Kevin Warsh, our new Fed leader

January 30, 2026

After almost a year of debate, we finally have our answer.  Our new Fed Chair is Kevin Warsh, a former investment banker and Fed governor.   And you know what?  That’s not a bad pick!  Our fear til now was that Trump would nominate a lackey who would simply do the President’s bidding – ie, cut interest rates to the bone.  However, based on Warsh’s past comments, he seems to be more of a hawk on interest rate policy (that is, he prefers rates to be higher).  So needless to say, this is somewhat of a surprising choice.

As a reminder, the Fed sets interest rates via a committee of 12 people – the FOMC.  And Warsh’s best qualification for the Chair job is that he used to be one of those 12 people.  He was a Fed governor from 2006-11.  Famously, he was the youngest Fed governor ever appointed.  As a former banker at Morgan Stanley, he played a key liaison between the Fed and Wall Street during the financial crisis in 2008.  

In the years after the financial crisis, he made comments that suggested he was concerned about the potential for inflation as a result of interest rates set at zero and quantitative easing. See chart below.

So overall, I guess this is a surprisingly development!  Some skeptics on the street are pointing out the fact that Warsh’s father-in-law is Ronald Lauder, billionaire heir to the Estee Lauder fortune and lifelong friend/supporter of Donald Trump.  (Ronald and Donald went to college together.)

Other skeptics are pointing out that in his truth social post, President Trump listed Warsh as having “central casting” looks, in addition to his other qualifications.  

Whatever the reason, I’ll take it.  Assuming he’s confirmed by the Senate, he will serve as Fed governor for 14 years and Fed Chair for at least the next four of those years.  It’s a sigh of relief to have a rational person at the helm.

And as we said above, rates are set by a committee of 12.  So even if Warsh comes onto the committee with a predisposition to lower rates, that doesnt guarantee a cut, as he has to also convince 11 other people of his view.  

As an aside, gold and silver are both falling sharply this morning.  This might be partially due to Warsh’s perceived “hawk-ish” stance, which will curb fears of higher future inflation.  That in turn would curb fears of dollar “debasement” (ie, loss of faith), leading to less demand for hard assets like gold and silver.  Or it could be just that they had gone up way to far too fast, and are now coming back to earth!