What Can Warsh Do ?

Let’s skip the complex math, the sacred economic texts, and the chanting about repo facilities. This is basic arithmetic. It doesn’t care who the Fed Chair is.

The U.S. economy is roughly a $30 trillion machine carrying about $38 trillion in debt. That debt grows by close to $2 trillion every year, automatically. Interest payments are now approaching $1 trillion annually and compounding at 15–20 percent a year. That’s impressive growth—just not the kind anyone should be celebrating.

At this point, asking what Kevin Warsh will do is like asking which button the elevator will press after the cables have snapped.

The math problem is painfully simple. The U.S. government spends about $7 trillion a year and collects roughly $5 trillion in taxes. This isn’t politics; it’s subtraction. The idea of “paying down the debt” belongs in the same museum as the gold standard and balanced budgets.

To merely stop the debt-to-GDP ratio from getting worse, the United States would need around 8 percent nominal GDP growth every year. For an economy of this size and complexity, that implies something like 5 percent inflation and 2 to 3 percent real growth—and that’s on a good day. To actually reduce the debt burden, the numbers get uglier. You need double-digit nominal growth, which means inflation north of 7 percent alongside positive real growth. At that point, the Fed’s 2 percent inflation target stops being a policy goal and becomes an aspiration.

So what will Warsh do?

Here’s the uncomfortable truth: Warsh doesn’t decide. Arithmetic does. He’s just the narrator, and there are only two possible stories to tell.

In the first story, the Fed fights inflation. Rates rise, inflation comes down, and economists applaud. Then reality intrudes. Interest costs explode, economic growth slows, markets fall, and tax revenues collapse—income taxes, capital gains, stock options, all evaporate. The deficit widens far beyond today’s already grotesque $2 trillion annual increase. Bond yields spike. The dollar wobbles. At that point, the Fed faces a binary choice: print money or default. Default is politically impossible. Printing is patriotic. The dollar dies.

In the second story, the Fed fights the debt. Rates come down and inflation takes off. Eggs begin to cost more than gasoline. Wages chase prices. Voters scream. But inflation at 7 to 8 percent performs the only remaining trick in the playbook: nominal GDP surges into double digits, and the debt suddenly looks manageable—at least on paper. Meanwhile, the dollar quietly slips out the back door. And dies.

Two paths. Same ending.

So no, the real question isn’t what Warsh wants to do. The real question is whether the dollar dies by high interest rates or by inflation. This isn’t policy; it’s choreography. The outcome is already locked in. The only suspense left is how loudly everyone pretends to be surprised.

Which brings us to India—and to you.

Warsh’s fate is sealed. India’s, and yours, is not. There’s no point debating what the RBI or policymakers should have done when the freight train was still in the distance. You should have heard it coming. Now you can see it, and it’s close. So let’s talk about tomorrow.

The survival formula is brutally simple: run, and run fast. Strengthen your balance sheet as quickly as possible. Own assets that effectively short the dollar—the larger your exposure, the better. Watch what China is doing as it buys an extra million barrels of oil a day for its strategic reserves. You may not have storage tanks, but you can position yourself in commodities or equities that benefit from a weakening dollar.

The bottom line is unavoidable. Dollar decline is inevitable. The only question is how fast it happens—and whether you get out in front of it.

Act accordingly.