Kevin Warsh and the Fed's balance sheet

At Radiolab, we love nothing more than nerding out about science, neuroscience, chemistry. But we do also like to get into other kinds of stories. Stories about policing or politics, country music, hockey, sex of bugs. Regardless of whether we're looking at science or not science, we bring a rigorous curiosity to get you the answers. And hopefully make you see the world anew. Radiolab, adventures on the edge of what we think we know. Wherever you get your podcasts. How long can this go on for? From Marketplace, I'm Sabri Beneshour. The U.S. has seized another oil tanker connected to Iranian oil. The U.S. blockade continues, but so does the fragile ceasefire. Meanwhile, CNBC is reporting Iran's foreign minister may be headed for Pakistan, and more talks with the U.S. may be coming. With us to talk about the latest economic developments out of the war and beyond is Christopher Lowe, chief economist at FHN Financial in New York. Good morning. Good morning, Sabree. How long would you say we have for this standoff to continue until, you know, the pressure on oil markets becomes too much and markets just have to respond? It's probably no more than another week or two before we start seeing significant impacts on the global economy. And that's the first step. You know, specifically, some of the airlines have warned that if the Straits of Hormuz are still closed at the end of next week, they're facing potential shortages of jet fuel in the UK and continental Europe. And that's sort of the first indication of, you know, really insurmountable problems for economies. Meta announced it's cutting 8,000 jobs, 10 percent of its workforce. Microsoft is offering buyouts to 7% of its workers. Nike also, not a tech company, also announcing some layoffs. Layoffs happen. It's part of the economy. Are we seeing the normal kind, or is this a sign of something? No, it's not normal. It is the sign of something, but it's not entirely clear what. To put it into perspective last year we barely had any job growth in the U but the economy grew GDP was up 2 in 2025 In 2026, the economy is still growing at about the same pace, but it's unprecedented. We've never seen it before where the economy is growing, but workforce is shrinking. And I think this is an indication of technology finally being used by companies to deal with a very tight labor market. And it's likely we're going to see more of the same as we go forward. Christopher Lowe, chief economist at FHN Financial in New York. Thank you, as always. Thank you, Sabree. The Federal Reserve has two jobs, promote job growth and control inflation. And to do that, it sets interest rates in the economy. It also, at times, buys bonds and securities to influence those markets. It's now sitting on a massive hoard of those assets. The man President Trump has nominated to chair the Fed next has big plans for that pile, known as the balance sheet. Marketplace's Nancy Marshall Genzer has that. The Federal Reserve is sitting on a roughly $6.5 trillion pile of treasuries, mortgage-backed securities and other assets. The central bank started beefing up its balance sheet during the 2008 financial crisis in an effort to stimulate the economy. The Fed did the same thing during the pandemic. At its confirmation hearing earlier this week, Kevin Warsh said it would be better to focus more on just cutting interest rates. Is interest rates affect a far broader cross-section of the economy? Interest rates get in the cracks. If we were to cut rates, then a broader number of people will benefit from it. John Canavan, lead market analyst at Oxford Economics, isn't so sure. He says the Fed's bond purchases also lower interest rates indirectly. Canavan says, like many other conservative economists, Warsh also thinks the Fed's giant balance sheet can distort markets. The philosophical argument for this is not incorrect. It's simply a different view. But Canavan says Warsh couldn't just start whittling down the Fed's balance sheet on his own. the Federal Open Market Committee would have to vote on it The question is Will the remaining members of the Federal Open Market Committee go along with him And that an open question Right now I wouldn say that he has the votes to do all of this Kahneman says, assuming he's eventually confirmed, Warsh would have a bully pulpit as Fed chair, which he could use to try to bring FOMC members on board. I'm Nancy Marshall-Genser for Marketplace. If you're a business leader, Intuit QuickBooks Payroll is an essential tool that completely integrates payroll, time tracking, HR, and your financials in a powerful all-in-one command center. No more juggling platforms or switching between vendors. All your data synced into one platform, offering clarity and confidence to make smarter decisions and focus on what matters. This summer, QuickBooks Payroll evolves to support the entire team lifecycle. HR, time, benefits, and payroll all working together in one connected system that fully integrates with your books. You'll be able to onboard employees in one seamless flow that feeds directly into payroll, configure automated HR workflows for things like promotions or offboarding, and track performance, time off, and benefits alongside payroll. Upgrade your workflow with QuickBooks Payroll today and get ready for the brand new tools coming soon. More at QuickBooks.com slash workforce. That's QuickBooks.com slash workforce. Despite the economic fears around AI and entry-level jobs, not everyone sees it as a menace. Some students are turning to it in hopes of standing out from the pack. In the final part of our series speaking to graduating college seniors across the country, we hear from Shreyas Bachiraju, an informatics student at the Arizona State University in Tempe. When I was a kid, I honestly wanted to become a doctor. I was really interested in medicine as a kid growing up. I kind of always had that sort of, I would say, passion for helping others. But I kind of found my way doing the same thing through tech. When I was in high school, I kind of started leaning into entrepreneurship. and then I sort of found my way to tech and entrepreneurship So I was really interested in how I could use like potentially use tech to benefit others I sort of really wanted to understand not only the technical aspect of AI and data science, but I also wanted to understand how humans interact with technology and kind of the cognitive aspect of that. I'm studying informatics. It's kind of like a mix of computer science, data science, and human-computer interaction. The benefit of really studying AI is that you kind of understand the power of AI and how you can apply to multiple different things. But definitely in the long run, I want to be an entrepreneur. I haven't really explored the job market yet because ever since I was a sophomore, I kind of knew that I wanted to go to grad school. I do know that the job market is pretty competitive right now, but people out there are still getting jobs with just a bachelor's degree. Some people are getting jobs without a degree and some people are even getting placed after their grad school. So it really depends on the applicant and their approach to the job market. That was Shreyas Bachiraju, graduating senior from the Arizona State University. You can hear more stories from graduating college seniors at marketplace.org. In New York, I'm Sabree Beneshore with the Marketplace Morning Report. From APM American Public Media. Learn all about oil and why the price of gas goes up and down. And we even meet Derek, an oil drill who knows a lot about the global economy. OPEC is a group of oil-producing countries that work together to decide how much oil they're going to drill and release for sale. They can drive the price down by releasing a lot of oil. Listen to Million Bazillion on your favorite podcast app.