Warsh endured the archetypal education for neoliberal politics and neoclassical economics[1], incurring a PPE BA from Stanford[2], a JD from Harvard before ‘learning’ about ‘market economics’ and ‘debt capital markets’ at MIT Sloan and Harvard Business School. Any hopes that Warsh could make any kind of recovery from these impediments were dashed when Warsh joined Morgan Stanley.
Like many lost souls before him (except with greater alacrity than usual[3]), Warsh pirouetted seamlessly from Wall Street to DC, becoming George W Bush’s Special Assistant for Economic Policy, and Executive Secretary of Bush’s National Economic Council, as well as joining Bush’s Working Group on Financial Markets. In short, Warsh quickly became the Bush administration’s interlocutor between Wall Street, regulators and government. As a reward Bush nominated Warsh for one of two Fed Board of Governor vacancies. Despite criticism and concerns Warsh’s nomination was confirmed, making him the youngest appointment in Fed history.
The Governor of Error
Once installed as a governor, Warsh seized the opportunity to demonstrate his limited understanding of key aspects of policy and his deeply flawed grasp of economics. A speech in 2007 highlighted that while Warsh was aware of the dangers of excess liquidity drying up, he had at best an extremely superficial understanding of the processes and causes – even though broad academia in general and the Fed’s own researchers specifically had already drawn attention to these processes and causes.
Warsh arguably exacerbated the Global Financial Crisis. Throughout 2008, he warned repeatedly that the policy response (to which he contributed) would lead to high, persistent inflation, and argued consistently for higher interest rates. He was wrong. He was also accused – rightly in the judgement of many observers – of favouring Wall Street over Main Street.
The Mercenary Years
Since resigning from the Fed Board in 2011 (seven years ahead of his term expiry), Warsh has devoted his split energies to teaching at Stanford[4], attending G30 meetings[5], advising the Congressional Budget Office, plotting the furtive pursuits of the Bilderberg Club and being paid handsomely for ‘consulting’ to the likes of UPS, Korean e-commerce operator Coupang and digital asset business Electric Capital Partners
During this time, his criticism of his erstwhile Fed colleagues and other policymakers has continued to grow even louder, leading Warsh to be described as a “hard money hawk” (although coming from the coke-addled brain of Lary Kudlow, that was presumably intended as a compliment).
For the last ten years, however, Warsh has aligned himself with Trump, resulting in a remarkable strategic, condottiere-like flexibility. Consequently, while Warsh was recently touted as a potential Fed Chair, Senator Elizabeth Warren asked Treasury Secretary Scott Bessent whether Warsh could be sued by the DOJ for not following instructions that Trump might issue to cut interest rates.[6]
The Nomination and The Record
On January 30, 2026, President Trump announced he had officially nominated Warsh as the next Fed Chair, succeeding Jerome Powell.
One of the better analyses of this appointment came from Bloomberg’s Odd Lots team, featuring guest Skanda Amarnath.[7] They argue that in addition to getting big calls wrong, Warsh has a history of aligning his policy views with partisan considerations. Amarnath highlights the challenges Warsh will face to establish credibility within the FOMC (especially those members that have faced his most trenchant criticisms) and the consequent challenges this will cause the next time the Fed has to step in during a period of crisis.
Amarnath points out that Warsh’s “public intellectual” history may come back to haunt us when the Fed matters most – i.e. in a crisis.
Amarnath highlights that Warsh’s crisis record is abysmal:
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The 2008 Blind Spot: While Warsh is eager to play up his presence during the crisis, but at the time, he was touting the strength of the financial system right up until the moment Lehman failed. He emphasized the inflation threat in the summer and fall of 2008, while the floor was falling out.
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The 2009 Inflation Phantom: Into 2009, with unemployment historically high, Warsh argued this wasn’t the Fed’s primary problem. He pushed to normalize rates, claiming inflation was going to explode and that QE was “really bad.”
