Everyone keeps asking: “When will Warsh cut rates?” I think that’s the wrong question. The question I care about much more is: How fast will the Warsh Fed eventually decide the U.S. economy can grow WITHOUT generating inflation? Because if AI materially changes that answer… everything else changes with it. Think about the old framework: Economy runs too hot → labor gets too tight → wages accelerate → inflation rises → Fed tightens. Now introduce a genuine productivity boom. AI allows companies to produce substantially more with the same inputs. Supply expands faster. Potential growth rises. Suddenly strong economic growth does not necessarily create the same inflation pressure the old model predicted. That potentially gives the Fed more room to let the economy run. And eventually? Potentially more room for lower rates without abandoning inflation discipline. We’re NOT there today. Warsh was very clear in his Jackson Hole speech: inflation remains too high and price stability is the immediate priority. But he also devoted a meaningful part of that speech to the possibility that AI becomes an entirely new factor of production and materially changes productivity. That’s why I’m looking beyond the next Fed meeting. The big macro question for the next 6–12 months isn’t: “When cut?” It’s: “How much has AI changed what non-inflationary growth actually looks like?” Because if the answer is “a lot”… the Fed can remain serious about inflation while eventually arriving at a lower rate path. Those two things are not contradictory. And that’s the part I think a lot of people are missing about Warsh. He may be a genuine inflation hawk who also believes the old economic models underestimate how much faster America can grow in an AI-driven productivity boom. If he’s right, the destination could eventually be: Stronger growth. Higher productivity. Lower inflation sensitivity. And lower sustainable interest rates. Not because the Fed gave up. Because the economy changed. And if that happens? Risk assets are going to care. A lot.