at critical signs, and gradually raised interest when he saw that the economy was overheating. This led to a cyclical movement of the dollar index of his era, which grew markedly during the heyday and gradually weakened. Down when entering the downward interest cycle after 2001.

5.The Ben Bernanke era (2006-2014)

Faced with the most serious financial crisis since the Great Depression, the Subprime Mortgage Crisis of 2008, which left major financial institutions bankrupt and the global credit system paralyzed to pump the heart and keep the financial system from collapsing, Bernanke decided to adopt an untextual monetary policy that no one had ever done before, by slicing the policy rate to 0% and initiating quantitative easing, or QE (Quantitative Easing), which directly printed money into the market for assets and debt. The infused dollar volume, coupled with the long-standing low interest rate, became a factor. The primary pressed for the U.S. dollar to depreciate and swing was low for years.

6.The Janet Yellen era (2014-2018)

Coming into office at a time when the economy was getting past its bottom, but the recovery was still fragile. Yellen's main challenge was not firefighting, but safely managing the "way down" from the extreme monetary policies of the previous era. She opted for a tool called Forward Guidance, or transparent communication of policy direction to the market, coupled with Normalization, with a gradual hike in policy rates as employment numbers grew stronger, as well as starting to suck money out of the system through a reduction in the balance sheet. As a result, the dollar index gradually flipped back to appreciate and re-established a solid new base.

7.The Jerome Powell era (2018-2026)

His term ended after leading the economy through one of the most volatile monsoons of the era, particularly the COVID-19 crisis, where he had to slice interest to 0% immediately ready to make Unlimited QE. But the side effects of the overflow of money, coupled with supply chain problems, led to the highest inflation crisis in 40 years, prompting Powell to suddenly modify his tools with the most aggressive and rapid rate hike in decades to 525 bps during 2022-2023 before maintaining a high level of interest and handing the stick to the next chairman. The behavior of the dollar in this era was severely volatile, rapidly strengthening interest before it began. Reduce the heat late in his term as the interest cycle ends and comes across a wave of resistance from the global tax wall policy.

8.Kevin Warsh era (2026-present)

Stepping in as the 17th Fed chairman in May 2026, in the midst of the U.S. inflation crisis that has accelerated again from the effects of the war in the Middle East and soaring oil prices, the Market Consensus sees Warsh as the real "Hawk," who is preparing to revolutionize the Fed's old approach, aiming to reduce the use of special tools like QE and focus on aggressive policies to quickly downsize the current balance sheet (Balance Sheet) by $6.7 trillion. The market predicts that he will reduce excessive communication and will turn to tools. " Interest rates "are at the core of economic control. For their impact on the money market, as soon as he passes Senate approval, bond and stock markets are volatile, as investors adjust their view that the Fed, under Warsh's leadership, will maintain a higher level of interest longer than expected (Higher for Longer) to subdue a new round of inflation, resulting in the dollar index returning a stronger trend to pick up with this strict policy direction.

💡 The past is a lesson. The future is a challenge.

The eight generations of Fed leadership history prove that there is no fixed formula for fighting a crisis. And today, the rise to Kevin Warsh's era in the midst of a new world equation of new inflation, high interest and trade wars, even more challenging investors to think about how long this "hawk line" will help the U.S. dollar secure the asset throne, and is your current portfolio flexible enough to deal with this new round of structural volatility? Because in the financial world, the fastest reader will always survive.

[BlackStocks] Understand money. Understand the future.

Disclaimer:: Not Investment Advice Investor Please study the information before making an investment decision.

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