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The Balance Sheet Confusion: He offered various shifting reasons for why he hated the size of the Fed’s balance sheet, none of which have been validated by subsequent events. As Amarnath notes, this reflects a fundamental misunderstanding of what the Fed’s balance sheet actually is and does and remains a favourite hobbyhorse of Warsh.
The Partisan Pivot
“He missed the whole financial crisis, but the more concerning issue is the growing pattern of obsequiousness and partisanship in how he orients his macro and monetary policy beams…..
For most of 2024, Warsh was clearly in the camp of the Fed keeping rates high enough for long enough to kill inflation. But his policy views changed in November 2024, when he executed a 180-degree turn on his previous policy views. He turned dovish the moment the election result was clear….
His tendency to worry about inflation and fiscal excesses during periods when a Democrat is in the White House…tends to flip to productivity growth being disinflationary when a Republican is in the White House. That flexibility has dialled up even further in the last 18 months. And that speaks to What exactly did Warsh have to promise Trump to get the job?” – Skanda Amarnath
(War, huh) Good God, y’all
(What is it good for?) Absolutely nothin’ – Norman Whitfield and Barrett Strong
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Paul Gambles is licensed by the SEC as both a Securities Fundamental Investment Analyst and an Investment Planner.
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[1] Although deriving from neos, the Greek word for new ‘Neo’ as a prefix to liberal or classical tends, in practice, to mean supplanted by something that pretends to be but really isn’t. Wikipedia defines neoliberalism as “a political and economic ideology that advocates for free-market capitalism, which became dominant in policymaking from the late 20th century onward. The term has multiple, competing definitions, and is most often used pejoratively.” We prefer the prefix ‘shit’ (urban dictionary defines a shitlib as a “performative-progressive”, who, according to Lama Abu-Odeh “lays claim to the progressive vanguard while remaining complacently invested in the economic status quo…….motivated by the fear of Republicans winning, rather than any deeper discontent with prevailing material conditions”).
[2] Admittedly Stanford is generally ‘more Silicon Valley than Wall Street’ but has shown a willingness to cross over between the grubbiest aspects of both and today would arguably head American academia’s ‘Hall of Shame’ current form league with its involvement in ‘scandals’ including the Theranos biotech fraud, the resignation of the university’s president following charges of plagiarism, an admissions scandal, one of the highest crime rates of any major university campus, spending $800,000 to hire para-military thugs to beat up students expressing pro-Palestinian sympathies, failure to disclose corporate funding in legal submissions, manipulating pharma research data, granting tenure to Joe Bankman, the father and business associate of crypto-fraudster Sam Bankman-Fried and granting tenure to Barbara Fried, the mother and business associate of crypto-fraudster Sam Bankman-Fried. The hits keep coming for Stanford, as America, thanks to the carefully drip-fed release of morsels from the Epstein papers, pores over the sexual mores of Bill Gates, the eponymous hero of Stanford’s computer science building, courtesy of $6 million donation. Further revelations about the extent of Elon Musk’s involvement with Epstein might prove less damaging as Musk dropped out after 2 days on a Stanford Ph.D. programme to focus on making money (allegedly illegally) through his first major venture Global Link Information Network, AKA Zip2).
[3] “I hope that my prior experience on Wall Street, particularly my nearly 7 years at Morgan Stanley, would prove beneficial to the deliberations and communications of the Federal Reserve.”- Warsh’s confirmation hearing remarks.
[4] Admittedly Stanford is generally ‘more Silicon Valley than Wall Street’ but etc. etc. etc.
[5] The Group of Thirty, or G30, is an international body of academics, bankers and former policymakers, which aims to influence economic and financial policy.
[6] This refers to the investigation of Jerome Powell and the Federal Reserve mentioned in Part One of this note as well as the ongoing DoJ investigation into Lisa Cook for alleged mortgage fraud.
[7] https://metacast.app/podcast/odd-lots/BsS6SNUS/lots-more-with-skanda-amarnath-on-the-risks-of-kevin-warsh/P4dX5rEc