Foreign Affairs

Iran War May Throw A Monkey Wrench Into Kevin Warsh’s Plan To Defeat Inflation

(Screenshot/CNBC)

The solution to inflation that Kevin Warsh suggested during his first appearance before Congress as Federal Reserve chairman may be a gamble.

Warsh — who previously called AI “the most disruptive moment in economic history in the U.S. and the world” during an April confirmation hearing — told the U.S. House Financial Services Committee during his testimony Tuesday that further investment in AI could serve as a deflationary force on the U.S. economy. “It seems inevitable that what is now called ‘AI investment’ will soon be called just ‘investment,'” he said. However, the Iran War’s disruption to the global supply chain has prevented around 5.2 cubic meters of helium from being sold each month, Data Center Magazine reported in March. Helium is essential for manufacturing the semiconductors data centers depend on.

The Fed did not immediately respond to the Daily Caller News Foundation’s request for comment.

“People are talking about putting 1.4GW for AI compute, but it just doesn’t exist anywhere in the US or Canada,” O’Leary told DCD.

AI spending may hit $5.3 trillion in fiscal years 2025-2030, Goldman Sachs projected on June 3. Goldman Sachs previously projected that companies will invest over $500 billion into the global artificial intelligence industry in 2026.

However, researchers at the Massachusetts Institute of Technology estimated that approximately 95% of AI pilot programs are scrapped, Forbes reported in August. Additionally, the abandonment rate for such programs rose from 17% to 42%, according to a May 2025 survey conducted by S&P Global.

On the bright side, inflation decreased 0.4% in June — the largest one-month drop in inflation since 2020, according to the Bureau of Labor and Statistics (BLS)’s June Consumer Price Index, which was released Tuesday. Despite this, Warsh cautioned the committee against declaring victory on inflation too soon.

“There might be some that look at this morning’s data and say, ‘Oh, mission accomplished, everything is swell.’ That is not my view,” Warsh told the committee regarding the BLS report.

In line with his call for regime change in the Fed, Warsh said he created five task forces. They aim to analyze the communications, technology, balance sheet, and economic data that the Fed utilizes.

Throughout his report, Warsh insisted that the Fed will stay independent of the White House — even if it draws ire from the president. President Donald Trump previously said that he wanted Warsh to be “totally independent,” AP News reported in May.

Warsh delivered the same report to the U.S. Senate Committee on Banking, Housing, and Urban Affairs on Wednesday.