Who Is Fed Chair Candidate Kevin Warsh? TL;DR Version

By Paul T. Murray

Kevin Warsh, President Trump’s nominee for Federal Reserve Chair, is a former Fed Governor who was in the room during the 2008 financial crisis. He supported emergency measures at the time, but later became a vocal critic of how those policies — especially Quantitative Easing (QE) — turned into a permanent strategy. QE has been the Fed's way of providing liquidity and stimulus by releasing more money into the financial system.

Warsh and other economists argue QE didn’t “save” the economy, and instead helped fuel inflation and asset bubbles, widened wealth inequality, and left the Fed with massive balance-sheet losses. In short: he believes that what started as a crisis tool became a long-running experiment with real side effects.

That helps explain why gold and silver prices fell after his nomination. Precious metals tend to benefit from easy money and inflation fears. Warsh is viewed as someone more likely to shrink the Fed’s balance sheet over time and rely less on money creation — a headwind for metals.

If confirmed, Warsh is not expected to slam on the brakes. Any changes to the Federal Reserve and monetary policy would be gradual. But the direction would likely be toward less market manipulation, fewer distortions, and more reliance on real economic fundamentals.

For investors, that could mean less artificial calm — and more honest price discovery. Fans of Warsh believe that this approach is healthier over the long run. It could also mean more short-term volatility for a market and financial system than has become reliant on Fed intervention. 

Image Credit: Ann Saphir/Reuters