New Fed Chair Kevin Warsh says the Fed has no tolerance for high inflation, except for 82% of the time since 1965 when it's been above 2%

The Fed has met its goal of keeping inflation below 2% in only eleven of the last sixty years, which I'm sure was just an accident.

 

Fed Chair Kevin Warsh, whose wealth is his wife's, peddles the myth that the Fed is in control

This country eats, drinks, and sleeps inflation in the post-war . . . at 3.4% since 1948.

It's the cover for the haves to rob the have-nots. The Fed's job is to keep it going, just at a lower level than the 4.4% of the last six years, while telling you that they work for you when they actually work for the banks and the corporations.

From 1871 to 1948 the inflation rate was 0.8%, for most of which time we had sound money . . . until they confiscated it in 1934.

The only true words below are "We don't know". 

 

 Warsh promises inflation will be a ‘thing of the past,’ cites benefits of AI investment boom

... "if we get policy right — and we will — the inflation surge of the last five years will be a thing of the past."

... "While monthly price fluctuations are inevitable — especially in an unsettled world — underlying inflation over longer time horizons is determined largely by monetary policy," he said. 

... "We don’t know the extent to which the economy will benefit from the AI buildout," he added. "Yet it seems inevitable that what is now called ‘AI investment’ will soon be called just ‘investment.’"

Warsh previously has said he expects an AI productivity boom will prove disinflationary — a premise challenged by some economists as well as his fellow Fed policymakers. ...                          

 

Gee, I hope it's not this disinflationary:

 

 

The homeownership rate soared to 68.8% in 2006 after nearly twenty years of Alan Greenspan at the Fed

 The rate when he began as Fed chairman was 64% in 1987, and again in 1990 and 1994, before taking off during the Clinton-Gingrich era.

Supporting the high homeownership rate was full time employment on an average annual basis north of 50% of population for twenty-three consecutive years 1986-2008. 

We call it The Lost World. 

 

Core pce inflation remained high but falling during Greenspan's first seven years, but stayed below the trend he helped to create for the remaining thirteen

PCEPILFE fell to 2.23% yoy in 1994 and as low as 1.27% by 1998 even as the Fed Funds Effective Rate (DFF) averaged 5.49% for four years 1995-1998.

Greenspan's observed "irrational exuberance" in stocks certainly wasn't caused by low interest rate policy. By today's standards his policy was hawkish even as the market formed a bubble.

His career core pce inflation performance averaged 2.46% yoy.  

It is difficult to imagine today's world being at all patient enough to tolerate Alan Greenspan, especially the Alan Greenspan of 1987-1990 when DFF averaged 7.89%.

He would be run out of town like Ben Bernanke and Jerome Powell, neither of whom arguably were in office long enough to really judge fairly by comparison with Alan Greenspan and both of whom were shabbily treated by Obama and Trump.

 

 

The Maestro is dead, long live The Maestro

 

 Greenspan had the main ideas right:

Low inflation over full employment, because inflation is the worst tax on the people;

And broad property ownership as the foundation supporting the American economy and securing the consent of the governed.

During his nearly 20-year tenure, the Federal Funds Effective Rate averaged 4.87%. 

This is a really good look at Greenspan's career from Marty Steinberg at CNBC. It is one of the best reads I've had at CNBC in a long time. 

 Alan Greenspan, former chairman of the Fed, dies at age 100

... Throughout, he focused on fighting inflation over promoting full employment. His supporters say he presided over the longest economic expansion in U.S. history, but critics said Greenspan’s low interest rate policies set the stage for the housing bubble that burst into the Great Recession a year after his successor, Ben Bernanke, took the Fed helm.

... in his best-selling memoir “The Age of Turbulence,” he defended the low-rate policy, which encouraged people to buy homes: “I believed then, as now, that the benefits of broadened homeownership are worth the risk. Protection of property rights, so critical to a market economy, requires a critical mass of owners to sustain political support.” ... 

Markets to Warsh: Welcome to the party, pal

Do you think the markets care much about the Fed lol?

Ten articles on the front page right now at CNBC:

 

Warsh experiences worst ‘Fed day’ S&P 500 performance for a new chair since 1994 

Chairman Warsh abstains from giving rate forecast as several members signal a hike in 2026

2-year Treasury yield rockets higher as many Fed officials signal possible hike this year

Chairman Warsh drastically alters Fed rate statement. Here’s what’s changed

Fed holds interest rates steady: Here’s what that means for your borrowing and savings rates

Fed holds rates steady, pares down statement to remove cutting bias

Fed meeting recap: Warsh announces task forces to overhaul major Federal Reserve operations

Jeffrey Gundlach says Fed’s Warsh is not going to be the ‘easy money’ chairman many hoped for 

The market didn’t like what it heard from the Fed and its new leader Kevin Warsh

Five big takeaways from Kevin Warsh’s first meeting as Fed chairman

 

 

Everything sold off today

Stocks were down across the board, with the NASD 100 notably down 4.77%. The equal weight S&P 500 is down 0.52% month to date.

