How Kevin Warsh Wants To Change The Fed

TL;DR

Kevin Warsh's Fed nomination hearing revealed plans to eliminate forward guidance, overhaul inflation metrics, and shrink the balance sheet.

Key Points

• 1.Warsh plans to eliminate forward guidance entirely. Unlike current Fed practice since the financial crisis, he opposes signaling future rate decisions, wants to scrap the 'dots' chart, reduce officials' public commentary, and will not commit to the existing press conference schedule.
• 2.He wants to fundamentally change how inflation is measured. The Fed currently tracks core PCE, excluding food and energy; Warsh wants to work with the Bureau of Labor Statistics to overhaul the underlying inflation measures, though the exact methodology remains unclear.
• 3.Warsh is sharply critical of the Fed's balance sheet tool. He argues the trillions in asset purchases since the financial crisis disproportionately benefit those with financial assets, preferring the interest rate tool as fairer — he even resigned from the Fed in 2011 over this issue.
• 4.A major disclosure problem surrounds his opaque 'Juggernaut Fund.' Warsh holds at least $100 million in this little-known financial instrument, and the Office of Government Ethics flagged him as out of compliance on disclosure forms — though Republican support makes it unlikely to derail his nomination.