Kevin Warsh nominated as Fed Chair

Investment Analysis Clubs Macro Economic Trends and Risks
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President Trump has nominated Kevin Warsh as Fed Chair.

Mr. Warsh has had a long, distinguished career. He is a lawyer rather than a Ph.D. economist.

https://www.wsj.com/economy/central-banking/kevin-warsh-a-fed-critic-is-now-poised-to-lead-it-7f447414?mod=WSJ_home_mediumtopper_pos_2

Kevin Warsh’s Long Road to the Fed Chair

Trump’s pick to succeed Jerome Powell as Fed chair spent years positioning himself for the job

By Nick Timiraos, The Wall Street Journal, 1/30/2026

…
Warsh served for five years on the Fed’s board of governors, helping navigate the central bank’s response to the 2008-09 financial crisis. Since leaving 15 years ago, he has in essays, speeches and interviews highlighted how he thinks the institution has fallen short. …

Warsh has promised a clear rupture—a wholesale rethinking of the Fed’s asset holdings, policy framework, role in the economy, and relationship with the executive branch…

Warsh has put at the center of his candidacy a wholesale revamp of the Fed’s $6.6 trillion asset portfolio, which he has said is too large and should be part of a new accord with the Treasury Department that reduces the central bank’s footprint in money markets. …

In 2010, Warsh argued that by trying to push longer-term interest rates down, the Fed was allowing Congress and the White House to duck decisions he believed they needed to make to put the U.S. on a stronger economic footing. “We should put the burden on them,” Warsh told his colleagues during a tense moment at a November 2010 policy meeting where he privately argued against a bond-buying program being advocated by Bernanke. … [end quote]

https://www.wsj.com/opinion/kevin-warsh-federal-reserve-donald-trump-central-bank-d6a17f5f?mod=hp_opin_pos_1

…
This “institutional drift,” as he put it, has caused the Fed to lose the plot on its essential mandate, which is price stability. The Fed has also wandered into fiscal policy with its bond-buying that has underwritten excessive federal spending and asset purchases that contributed to the misallocation of capital. (See the boom in housing prices.) …

Mr. Warsh will steer the Fed away from all that. He will also aim to reduce the Fed’s balance sheet that has ballooned into the trillions of dollars from merely some $800 billion when Mr. Warsh first joined the Fed. He has said fiscal policy is the job of Treasury and Congress, while the Fed should stick to money. … [end quote]

If Mr. Warsh stands by his clear opinions (regardless of pressure from the White House) he will not support fed funds rate cuts if the economy is strong and inflation is persistent.

Even more important, Mr. Warsh has been against the Fed suppressing long-term interest rates by buying bonds with fiat money. (Quantitative Easing.) He will support the roll-off of the Fed’s bloated book of bonds.

This is extremely important since bond investors will read this as a Macroeconomic trend toward higher long-term interest rates. Stock investors will, too – and higher interest rates will lead to lower stock prices.

Wendy

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Warsh’s intention to manage Fed in such a way as to…let’s call it institutionally insist that Congress stop its descent into social media drooldom and instead do its crux job of achieving good fiscal management while placating voters… and if you think that will happen smoothly you have floated off into PollyAnna land. The idea warms the most simpleton parts of my Constitutionalist heart, but scares the living heck out of both my politically experienced and investment oriented mind.

The upcoming midterms will likely be extremely contested, flooded with tons of “constitutionally protected free speech” money, and the most pivotal of my lifetime.

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Will the real Kevin Warsh please stand up, please stand up!

https://global.morningstar.com/en-nd/economy/what-kevin-warsh-fed-chair-could-mean-interest-rates

Once known as a “hawk”—an advocate of tighter Fed policy—Warsh has aligned with Trump’s views in recent months, supporting lower interest rates and telling Fox News that Trump was right to be frustrated with Powell’s handling of policy. “

So which Warsh are we going to get, the monetary hawk of times of yore or a sycophant who will do what he can to lower rates regardless?

Of course, shrinking the balance sheet will have the opposite reaction of lower the fed funds rate so it possible to let that balance sheet rolloff while lower rates. Sure not going to help with mortgages though in doing so.

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I think Slim Shady’s song lyrics are prescient! Bastardized by yours truly…

“T’s bum is on his lips, T’s bum is on his lips
If we’re unlucky, he might give it a little kiss
And that’s the future that we deliver to little kids”

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He is a complicated choice despite his apparent qualifications.

