Let's talk about whether Kevin Warsh will be a Trump puppet at the Fed.... - Belle of the Ranch

Well, howdy there Internet people. It's Belle again. So, today we're going to talk about whether Kevin Warsh will be a Trump puppet at the Fed.

Okay. So, Trump sat down, had a taco, and thought about his life. The DOJ investigation into current Federal Reserve Chair Jerome Powell disappeared and a normal Inspector General investigation began. Well, the administration is pointing to that to say Trump totally didn't TACO it should be noted that Powell himself asked for an IG probe almost a year ago back in July.

In response, Senator Thom Tillis has dropped his hold on Trump's new nominee for the next Federal Reserve Chair. Tillis said, “I believe that there will not be any wrongdoing. Maybe we find a little stupid here in terms of somebody responsible for the project making a decision they shouldn't. Maybe. But it doesn't rise to a criminal prosecution. That was my problem to begin with because I feel like there were prosecutors in DC that thought this was going to be a lever to have Mr. Powell leave early.”

Okay. Well, despite the talk about Trump saying it's not over or bringing it back up, it's important to remember that Powell still has his incredibly funny card to play if they start to exert pressure again. There will be a link below.

So, that brings up the next question. Will Trump's new pick just be a Trumpian puppet at the Fed? Well, as we saw by Trump's attempts to force Powell out once you're in at the Fed, there isn't much they can do to you so Warsh has a lot of institutional walls protecting him from Trump's influence in large part due to Powell and Tillis actually standing their ground.

Trump wants interest rates cut and even if Warsh gets confirmed and does end up as chair of the Federal Open Market Committee, which is the committee over interest rates and not the same thing as Chair of the Fed. He's only one vote out of 12. I'm still not sure Trump actually understands how the committees work.

More importantly, Warsh is widely seen as an inflation hawk. Inflation ticking up the way it has been isn't something that will convince him to drop rates. The way he talks, he wants rates down, as do most people, but he wants some data to support cutting rates.

I'm not the only one that noticed his words and past positions don't match up with what Trump thinks is going to happen. The head of US economics at BOFA Securities put out a client note that advised, “Warsh's stated outlook is much more consistent with an extended hold than additional cuts.”

Can you imagine the temper tantrum that Trump is going to throw if he doesn't get rate cuts? It's completely possible that Warsh gets in there and just tries to do whatever Trump wants. But the only thing to suggest that is Trump's own words and Trump is not a source.

Based on what's currently available, I think the most likely outcome is that Warsh does what Powell did and tries to protect the country from Trump's bad decisions. We'll know more if Warsh is confirmed and after the first committee meeting.

Anyway, it's just a thought. Y'all have a good day.