The Tech sector was down the most on the day, 5.78%.

The Consumer Staples sector was up the most on the day, 1.64%, which looks defensive against a possible coming recession. The Utilities sector was up half that.

The U.S. 10Y yield rose to 4.55%, and the 20Y and 30Y yields rose above 5.00. YTD return for VUSUX is now down 0.85%.

Oil retreated 3%.

Metals were down across the board, silver down over 8%.

Crypto was down across the board, too, with Bitcoin falling below $60k.

But DXY climbed! +0.658 to 100.071.

The theory is investors are upset that today's "strong" jobs numbers (the 70k hospitality hires is probably World Cup related, a one off, so forget that) indicate easy money from the Fed is now absolutely out of the question, and maybe even a rate increase is coming because the economy is running too hot, which is silly with 1Q GDP at 1.6% annualized. CNBC called that "solid" lol.

Jokers say everyone's just raising cash to buy overpriced SpaceX in its IPO next week.

Investors are taking profits ahead of SpaceX IPO, says Capital Wealth’s Kevin Simpson

SpaceX is worth less than half of its $1.75 trillion IPO target, Morningstar says

Former Fed Chair Jerome Powell accepts Profile in Courage Award

 Fed’s Powell warns Trump’s political ‘stress test’ will wreck public trust in central bank

... “If any administration finds a ​way to remove Fed officials ​over policy differences, then ⁠future administrations will do so as well,” Powell said while accepting the John F. Kennedy Profile in Courage Award. “The public would lose faith that the central bank will make decisions based only on what’s best for all Americans.” ... 

Powell is still Fed chair

 

Kevin Warsh wasn't sworn in as Fed chair on Friday and Powell is still in charge because Warsh has so many assets to unload to meet ethics requirements he couldn't get 'em all done on time lol

 So the bond vigilantes threw a party and sold off, spiking yields across the board 1.44% on the day, throwing down the gauntlet at Warsh, daring him to cut in the face of all the chaos Trump is causing.

The 20-year soared to 5.14%.

Yields are up 2.8% in the aggregate since the beginning of the month.

6% inflation is knocking on the door.

Inflation rate projected to hit 6% in the second quarter, top economic forecasters say

 

 

 

Kevin Warsh confirmed as Fed chair 54-45 by the US Senate, takes over from Powell on Friday

 Kevin Warsh wins Senate confirmation as the next Federal Reserve chair

... In the most divisive vote ever for a Fed chair, Warsh, 56, won confirmation to take over for Jerome Powell, who has served in the top leadership position since 2018 and whose term will expire Friday.

The Senate voted 54-45 to confirm Warsh, ending a months long saga that began in the summer of 2025 and included an extensive search for Powell’s successor. The vote was almost completely along party lines, with only Pennsylvania Democrat Sen. John Fetterman crossing over to vote for Warsh, who becomes the 11th Fed chair of the modern banking era.

Powell will stay on at the Fed as he has two years left in his term as governor. ... 

The Jerome Powell Fed Chair era draws to a close effective May 15, but Powell could remain a Fed governor until his term ends in January 2028

Fed holds rates steady but with highest level of dissent since 1992

... In what may have been Chair Jerome Powell’s final meeting at the helm, the rate-setting Federal Open Market Committee voted to hold the benchmark funds rate in a range between 3.5%-3.75%. Markets had been pricing in a 100% chance of no change. ...

It wasn't much of a dissent when the vote to hold rates steady was 11-1. Three of the eleven simply disagreed that right now the Fed should say as it does in the official statement that it remains open to new information which might suggest additional rate cuts in the future, when in their opinion that sends the wrong signal when inflation remains as elevated as it is at present.

Jerome Powell says he will continue to serve as a Fed governor, calls Trump criticism ‘unprecedented’  

... “My decisions on these matters will continue to be guided entirely by what I believe is in the best interest of the institution and the people we serve after my term as chair ends on May 15, and will continue to serve as a governor for a period of time to be determined,” he added. ...

Stock investors fared very well under Powell. Bond investors, not so much 

...  the S&P 500 rallied 14.7% annually under Powell, the third best performance for Fed chairs going back to 1970, Bespoke Investment Group found. ...

“He believed in easy money. He voted for all the QEs. He voted for zero interest rates,” Boockvar said. “It’s only when inflation mugged him ... that he became more hawkish ... .”

