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Inflation Is A Choice: Kevin Warsh On Fixing The Federal Reserve

Peter Robinson
@PeterRobinson
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Has the Fed lost its way? Kevin Warsh, Hoover visiting fellow and on the short list of candidates to be the next chairman of the Federal Reserve, thinks the Fed has and offers solutions on how to fix it. Drawing on his firsthand experience during the 2008 financial crisis and his continuing work as a macro investor and Hoover Institution fellow, Warsh argues that the Fed has strayed from its core mandate of price stability. He discusses the dangers of inflation, the legacy of quantitative easing, and the institution’s growing entanglement with fiscal policy. Along the way, Warsh revisits the insights of Milton Friedman, Paul Volcker, and Alan Greenspan, warns against institutional complacency, and outlines a vision of reform—not revolution—for the Fed. Despite the turbulence, Warsh remains bullish on America’s economic future, driven by innovation, productivity, and the enduring dynamism of its people.

Recorded on May 28, 2025.

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Discussion (2)

  • CarolJoy, Not So Easy To Kill@CarolJoy

    The Fed has often strayed from its core mission principles. That straying is not something only related to current day inflation.

    One reason that early on The Fed's creation was promoted in the newspapers, although not in all of them, was due to its promise of regulating the economy such that there would not be any depressions.

    But in the 1920's, the expanding margin allowances that gave people the privilege to have 100% of stocks they wanted for only 5% of the price super inflated the economy. What goes up must come down, but none of the Fed chartered bankers mentioned how atrocious the fallout from this expansive policy would be.

    So we had the Great Depression in 1929, less than 15 yrs after the Fed creation. And we were not pulled out of The Depression due to any policies of the Fed but through the nation entering WWII.

  • CarolJoy, Not So Easy To Kill@CarolJoy

    I'm only 20 minutes in but I am very impressed with the depth of Warsh's knowledge and his embrace of Friedman's attribute of questioning his own policies each year after formulating them.

    I wonder what Warsh thinks about the International Bank of Settlements, as that outfit has even more power than the US Federal Reserve. (At least that is how Catherin Austin Fitts views it.)

    Maybe he tackles that matter in the next section of this remarkable interview.