“The future is now, you pathetic, old man…” -Donnie Stimulus to Jerome Powell

It finally happened. After months of late nights deliberating who he should hand the newly renovated Fed HQ keys too, Trump reached across the Resolute Desk, pointed dramatically, and tapped Kevin Warsh to chair the Federal Reserve.

Translation: Jay Powell’s getting put out on the pasture for good.

If this pick kinda feels out of nowhere, that’s because it kinda is. Warsh wasn’t always the guy. Back in 2017, Trump reportedly passed because Warsh was “too young” and (this is real) too good-looking to boss around a room full of economists. Eight years later? Glow-downs happen. Warsh is now 55, battle-tested, and deeply suspicious of money printers going BRRRRR without adult supervision.

Almost immediately, the mood shifted. The dollar bounced, gold and silver backed off by about 1%, and Treasury traders eased up like the inflation police had just walked back into the room. Warsh may evolve on rates, but no one believes he’s going to shrug at inflation or outsource policy to a focus group. That reassurance (more than any speech or forecast) was enough to steady nerves.

(Source: CNBC)

Under Jerome Powell, the Fed lived and died by “data dependency.” CPI print? React. Jobs report? React. Bad vibes on Twitter? Pretend you didn’t see it. 

Warsh hates that. He’s a conviction guy. Inflation hawk by instinct. Longtime believer that central banks got addicted to easy money, bloated balance sheets, and doing way more than their job description. Climate policy? Income distribution? Warsh would like the Fed to politely log out of those tabs and refocus on inflation.

So far, so good… right? Well, here’s why if I had to bet money… I’m expecting things to get dicey fast.

You see, to pass Trump’s audition, Warsh has conveniently discovered religion in AI. He now believes artificial intelligence is about to unleash a productivity miracle so powerful it’ll smother inflation without the Fed lifting a finger. Translation: rates should come down… fast.

Main Street gets relief. Trump gets his cuts. Everyone parties.

But (because this is never simple) Warsh wants to offset those cuts by tightening conditions on Wall Street. You know, things like shrinking the Fed’s balance sheet and pushing the private sector to actually fund government deficits instead of letting the Fed foot the bill.

This is the fault line.

Trump wants lower borrowing costs. Warsh wants discipline. Trump wants cheap money everywhere. Warsh wants cheap money selectively.

That disagreement hasn’t exploded yet… but it’s loaded.

The funny thing is that Trump already knows how this movie ends. He said it himself in Davos last week: “It’s amazing how people change once they have the job.” Exactly. Warsh might walk in as an ally. But the Fed chair job has a funny way of turning presidential favorites into independent thinkers with suddenly uncooperative spines. If that happens? The odds of a very public breakup are… almost 100%.

But let’s not put the cart before the horse. This isn’t an Elon/Trump level breakup yet… just something worth keeping an eye on.

For now, markets are celebrating the announcement . A grown-up is back in the room. Inflation still matters. And the Fed won’t be run by someone making decisions purely out of spite.

Enjoy the calm while it lasts.

Because if conviction economics meets messy reality (and Trump doesn’t like the results), Jerome Powell’s gonna be the one with the last laugh.

At the time of publishing this article, Stocks.News doesn’t hold positions in companies mentioned in the article.