How Kevin Warsh Inherited an Unwinnable Monetary War

Posted on September 11, 2026 by MN Gordon

“Alea iacta est”

– Julius Caesar

Out of Thin Air

When Julius Caesar marched his 13th Legion across the Rubicon River in 49 BC, he knew he was breaking a fundamental rule of the Roman Republic. But it was a calculated risk he chose to take. And, once crossed, there was no turning back.

In late 2008, Federal Reserve Chairman Ben Shalom Bernanke marched an unwitting American populace across a monetary Rubicon. Facing the vaporization of Lehman Brothers and a global banking system that had frosted over like the Alaskan tundra, Bernanke took the ultimate leap. In the process, he released a crude monetary experiment called quantitative easing that would alter the course of the American financial system forever.

Before Bernanke’s experiment, the central bank operated under a relatively straightforward rulebook. If the economy was running too hot, the Fed raised short term interest rates to cool things down. If a recession loomed, it cut short term rates to make borrowing easier. It was a mechanical, predictable system that left long-term market rates largely to the forces of supply and demand. Continue reading →

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Modest Reflections on Varying Tolerances to Extreme Pain

Posted on September 4, 2026 by MN Gordon

“We take our responsibility seriously, with humility and with resolve.”

– Federal Reserve Chairman Kevin Warsh, August 28, 2026

Same Old Price Fixing

Last week Fed Chairman Kevin Warsh delivered his debut alpha dog speech from Jackson Hole, Wyoming. It was titled “In Our Time,” and was billed as a broad blueprint for how he intends to govern. Namely, he wants a quieter Fed.

“We should not indulge a regime in which market participants are looking primarily to the Fed for their next trade.”

This is a nice sentiment. It sounds good coming out of Jackson Hole. But it doesn’t really change anything. Wash is merely smiling through his teeth, while talking out of his neck.

He says he wants to pull back the Fed’s verbal influence. Yet he wants to leave its mechanical influence completely intact. He wants a quiet central bank, but he still expects to sit in a room with twelve people every six weeks and fix the price of credit for a $28 trillion economy.

Philosophically, the core presumption remains unchanged. That a committee of central planners believes it can calculate the correct price for borrowing money better than the open market. Continue reading →

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Financial Graffiti

Posted on August 28, 2026 by MN Gordon

The financial reckoning continues to move towards its end.

The U.S. national debt has officially broken $40 trillion. This number is so massive it’s hard to comprehend. For example, if Washington paid down $1 billion of debt every single day, it would take nearly 110 years to settle the tab.

But Washington has proven it’s incapable of honestly tackling the debt problem. In fact, the debt clock is now ticking to the tune of roughly $7 billion added every 24 hours, with annual structural budget deficits heading toward $2 trillion.

For years, Congress could ignore the massive hole they were digging because record-low interest rates kept interest payments manageable. Now, as Treasury yields have increased, interest payments are consuming a massive part of the budget.

Rather than facing the problem head on, making difficult decisions, and cutting spending, America’s central planners are trying to override basic supply and demand. These efforts have triggered the return of the debasement trade that is pushing gold’s dollar price upwards. Continue reading →

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How to Profit When the Oil Market Splits

Posted on August 21, 2026 by MN Gordon

“Let the good work go on. We must ever remember we are refining oil for the poor man and he must have it cheap and good.”

– John D. Rockefeller

Hard Knocks

One of the more enticing things about financial markets is not that they’re predictable. Or that they’re not predictable. It’s that they’re almost predictable – or at least they appear they should be.

When the Strait of Hormuz was first closed following the ill-advised military strikes on Iran by the United States and Israel at the end of February, it was all so obvious. Oil prices would skyrocket.

With 20 percent of global petroleum liquids abruptly taken offline, the price of oil had nowhere to go but up. Simple minded speculators went all in on oil ETFs like the United States Brent Oil Fund (BNO). Some also bought call options and then counted their chickens before they hatched, purchasing first class tickets to Maui.

Those who were quick to act were able to buy shares of BNO on March 2, for $37. As of August 20, these shares were trading for $53 – up 43 percent. But after peaking on May 4, at $60, BNO is now down 11 percent. Continue reading →

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