Uncommon Knowledge Inflation Is A Choice: Kevin Warsh on Fixing the Federal Reserve | Uncommon Knowledge | Peter Robinson | Hoover Institution
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Jul 8, 2025 Kevin Warsh, a former Federal Reserve governor and current fellow at the Hoover Institution, shares his insights on the Fed's current trajectory. He argues that the central bank has lost sight of its price stability mandate, reflecting on the impact of past policies. Warsh critiques quantitative easing's transition from stopgap to status quo and discusses the risks of fiscal irresponsibility. Despite these concerns, he remains optimistic about the U.S. economy, driven by innovation and productivity.
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Inflation Is A Choice
- Inflation is a choice driven primarily by monetary policy, not external events like supply shocks.
- The Fed is solely responsible for maintaining price stability, and blaming others is a failure of accountability.
Inside The 2008 Financial Crisis
- Kevin Warsh felt the 2008 financial crisis deeply as a young Fed governor.
- The crisis was scarier than it seemed, with markets crashing and treasury auctions faltering.
Shrink Balance Sheet Carefully
- To reduce inflation, the Fed should shrink its $7 trillion balance sheet more quietly.
- Coordinated clarity with the Treasury is needed to separate monetary and fiscal responsibilities.