The nomination of Kevin Warsh to chair the Federal Reserve has prompted concerns from friends and foes of President Trump’s economic agenda.
The enemies of the Trump administration have been quick to build a kind of preemptive conspiracy theory in which Warsh has been appointed simply to carry out the Trump agenda. Most of this can be dismissed as just the latest iteration of Trump Derangement Syndrome. Instead of Russia, Russia, Russia it’s now teeth gnashing about central bank independence.
Some friends of the president’s agenda are also worried about the Warsh nomination, concerned he may be too conventional a pick for such a transformative president. Neil Dutta of Renaissance Macro captured this well in a recent podcast, calling Warsh the “antithesis of the populist movement that swept the president into office.” And certainly, it is a bit jarring to see the nomination garner the endorsement of former Fed Chairman Ben “QE” Bernanke and China’s Canadian Prime Minister Mark Carney.
In our view, analysts categorizing Warsh as either a “hawk” or a “dove” and then predicting how this will play out under President Trump are likely misunderstanding Warsh’s actual record and how it fits with sound monetary policy.
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