Trump announced he loves inflation at 4.2%. Kevin Warsh, the new Fed Chair, gets to pretend this matters. The president just handed him permission to do absolutely nothing while prices eat through your grocery budget like termites through balsa wood.
Here's the setup. The Fed exists to fight inflation. That's the whole bit. They raise rates, they lower rates, they mumble about data dependency, and retail traders pretend the dots on their little chart mean something. But now the guy who appoints the Fed Chair says he's happy with inflation running hot. Warsh can sit in his office, feet up, watching his Bloomberg terminal like it's Netflix. No rate hikes. No emergency meetings. Just vibes.
This is fantastic news for Warsh because doing nothing is the easiest job in finance. He doesn't have to defend rate cuts to senators who can't find the Federal Reserve on a map. He doesn't have to parse CPI prints while CNBC hosts scream about whether core PCE includes avocado toast. He just points at Trump's quote and shrugs. The president loves it. I love it. We all love it. Your 401k doesn't love it, but nobody asked your 401k.
Retail traders are currently Googling "what does Fed Chair do if president likes inflation." The answer is cash checks and show up to Jackson Hole. That's it. Meanwhile, every econ textbook written since 1980 is bursting into flames. Volcker died for this. He choked the economy half to death to kill inflation, and now we're doing victory laps at 4.2% because the president said it's fine.
Warsh will give a speech next month about monitoring conditions and remaining flexible. Translation: he's going golfing. Trump gave him a hall pass to ignore his only responsibility, and he's going to ride that until the bond market has a stroke.
Photo by Pau Casals on Unsplash
Leave a Comment