Kevin Warsh's arrival at the Federal Reserve and his first meeting at the head of FOMC have reinforced a clear idea in the markets: monetary policy returns to the center of the system, and he does so with a more restrictive tone.To understand why that matters so much, it is important to return to the essentials. The Federal Reserve does not set the price of the dollar directly. Its role is deeper: managing the monetary policy of the world's most…
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Kevin Warsh's arrival at the Federal Reserve and his first meeting at the head of FOMC have reinforced a clear idea in the markets: monetary policy returns to the center of the system, and he does so with a more restrictive tone.To understand why that matters so much, it is important to return to the essentials. The Federal Reserve does not set the price of the dollar directly. Its role is deeper: managing the monetary policy of the world's most…