“Warsh’s father-in-law is Ronald Lauder, heir to the Estee Lauder cosmetics fortune and a longtime donor and confidant of Trump’s.” (Lauder is the same billionaire who helped persuade Trump to try to acquire Greenland.)

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I would trust Krugman far more than Murdoch’s WSJ. He seems to be a political hack. As is SOP these days.

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That’s a darn good question!

Sycophant long enough to get nominated and confirmed.

But once Warsh is confirmed he’s in like Flynn and can do whatever he wants.

As long as he ignores the screams and insults.

Will he? Have superhuman confidence and strength like Jerome Powell?

Only time will tell.
Wendy

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I think Trump came to his cross roads with the Pretti murder. Trump has been very angry. His first instinct was to put the military into the cities. Perhaps a precursor to defaulting and batting down riots later.

He is choosing stability as he might be defaulting. Warsh is one of the best candidates for FED chair.

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Thank you for the Krugman link. The WSJ piece had me scratch my head - what an out-of-character nomination!!

Guess not:

As I write this, many media reports are describing Warsh as a monetary hawk. That’s a category error. Warsh is a political animal. He calls for tight money and opposes any attempt to boost the economy when Democrats hold the White House . Like all Trumpers, he has been all for lower interest rates since November 2024.

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It’s not going to happen at all. Warsh had to promise to cut interest rates by 1% to 2% in order to be nominated for the job.

I expect the first 1% cut to be within 4 weeks of taking office.

intecst

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Yep. Warsh is an experienced brown-noser from the George W. Bush administration who will do as he’s told.

intercst

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For now, precious metals appear to buy the ‚inflation hawk‘ narrative.

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I did not even research Warsh. I just assumed he was a corrupt sycophant solely based upon who was nominating him. Based on what I have seen here, I am going to assume an increasingly subservient Fed, a declining dollar, and continue my sell America policy that I started last spring. But that is not advice because I don’t know enough to advise anybody but me.

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For over a week now the melters have been pulling back. At first they stopped pay until thirty days later for delivery. Now they simply won’t take the metals. The melters are overrun with gold and silver.

Warsh is not a sycophant. We are going to need him. He is one of the biggest overacheivers I have ever seen. He must consume textbooks like cotton candy.

We have chosen a path back in November 2024 where you lose your nest egg, but you knew that. It will be good for the nation. Personally raising taxes on the wealthy would have been much better, but we made a choice. People who do not know much made the choice.

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FWIW, today’s Barron’s:

Warsh Is a Sharp Critic of Fed Chair Powell. Trump Could Steer the Economy.

Kevin Warsh is President Donald Trump’s choice to lead the Federal Reserve. But the stamp the nominee will put on the Fed has been decades in the making.

Warsh, 55, a former Fed governor, has promised “regime change” at the central bank. That includes cutting interest rates, but will also mean distancing the Fed from current Chair Jerome Powell’s “data-driven” approach to rate decisions.

The nominee has made clear he thinks the Powell Fed—by being too focused on the minutiae of outdated economic data—hasn’t recognized that government spending and the amount of money in circulation are the primary determiners of inflation.

Warsh has said the Powell Fed “has failed” and lost the faith of the markets. The chair not only needs to get rates right but also to “look like you know what you’re doing,” Warsh told Barron’s in a sit-down a few months ago.

Trump clearly finds that quality in Warsh, who is from “central casting,” the president said on Friday.

https://www.barrons.com/articles/kevin-warsh-fed-chair-trump-choice-fa721ae0?mod=hp_LEDE_C_1
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Can the Fed chair alone cut the rate? Will the majority of the Fed committee follow his lead?

Pete

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Will there be more trumped-up charges against uncooperative board members?

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That failed something like 8 to 1 with the Supremes.

We differ over the value that Barron’s should have. It is a hyped up sales sheet. Warsh and the gang go off, lowering rates before it is due, and inflation will cripple the economy. All of these arguments can take months to years to make. It is not ripping the cord while parachuting.

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Even if the real guy stands up.. no one is going to trust him. In Oct 2025, Kevin Warsh was arguing that Fed needs to shrink its balance sheet and bring the rates down… You can do one of them not both together… I am sure he knows that…

The problem is you can say whatever you have to say to get the job, but in the process if you lose your credibility, you may get the job, but you cannot effectively function.

I would not be surprised if 10 year goes above 5%..

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No. But with the Warsh appointment I believe there are enough Trump nominees on the 12 person FOMC to form a majority.

intercst

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