Renowned economist Steve Moore recently wrote in Fox News that U.S. President Trump’s nomination of Kevin Warsh to succeed Jerome Powell as Federal Reserve chair is “right on target.” Moore noted that Warsh is neither a politician nor an inflationist, standing in stark contrast to current chair Jerome Powell.
Moore cited Warsh’s views, saying Warsh rejects the Phillips curve theory that “economic growth inevitably leads to inflation.” He believes the U.S. is fully capable of returning to the low-inflation, high-growth prosperity seen under Paul Volcker in the 1980s and Alan Greenspan in the 1990s.
Powell leaves serious policy problems
Moore criticized Powell for failing to understand the relationship between growth and inflation. He pointed out that Powell’s insistence that growth drives inflation contributed to the near-stock market crash of 2018 and subsequent economic weakness. Under the Biden administration, the U.S. experienced four years of stagflation, with stagnant real wages and persistently high prices.
Moore said Powell has now become a “lame duck,” even “an injured duck,” and should resign immediately. Unfortunately, he will not step down voluntarily, and American society will have to wait four more months for the transition of power to formally end the monetary policies that caused 9% inflation.
Moore emphasized that Warsh must be ready on his first day in office to fully reverse current monetary policy.
Top priority: defend the dollar and stabilize prices
For the best of our weekly content！
You are now signed up for our newsletter
Check your email to complete sign up
Moore agreed with former World Bank president David Malpass that Warsh’s Federal Reserve should prioritize maintaining a strong dollar and price stability.
However, Moore expressed concern that Trump has repeatedly indicated a desire for a weaker dollar, a tendency that Moore attributes to Powell’s policies. He warned that continued dollar depreciation against other currencies and gold could not only push up prices but also undermine the dollar’s global reserve status. He stressed, “We cannot allow things to reach that point.”
Second priority: reform the Fed and cut bureaucracy
Moore noted that Warsh has pledged to cut 30 percent of the Fed’s bureaucratic staff, which would be a good start. He argued that the Fed does not need more than 3,000 officials and hundreds of PhD economists; even halving the workforce could still produce 9 percent inflation.
Moore warned that action must be taken immediately because the bureaucracy is already organizing resistance. Citing former New York Fed official Krishna Guha in the Financial Times, Moore said Warsh would face widespread internal pushback if he attempted reforms under the “Make America Great Again” (MAGA) spirit.
He emphasized that “knowing yourself and knowing your enemy” is critical for Warsh, or the Fed’s internal culture could derail the entire reform agenda. Fed staff are expected to publicly oppose Warsh’s inflation-curbing strategies.
Moore also criticized Powell’s excessive spending, noting nearly $2 billion was used to renovate the Fed headquarters, which he described as a poor example of fiscal discipline. He called on the Fed to lead by example and genuinely practice the restraint it preaches.
Third priority: shrink the balance sheet and curb money supply
Moore agreed with Warsh that the Fed’s past injection of trillions of dollars into the system, swelling its balance sheet to $6.5 trillion, was the worst mistake in 45 years.
He pointed out that 25 years ago, the Fed’s total assets were less than $1 trillion; last year, the number briefly exceeded $8 trillion. Moore suggested accelerating asset sales to withdraw excess money from the market, bringing inflation back to a reasonable 2 percent target and improving Americans’ real purchasing power.
Moore quoted the old saying, “You always hope to inherit a loser,” noting that Warsh is taking over the Fed at such a moment. If he can help the Trump administration restore price stability, he could become one of the greatest Fed chairs in history.
Advocates using a ‘price rule’ for interest rate policy
Moore also recommended that the Fed adopt a “price rule” as the basis for interest rate decisions, with full transparency to the public. He favors using a basket of commodities—including gold, coal, copper, and cotton—as reference indicators.
He explained that rising commodity prices signal excess money in the system and should trigger rate hikes, while falling prices could justify rate cuts. He believes this approach would guide monetary policy more scientifically.
Moore concluded that Warsh’s best gift to Trump would be restoring price stability and the dollar’s global dominance. If successful, Warsh would leave a significant mark in history.
Warsh’s background
On Jan. 30, Trump announced the nomination of former Fed governor Kevin Warsh to succeed Powell, whose term is ending. The nomination requires Senate confirmation. If approved, Warsh would return to the Fed 15 years after leaving.