Fed Up: Kevin Warsh Defies Trump
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Why is the Federal Reserve’s rate hike seen as a rebellion against Trump?
I think it was hard for me yesterday to be rooting for something that I knew was going to be hard for American consumers. But at the same time, you were, you know, championing and celebrating that at least one institution has managed to maintain its independence and do its job.
It's Thursday, September 17th. I'm Greg Walters, in for Jane Koston, and this is What A Day, the show that can't help noticing that former Georgia Congresswoman Marjorie Taylor Greene is posing out in front of gas stations and blaming President Donald Trump for high prices. All right, 8.49 for diesel in California. Let me tell you something. in Georgia. I don't care if it's Georgia or California. It's way too high. This is ridiculous. Look, everything you buy, your food, your supplies, all of your goods gets delivered by diesel. The war in Iran has got to stop. This is Trump's fault. This should not be this high. It needs to end. Ridiculous. Ridiculous. Gas and diesel are hitting record highs, which is making everything else more expensive, too.
But what's even more ridiculous is that someone just did something about that designed to get those prices down. And Trump is incredibly mad about it. That's the real drama around the Federal Reserve raising interest rates yesterday. A group of buttoned up finance nerds just staged a remarkable uprising against Donald Trump. And we'll get to that in just a moment. But first, billionaire and owner of the New England Patriots, Robert Kraft, said that musician Ed Sheeran asked him to donate $2 million to humanitarian aid organizations in the Middle East after Kraft reportedly forced Sheeran to drop rapper Macklemore from his tour for making pro-Palestinian comments on stage. And will Trump knock down the Kennedy Center, America's premier government-owned performing arts venue?
Well, he was just photographed through the window of Air Force One looking at a giant blow-up poster board that said, Kennedy Center demolished. I'd say, not looking good. But I want to talk about a rebellion at the heart of Trump's empire, which is being led by some of the least rebellious guys you can think of, the finance geeks at the Federal Reserve. And joining me is labor economist and policy consultant, Catherine Ann Edwards, to talk about Trump, the Fed, gas prices, and you. Catherine, thanks for joining one today.
Thank you so much for having me.
So let's start with the news. But I want to get into some context here, which is that yesterday the Federal Reserve announced that it's raising interest rates by a quarter of a percentage point. And I know that a lot of people might treat this as like boring econ news. They don't need to understand. But this is a decision that has been unusually full of political drama. Because President Donald Trump has been pounding the table for the Fed to lower interest rates. And instead, it raised them. So to kind of get into this question, could you explain why Trump has been so fixated on the Fed lowering rates? Like what's in this for him?
Yeah, lowering interest rates is stimulative economic policy, aka the money button, right? It's the button you push to make the economy juiced a little bit. So it's easier to borrow. I mean, technically, the interest rate is the Fed's price for borrowing, but it influences interest rates in the economy, which makes things more or less expensive. So if it's, you know, cheaper for you to buy a house, cheaper for you to get a loan for various large purchases, everything else becomes easier to afford, too, and you can spend more money.
How does Trump’s “money button” mentality affect gas and diesel prices?
Well, I mean, who wouldn't want that if you're a politician, right? You want people to have an easier time affording things, and this is a very direct way to go about it. Yeah,
he wants to smash the money button.
Yeah, smash the money button. Just pour that money out. But of course, the problem there is that actions have consequences, especially in the economy. And if you don't push that button at the right time, it can be pretty disastrous for an economy for a fairly long amount of time.
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Chapters
8 chapters
1
Why is the Federal Reserve’s rate hike seen as a rebellion against Trump?
0:00–3:43
2
How does Trump’s “money button” mentality affect gas and diesel prices?
3:43–7:44
3
What historical lessons from the 1970s and Volcker era explain today’s Fed credibility fight?
7:44–12:13
4
Why did the Fed appoint Kevin Warsh despite Trump’s pressure to fire board members?
12:13–16:27
5
How does the Fed’s voting structure protect its independence from political appointees?
16:27–20:53
6
What are the economic trade‑offs of raising interest rates versus a Trump‑favored rate cut?
20:53–25:27
7
How might tariffs, the Iran war, and future price shocks challenge the Fed’s inflation target?
25:27–30:21
8
What does the recent Fed decision mean for the future of institutional independence under Trump?
30:21–31:27