💡 Trump's New Fed Chair: Does It Even Matter?
Issue 203
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👉 And you can always check out the archives to read more of The Informationist.
Today’s Bullets:
Who Is Kevin Warsh?
The Hawk Who Cried Inflation
The Day Debasement Investors Panicked
The Four Doors of Government Debt
Investment Implications
Inspirational Tweet:
Well said Halston, well said. Especially…
“Federal Reserve independence” means independent from YOU. Not from Wall Street. Not from billionaire dynasties.
That line hit really me when I read it this morning.
Because here’s what just happened.
President Trump nominated Kevin Warsh to be the next Chair of the Federal Reserve. Powell’s term ends in May. If confirmed, Warsh will be at the helm of the most powerful financial institution on Earth.
The financial media is buzzing. Is Warsh a hawk or a dove? Will he cut rates to please Trump? Will he protect Fed independence?
All interesting questions.
But I’m going to argue they might be the wrong questions.
There’s something bigger at play here. Something that doesn’t change no matter who sits in that chair. And Friday’s market action gave us a hint of what it is.
And so, who exactly is Kevin Warsh? What’s his actual track record? Why did precious metals just have their most violent day in years? And what does any of this mean for your portfolio?
All good questions, and ones we will answer, nice and easy as always, here today.
So grab a big, hot cup of coffee and settle into your favorite seat for a candid look at the new Fed Chair nominee in this Sunday’s Informationist.
Partner spot
The cracks in the foundations of money are becoming harder to ignore. Persistent deficits, rising debt, and central bank behavior are quietly reshaping how investors think about preservation and risk.
In my latest report, The Debasement Trade, I walk you through:
Why debasement is structural, not cyclical
How inflation and financial repression challenge familiar portfolios
Why gold tends to move first—and bitcoin often moves further
Download the report here:
🏦 Who Is Kevin Warsh?
The day is September 20, 2008.
The global financial system is in free fall. Lehman Brothers collapsed five days ago. AIG is hemorrhaging. And Morgan Stanley, one of the last remaining investment banks, is circling the drain.
Inside the Federal Reserve, a 38-year-old governor named Kevin Warsh has a problem.
Morgan Stanley, his former employer, is about to fail. The firm needs access to Fed emergency lending to survive. But investment banks can’t access the Fed’s discount window. Only bank holding companies can.
And Warsh has another problem: he worked at Morgan Stanley for seven years. An ethics wall is supposed to prevent this exact type of conflict.
So what happens?
Warsh gets a waiver. The Fed clears him to deal directly with his former employer. The very next day, Morgan Stanley is converted into a bank holding company, gaining access to Fed facilities. And just like that…
The firm survives.
Ben Bernanke later wrote that Warsh’s “political and markets savvy and many contacts on Wall Street would prove invaluable.”
I’m not interested in re-litigating the ethics. In a crisis, you use the people who know where the bodies are buried. Warsh knew. And the reality is that he delivered.
But hold that image: a baby-faced 38-year-old Fed governor negotiating the survival of his former employer while the system burns.
It tells you everything about who Kevin Warsh is.
The Path to the Room
How does someone end up in that room?
Warsh grew up in a little town called Loudonville, just outside of Albany, in upstate New York. This was the wealthy side of the tracks, mind you, where the big houses were. I know because I grew up in Clifton Park which was a firmly middle class area on the other side of Albany. I sometimes drove past these houses on my way to the hockey rink, wondering just what the people did for work to be able to live like that.
It wasn’t finance, I’ll tell you that. Virtually nothing of the sort in those parts.
In any case, Warsh left Albany for undergrad at Stanford, continued on to Harvard Law, then spent seven years at Morgan Stanley doing M&A.
This is where he learned finance and how Wall Street actually works.
In 2002, he moved to Washington, DC. President Bush hired him as a White House economic policy adviser. For four years, he watched how policy gets made. Who matters. How the game is played.
In 2006, Bush nominated him to the Fed. He was 35. The youngest Fed governor in history.
Two years later, he was saving his former employer.
The Cantillon Connection
Now here’s where Halston’s tweet becomes relevant.
In 2002, Warsh married Jane Lauder, granddaughter of Estée Lauder. Her father is Ronald Lauder, net worth approximately $4.7 billion. Ronald Lauder has been one of Trump’s longtime allies and donors.
This is the Cantillon Effect in human form.
If you have never heard that term or want a refresher on what it means, I wrote all about it recently. You can find that newsletter here:
For the TL;DR types: Richard Cantillon was an 18th-century economist who observed that new money doesn't arrive everywhere at once. It enters at specific points. The people closest to those entry points benefit first.
Now think about Warsh’s trajectory:
elite education → Wall Street deal flow → White House access → the Fed itself → marriage into a billionaire dynasty
The circle reinforces itself. The people closest to power marry into wealth. The people closest to wealth gain access to power.
“Federal Reserve independence” means independent from voters. Independent from you.
It doesn’t mean independent from the people who’ve always run it.
After the Fed
In any case, Warsh resigned in 2011, seven years early. He’d grown uncomfortable with QE, the Fed’s bond-buying program. He was quite outspoken about how he thought it would distort markets and cause inflation.
You think?
Of course, he voted for it anyway, because Bernanke demanded consensus. Then walked out.
The detail that matters most: he soon became a partner at Stanley Druckenmiller’s family office. Druckenmiller is one of the greatest macro investors alive. Warsh has spent the last decade learning how the smartest money thinks about Fed policy.
And that, my friends, is who Trump just nominated.
🦅 The Hawk Who Cried Inflation
Throughout his Fed tenure, Warsh was known as a hawk. He prioritized fighting inflation, favored tighter policy, and worried about easy money.
He was also wrong. Repeatedly.
The Receipts
March 2008. Bear Stearns just collapsed. The Fed is cutting rates.
Warsh’s take: “On the inflation front, there is little reason to be confident that inflation will decline.”
What happened: inflation collapsed as the economy cratered.
September 2008. Lehman just failed. The global system is teetering.
Warsh’s take: “I’m still not ready to relinquish my concerns on the inflation front.”
Actual risk: deflation. A deflationary depression.
April 2009. Worst recession since the Great Depression. Unemployment approaching 10%.
Warsh’s take: Still warning about inflation.
Actual inflation: 0.8%.
Bernanke was frustrated. In his memoir, he vented about “holders of the unreasonable opinion that we should be tightening even as the economy and financial system are in a precarious position.”
Make no mistake, he was talking directly about Warsh.
The Conversion
So Warsh spent 15 years as a hawk. Opposed QE. Resigned in protest.
Then Trump started looking for a Fed chair.
Suddenly, a different tune.
In July 2025, Warsh appeared on CNBC criticizing Powell for not cutting rates fast enough. He called for ‘regime change’ at the Fed.
“It is very puzzling to me how you could think that we should do emergency rate cuts last September, and now all of a sudden you sit there like a hawk,” he said. “That’s not good for the institution.”
The hawk became a dove. Right when it mattered for getting the job.
He’s now arguing AI will boost productivity and reduce inflation. Convenient cover for the rate cuts Trump wants.
So which Warsh shows up as Fed chair? The inflation hawk who resigned in protest? Or the Trump ally calling for rate cuts?
On Friday morning, the markets gave us who they believe will show up.
And it was violent. How?
Keep reading. This story gets even better.
💥 The Day Debasement Investors Panicked
Fed funds futures barely moved on the Warsh news.
But somewhere else, chaos erupted.
