Be kinde to folk. This changeth the whole habitat.
- Manlobbi
Personal Finance Topics / Macroeconomic Trends and Risks
No. of Recommendations: 3
Kevin Warsh is the Fed chair designee and thinks the Fed is out over its skis in some areas:
https://www.theepochtimes.com/business/kevin-warsh...Kevin Warsh Wants an Overhaul of the Fed—Here’s What That Could Look Like
Trump’s nominee said he wanted to remove ‘central bank fast food’ from the Federal Reserve menu.Let's see here:
In previous speeches, Warsh has identified four factors that could be overhauled: changing the Fed’s metrics, revising the policy of “data dependence,” pausing near-term forecasting, and abolishing forward guidance.
“It’s necessary to set aside some of the fast food that is part of the current practice of monetary policy,” Warsh said in an April 2025 International Monetary Fund speech.
“Central bank credibility is the coin that purchases American economic strength. In Washington, a central banker can ill-afford to be anything other than a straight-shooter.”Don't like the removal of forward guidance, but let's give it a chance:
Warsh said in October 2024 that the central bank has routinely shifted the goalposts for measuring inflation—from average inflation targeting to core inflation ex-housing—and how it conducts policy.
“They don’t seem to have a serious theory of inflation that is theoretical and empirical. It is not obvious that they acknowledge what their role is in prices,” Warsh told CNBC’s “Squawk Box.”
“I think in a world this dangerous, an economic policy where fiscal policy is irresponsible, the central bank needs to be very clear about its reaction function, be clear about its goals, and not look like it is lurching—that’s what put us in the mess we have.”There's a lot of truth here. No one who's tried to buy a house in the last 20 years can deny what all the years of easy money has done to the housing market.
A key criticism by Warsh is that QE tends to benefit the wealthy disproportionately and worsens income inequality by inflating asset prices—boosting valuations of stocks, bonds, and housing.
“We created a product not with bad intent. We created a product that might, may or may not turn out to be counterproductive,” Warsh said at a June 2015 Hutchins Center on Fiscal and Monetary Policy event.
As a result, an institution helmed by Warsh will likely lead to a more conservative use of the balance sheet, which could lead to complications in the financial markets that have turned to the Fed in times of emergency.Hmmm. Might be some dislocations caused here...
No. of Recommendations: 3
This is good:
Warsh may have signaled a potential return to pre-2000 times in suggesting that forward guidance “has little role to play in normal times.”
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“Moving markets with rolling Fed incantations is tempting, but unhelpful to the Fed’s deliberations, and ultimately, to its mission,” Warsh said last year.
“The central bank should find new comfort in working without applause and without the audience at the edge of its seats.”
No. of Recommendations: 3
Warsh may have signaled a potential return to pre-2000 times in suggesting that forward guidance “has little role to play in normal times.”
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“Moving markets with rolling Fed incantations is tempting, but unhelpful to the Fed’s deliberations, and ultimately, to its mission,” Warsh said last year.
It all sounds reasoned and well thought out.
But we all know why Walsh was chosen- to do exactly as Donald Trump tells him to do- and that is move interest rates down in Trump’s never ending quest to reduce his own borrowing costs, make his regime look good to his base by overheating the economy, and exerting absolute control over all areas of life in America.
With only a few minor adjustments, the above can serve as my response to just about every action that Trump takes.
No. of Recommendations: 0
so....what he is advocating is a totally opaque Fed? No guidance on their priorities or methods?
Steve
No. of Recommendations: 4
so....what he is advocating is a totally opaque Fed? No guidance on their priorities or methods?
This allows Donald Trump to exert control, guided by his latest intuitive flash of 4D chess, without having to worry about anyone saying….
but last month, you told us….!!!
No. of Recommendations: 4
This allows Donald Trump to exert control, guided by his latest intuitive flash of 4D chess, without having to worry about anyone saying….
So God and Savior Trump can front run public Fed announcements, and make lots and lots of money for himself.
Steve
No. of Recommendations: 4
So God and Savior Trump can front run public Fed announcements, and make lots and lots of money for himself.
He’s been front running the government for some time now. Being able to do it with the fed is the mother lode.
Not only for him, but for everyone in his circle of sycophants and toadies.
No. of Recommendations: 3
Hmmm. Might be some dislocations caused here...
I'm not familiar with the governance of the Fed. How much of that is under the direct control of the Chair, and how much of that is the decision of the Board of Governors collectively?
It was pretty expected that Powell would resign from the Fed when his term as Chair is up, but it's entirely possible that given everything that's gone on, he might choose to stay on as "just" a member of the Board of Governors until that term expires in 2028.
