Former Fed Governor Kevin Warsh last week slammed the Fed, during a speech delivered at the Hoover Fed Conference, admitting the central bank had no real “normalization” strategy aside from jawboning, and accused his former co-workers of potentially terminal groupthink.
Changes are in order to how the Fed organizes itself, conducts its business, deliberates policy choices, and makes its monetary policy decisions. In short, deliberations should be more robust, and decisions less constrained. The existing governance structure reinforces a groupthink of the guild. It places the Fed at considerable institutional risk when the next crisis strikes. And it makes the next crisis more likely to be more harmful to the economy.
As a former Fed governor, he would know. On Monday, Warsh appeared again at the Ira Sohn conference in his capacity as consultant to Stan Druckenmiller’s family office, and was the third in a row just this morning (after Goldman and Citi) to warn that he believes the market is risky when measures of risk are as low as they are currently (the VIX is currently trading at 9.72, and grinding lower).
This post was published at Zero Hedge on May 8, 2017.
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