#Markets fell sharply overnight, but appeared to stabilize early Friday on the announcement. Precious metals, which had been on a tear in recent months, remain sharply lower Friday. Gold fell almost 5% & silver tumbled 13%. The dollar, which slumped over the past year, regained some ground.
In #Congress, initial reaction broke along party lines. Sen. Tim Scott, a South Carolina Republican & chair of the banking committee that will consider Warsh’s nomination, praised #Trump’s choice.
Interesting choice by Trump, considering that Warsh is more concerned about inflation, and using higher interest rates to control that. As you pointed out from the article, Warsh was completely wrong about how to handle the Great Recession. Warsh would have to do a complete turnaround to be Trump’s stooge. Really dreading Powell’s departure.
“I have known Kevin for a long period of time, & have no doubt that he will go down as one of the GREAT Fed Chairmen, maybe the best,” #Trump posted on his Truth Social site. “On top of everything else, he is ‘central casting,’ & he will never let you down.”
The appointment, which requires #Senate confirmation, is a return trip for Warsh, 55, who was a member of the Fed’s board 2006–2011. He was the youngest governor in history when he was appointed at age 35.
Warsh is currently a fellow at the right-leaning Hoover Institution & a lecturer at the Stanford Graduate School of Business.
In some ways, Warsh is an unlikely choice for #Trump because he has long been a hawk in #FederalReserve parlance, or someone who typically supports higher #InterestRates to control #inflation. Trump, by contrast, has said the Fed’s key rate should be as low as 1%, far below its current level of about 3.6%, a stance few economists endorse.
During his time as governor, Warsh objected to some of the low-interest rate policies that the #FederalReserve pursued during & after the 2008-09 Great Recession. He also often expressed concern at that time that #inflation would soon accelerate, even though it remained at rock-bottom levels for many years after that #recession ended.
More recently, however, in speeches & opinion columns, Warsh has said he supports lower rates.
#Markets fell sharply overnight, but appeared to stabilize early Friday on the announcement. Precious metals, which had been on a tear in recent months, remain sharply lower Friday. Gold fell almost 5% & silver tumbled 13%. The dollar, which slumped over the past year, regained some ground.
In #Congress, initial reaction broke along party lines. Sen. Tim Scott, a South Carolina Republican & chair of the banking committee that will consider Warsh’s nomination, praised #Trump’s choice.
“Federal Reserve independence remains paramount, and I am confident Kevin will work to instill confidence and credibility in the Fed’s monetary policy,” Scott said.
Democratic Sen. #ElizabethWarren of Massachusetts, the highest-ranking Democrat on the committee, said that “ #KevinWarsh — who cared more about helping #WallStreet after the 2008 crash than millions of unemployed Americans — has apparently passed the loyalty test.”
Warsh’s appointment could be a major step toward #Trump asserting more control over the #FederalReserve, one of the few remaining #independent federal agencies. While all presidents influence Fed policy through appointments, Trump’s rhetorical attacks on the #CentralBank have raised concerns about its status as an independent institution.
