How a Former Fed Vice-Chair Is thinking About the Next Fed Chair
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What is the main topic discussed in this episode?
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Hello and welcome to another episode of the Odd Thoughts Podcast. I'm Tracy Alloway. And I'm Joe Weisenthal. So, Joe, Trump nominated Kevin Walsh to be Fed chair last week. We've been talking about it on the show. Obviously, this has big market implications, but I'm starting to think that the sociological questions and aspects of this are kind of more interesting.
I'm so intrigued by the constellation of people who have come out either in support or opposition of this name. It is not like any other nominee that I can recall, where you have fairly sort of mainstream, even sort of liberal names like Jason Furman or Gita Gopinath uh saying this is a great pick, et cetera. And then you have Paul Krugman and Neil Dutta saying it's a terrible pick and so forth. It is it it cuts in ways that I would not have necessarily anticipated, not like any other Trump pick that I recall.
Yeah, it is very split. And it feels like there's a split within Warsh's own thinking as well, right? Because here we have a guy who has talked about wanting to overhaul the Fed. Yeah. Right. And even break some heads. I think was a direct quote that we've mentioned before. He has given a speech that is literally titled An Ode to Independence at the central bank. But At the same time, there's a big question mark about how and why he has suddenly seemingly gone from an inflation hawk to someone who's advocating for low rates.
Totally. And of course, I think, I mean, if we're, you know, just to be blunt, this would have been something that any nominee from this administration, to some extent, there would have been question marks around because, you know, obviously Trump has been very critical of uh Jerome Powell, despite the fact that he nominated him himself. And it's clear that he wants a low rates now kind of guy in there. He said after the nomination, he's like, you know, he didn't make me He promises but he's gonna I think he's gonna be a low rates guy. And then he joked a couple of days later that he was gonna sue. That wasn't you know, he was joking. He said he was gonna sue if Warship. Joke. I'm doing error quotes. Yeah, joke, error quotes.
You don't know it, but this has been the big thing. And so the question is the degree to which an incoming Fed chair, presume if he passes the Senate, which isn't guaranteed, but if he passes the Senate Can establish his commitment to what he's long talked about, which is Fed independence, while also, you know, not immediately angering the guy who nominated him.
Exactly. To the extent that
that matters.
Exactly right. So we need to talk about all of this. Yes. Get a little bit more color on, I guess, Fed board culture. Yeah.
Yeah. And well put
political machinations as well and market implications, of course. And we really do have the perfect guest. We're going to be speaking with Richard Clarida. He is, of course, Global Economic Advisor at PIMCO, a professor of economics at Columbia. And most importantly, for the purpose of this particular conversation, he's a former vice chair of the Federal Reserve Board.
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Chapters
7 chapters
1
What is the main topic discussed in this episode?
0:00–6:07
2
Why did President Trump nominate Kevin Warsh as the next Fed chair and what are the immediate market reactions?
6:07–23:32
3
What does former Fed Vice‑Chair Richard Clarida see as the core responsibilities of a Fed chair in monetary‑policy meetings?
23:32–29:57
4
How do the Fed chair and the Treasury Secretary normally communicate and coordinate policy?
29:57–34:55
5
What is the Fed‑Treasury relationship like today and why is a collaborative approach important?
34:55–39:14
6
How does the Fed board communicate internally and with the chair before policy decisions?
39:14–45:59
7
What are the main criticisms of Kevin Warsh’s past stance on inflation, QE and the balance‑sheet?
45:59–53:29
Speakers
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