MacroVoices #544 Viktor Shvets: How Markets Survive Disruption

**Viktor Shvets** (0:00)
We're living in a de-inflationary world.
I think Kevin Worf and the six Scott Bassens are absolutely correct. The de-inflation is a dominant, longer term trend.

**Erik Townsend** (0:13)
That was Viktor Shvets. I'm Erik Townsend, and this is Macro Voices, the free weekly podcast targeting professional finance and sophisticated private investors. Episode 544 was produced August 6th, 2026
In this episode, Viktor Shvets and I will discuss everything from Hormuz to inflation signals to precious metals to the K-shaped economy.

**Patrick Ceresna** (0:36)
And I'm Patrick Ceresna. Let's dive straight into this interview.

**Erik Townsend** (0:40)
Viktor, it's great to get you back on the show. It's been too long, almost a couple of years, I think. The last time I had you on was in 2024 My question to you then was whether central banks have become too political.
Now, since then, the president has installed his own personal Fed chair. So, I think we got the answer to that question. But I still want to come back to it and get your perspective. From a 2026 perspective, how do you assess the new Fed, I'll call it, the Fed under Warsh's leadership? And I would go so far as to say that it's really the Fed under Warsh's leadership with maybe Besant tag-teaming a little bit and participating in some of that policy setting.

**Viktor Shvets** (1:21)
You're absolutely right, Erik, and it's great to be on your show. I think the first thing one has to recognize is that compared to 2024, there has been a dramatic shift in the way US Supreme Court is thinking of or is basically laying the law on a very simple concept of executive responsibility. In other words, back in 2024, there was an argument that US Constitution basically best all the executive power in the president, and therefore 100 years of evolution of the United States, whereby there was independent bureaucracy, independent institutions, all of that is unconstitutional. So in 2024, there was a question mark whether that is going to transpire. In 2026, that question mark is gone. Effectively, US Supreme Court emasculated pretty much all federal institutions, but they did make an exception for the Federal Reserve.
And it was not intellectually systematic. It was not intellectually rigorous, because there is really no argument why Federal Reserve should be independent, but Security and Exchange Commission or EPA or many others should not be. So you can't justify it intellectually. But what did happen is that US Supreme Court did carve out a niche for Federal Reserve. That basically means that Federal Reserve remains the only independent institution in the United States. Now, the second point is, of course, your Federal Reserve does not exist in a vacuum. It is part of society. It is part of the legal framework. And so the question is, extend to which it is being politicized. My view and the way I look at Kevin Warsh, he's not an inflationary hawk or a dog. He is really a politician. Now, that basically means that whatever he discusses have to be interpreted very carefully. For example, many things he wants to do are actually things that most people will support.
The only problem is that they're not viable and not realistic. A classic example is to reduce the degree of communication. Now, it's a laudable cause, but nevertheless what it means is a higher volatility and emergence of shadow chairs that are still going to drive conversation. The less you communicate, the more other people will communicate. The other thing he was highlighting is that it will be good idea to return risk to the market. Again, I think it's a very laudable task, but it cannot be done. There are other propositions such as reducing and altering the shape and the footprint of Federal Reserve. Again, a laudable task, but it cannot be done. So, to me, a lot of the sayings that Kevin Warsh is discussing, very few people will disagree and ultimately it might not be a better idea to do, but none of them, as I said, is relevant. If you wanted to debate the role of the monetary policy, the role of Federal Reserve, the role of financialization, we should have done this debate back in 80s and 90s. Today, that trend left the station long ago. So, the way I look at Federal Reserve, is it still independent? Yes, US Supreme Court makes sure it is. Is it politicized? To some extent, all institutions are politicized.
Does Kevin Warsh have different ideas? The answer is yes. But as I said a second ago, I think a lot of those ideas are not very practical.
I think what's going to happen over time is that they will fail the test of time. Now, the next point after that is to say, if you look at the Federal Reserve, does a chair have a dominant voice? It depends on the chair. Certainly, Greenspan was incredibly dominant. You find Bernanke was not dominant, but he did have a degree of respect and following within the Federal Reserve.