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Kevin Warsh's proposal for a new Fed-Treasury Accord, as the incoming Fed Chair, aims to coordinate debt issuance and limit the Fed's long-l term bond holdings, echoing the 1951 Accord that restored Fed independence after WWII yield caps fueled inflation.
Historical data from WWII shows U.S. debt rose from $48 billion to $260 billion in six years under yield controls, keeping short-term rates at 0.375% and long term at 2.5%, but post war inflation hit 19% in 1947 as real rates turned negative.
While potentially lowering yields to support equities and crypto via capital flight from bonds, precedents like Japan's 2016-2024 program where the BOJ owned over 50% of bonds resulted in yen depreciation and liquidity strains, signaling exit challenges.