The Weight of the Chair

There is a particular kind of gravity that settles on a man when he inherits what he did not build but must now answer for. Kevin Warsh, newly sworn in as the seventeenth chair of the Federal Reserve, sat in the East Room of the White House on May 22 and received a charge that no confirmation vote could adequately describe. His first FOMC meeting — the one where he will actually pull the lever, or refuse to — is June 16. He has twenty-four days.

Consider what he inherits. The national debt has crossed $39 trillion. The Congressional Budget Office tells us that the Treasury is paying, in interest alone, three billion dollars per day to service that figure — a number so large, so abstract, so disconnected from the lived experience of any human being, that it slips past us like weather. It should not slip past us. Three billion dollars a day is what the richest government in the history of the world pays each morning simply to keep the lights on, before a single road is built, a single veteran is treated, a single dollar is spent on anything that could be called governance. This is not a policy question. It is an accounting catastrophe.

And Warsh arrives against this backdrop with a Federal Open Market Committee that is openly, historically fractured. At the April 28 meeting, four of the twelve voting members dissented — the first time since October 1992 that a Fed decision has produced four dissenters. One wanted a cut; three, including Lorie Logan of Dallas, Beth Hammack of Cleveland, and Neel Kashkari of Minneapolis, objected to language in the official statement suggesting the only possible next move was down. They were right to object. An institution that commits in writing to a one-directional bias, while inflation runs at multi-year highs, is not a central bank. It is a political weather vane.

Which brings us to the deeper question that Warsh's confirmation cannot answer: whether the Federal Reserve is still capable of independence, or whether it has been so thoroughly politicized — by Jerome Powell's accommodationist decade, by the Trump administration's Department of Justice opening a criminal investigation of the central bank, by the confirmation drama that required the investigation to be dropped before the Senate could vote — that independence is now a courtesy title, like a constitutional monarchy. The vote itself was 54-45, the most divisive in Fed history. Senator John Fetterman was the only Democrat who crossed over. The institution that is supposed to stand outside partisan combat has now been fully absorbed by it.

Warsh was once known as a hawk. He dissented in 2010 against the second round of quantitative easing, warning that the Fed was purchasing credibility problems for the future. He was correct. In recent years he softened, arguing that artificial intelligence would cool inflation through productivity gains. The theory is not absurd. But theories have a way of dissolving when grocery prices do not.

What the moment demands is simple to state and nearly impossible to deliver: the willingness to accept economic pain in defense of the dollar's value and the long-run stability that every business owner, every pension holder, every person who has ever saved a dollar depends upon. That willingness requires saying no — to the White House, to the easing faction inside the FOMC, to the bond markets that have become addicted to cheap money. Whether the man who took the oath in the East Room has that willingness is the only monetary policy question that matters right now.

Everything else is ceremony.