WASHINGTON — President Donald Trump’s new pick to run the Federal Reserve spent the years surrounding the greatest financial calamity of his lifetime arguing the country needed to remain vigilant against utterly nonexistent inflation.
During the so-called Great Recession, which caused unemployment to skyrocket and inflation to plummet, Kevin Warsh — then a member of the Fed’s Board of Governors — repeatedly said inflation was lurking around the corner.
“I continue to be more worried about upside risks to inflation than downside risk,” Warsh told his Fed colleagues in April 2009, when the unemployment rate reached 9% and inflation sank below zero.
Warsh, whom Trump nominated to the United States’ central bank on Friday, has seemingly changed his mind about monetary policy – but only after the Republican Party got a new leader in Trump who preferred lower interest rates to high ones. The flip-flop is key to the case against Warsh: He’s more of a political climber than an economic leader, and his loyalty to Trump could undermine the Fed’s independence from political interference.
“He wants to say whatever Donald Trump wants him to say,” Sen. Elizabeth Warren (D-Mass.) told reporters at the Capitol on Friday. “He needs to show some independence. So far, all he has done is shown that he would be an excellent sock puppet for Donald Trump.”