But the problem with accommodative monetary policy is, “Easy money gets investors drunk on things, and puts beer goggles on them,” Boockvar said. ’Sometimes it ends up OK, but other times it ends up in rampant inflation.”

 ... The Bloomberg US Aggregate Bond Index that aims to track all U.S. investment-grade debt returned just under 2% annually during Powell’s tenure, far below the average of 6.5% since the 1970s, according to Bespoke. ... 

Analysis: The Warsh revolution is coming. Powell won’t stand in the way. 

... the only major challenge for Warsh, as far as Powell is concerned, will be driving consensus within the Fed for where to set interest rates. Wednesday’s dissents suggest that won’t be easy. But Powell, whom Warsh has described as a failed chair who chose inflation, went out of his way to say Warsh is up to the task.

The chair’s job is to “create consensus” among the Fed’s voters and to “be inside their thinking,” Powell said.

Warsh “has the capabilities, skills to be very good at that,” Powell said.

 

If Warsh cuts interest rates in this environment, he'll be choosing inflation, too.

Inflation is very painful for the people, but for a government which absolutely refuses to get its fiscal house in order Powell's choice of inflation was the only medicine available to him, faced as he was with a national debt snowballing toward $40 trillion and the moon after that, and desperately in need of devaluation. 

As an inflation fighter, Jerome Powell turned out to be twice as bad as Arthur Burns

Under Powell core pce inflation exceeded 10Y yield for 4 consecutive years (2020-2023).

Under Burns it was for only 2 (1974-1975).

The Bernank was Fed chair in 2012 when inflation only just barely outran 10Y yield.

 

When the going gets tough, cave lol

 DOJ drops criminal probe of Fed Chair Powell, removes hurdle for Warsh confirmation

Mad King Ludwig can't get Kevin Warsh confirmed on time, throws another tantrum at Powell

 Powell staying on as acting chair until Trump can get his shit together would be customary procedure, not an anomaly.

 Trump threatens to fire Powell if Fed chair doesn’t leave office on his own

 Fed nominee Warsh filings detail vast wealth, far exceeding past chairs

 ... Warsh’s filings detail roughly 1,800 individual assets. Many individual items are identified as being subject to “pre-existing confidentiality obligations” that prevent him from specifying the underlying assets.

Warsh in the filings pledges to divest these assets if confirmed. ...

Bond yields through March 2026 have ignored Fed interest rate cuts which commenced in September 2024

 

Fed chair Jerome Powell didn't say the oil shock will be transitory, but he might as well have

 

 ... Powell said raising rates now could have negative effects on the economy later. He noted that Fed rate moves have a lagged impact on the economy, so tightening here wouldn’t help the inflationary impact of the Iran war.

“By the time the effects of a tightening in monetary policy take effect, the oil price shock is probably long gone, and you’re weighing on the economy at a time when it’s not appropriate. So the tendency is to look through any kind of a supply shock,” he added. ...

More.

Mistaken yet again.

We have permanently higher prices across the board as a result of the COVID shock. 

Reality has a funny way of jamming seemingly interminable rosy expectations

 Markets now see the Fed’s next move as a potential rate hike as inflation fears mount

... Traders in the futures market pushed the probability of a rate increase by the end of 2026 to 52% on Friday morning, the first time it has crossed the 50% threshold, according to the CME Group FedWatch tool. ... 

 

Larry Kudlow has really devolved, falsely calling Fed Chair Powell the Fed’s first forever board member

Larry knows that's a lie.

He knows it's Senator Thom Tillis who is stopping Kevin Warsh from getting a Fed chair confirmation hearing, not Jerome Powell.

But he never mentions that.

Truly disgraceful.

I guess Larry wants no one in charge at the Fed when Powell's term expires on May 15. 

Meanwhile Alan Greenspan remained as Fed chair in 1996 pending confirmation for his next term, which took almost four months, and Marriner Eccles stayed on as Fed chair for over two months after his term expired, and on the board of governors after that from 1948-1951. G. William Miller stayed on as Fed chair for over a month in 1978 after his term expired, and Chair Powell himself had to wait over three months in 2022 for confirmation to his second term.

But Larry doesn't mention any of that either, because he's a liar.  

Powell is doing his duty while Mad King Ludwig tries to wreck everything he touches, and Larry Kudlow has become nothing but Trump's partisan hack.

The New York Sun and Real Clear Politics should be ashamed of themselves for circulating this trash.  

Powell's Bizarre Plan To Stay On at the Fed

Larry Kudlow, New York Sun

Core pce inflation, the Fed's key inflation indicator, went to 2.996% year over year in December 2025, the highest reading since April 2024, 2025 comes in at 2.8%, 65% elevated above the 2000-2020 average of 1.7%

Does anyone in leadership really care about what this persistent high inflation is doing to America?