Polymarket data shows that the probability of betting on Trump loyalists pushing Walsh to become the new chairman of the Federal Reserve has officially surpassed Hassett—— This may also be one of the hidden reasons why the market has been falling continuously in the past two days. Walsh represents both monetary conservatives and political boundary advocates: He criticized the Federal Reserve for too much QE and deviating from its functions; He advocates for a return to the independence of the Federal Reserve and not to blame the finances; He believes that 'inflation is created by the central bank itself, not an external excuse'. This means that if Walsh takes office, the Federal Reserve may no longer act as a fiscal ATM, but instead return to its traditional role as a contractionary. ⚠️ Walsh's policy proposition is to promote a combination of interest rate cuts and balance sheet reduction, which is an unconventional and highly uncertain policy combination. It sounds like the 2.0 version of Powell's' left-right battle ', and the logic goes like this—— The interest rate cut is aimed at reducing the cost of short-term financing and supporting enterprises and the economy; The purpose of shrinking the balance sheet is to clean up the problem of too much water in the financial system and curb the asset foam and regulatory arbitrage; The prerequisite for simultaneous promotion is to thoroughly reform the regulatory framework to reduce banks' reliance on reserve requirements. That is to say, he hopes to exchange regulatory measures for monetary policy space in the financial system. But in practical operation, the difficulty is extremely high, which also means that the market may face huge uncertainty in the short term. So from a financial perspective, if Walsh takes office, he will not easily return to the old QE path, which may be a suppressive signal for current asset prices—— US stocks: interest rates may drop a little, but liquidity is gone, and the valuation of foam assets cannot sustain. Bitcoin/Gold: Without the Federal Reserve's "gate opening" as a source of liquidity, the logic of a bull market needs to be questioned. US Treasury: Short term long term short term. If we persist in reducing our balance sheet, the pressure on US Treasury supply and demand will intensify, and the downward space for interest rates will be limited. I now feel that Trump is also a god! Are you playing some script? Hassett is suitable for pre selection, blowing bubbles to solicit votes; Walsh may be suitable for post selection: calming the market and repairing credit? Can't you really understand why Wang didn't park the smoke bomb!