Warsh’s reluctant turn restarts Fed war

Warsh, channeling Powell, delivered two clear warnings to Bessent and other administration meddlers in his press conference Wednesday. He noted that his job was to formulate monetary policy, “and we’ll let the people that do trade policy and fiscal policy stay in their lane, too.” In case the point didn’t get across, he essentially paraphrased a recent criticism from hedge fund manager Stanley Druckenmiller, a former mentor he shares with Bessent. “I want to let them tell any story they wish,” Warsh said of bond market investors, who have sold off U.S. debt amid a deluge of AI-led investment and high commodity prices. Druckenmiller recently urged Bessent to listen to the bond market rather than attempting to subdue it. Bessent pushed back, saying last week that he has “asymmetric information,” like the “house” in a casino. “You can bet against me if you want.”

In some respects, the administration’s pressure never ended. While the Fed’s independence won a reprieve when the Supreme Court ruled that officials could not be fired without cause, it faced other threats. Treasury Secretary Scott Bessent has waged a quixotic battle to lower U.S. yields since August. Bond buybacks of $2 billion or $4 billion apiece failed to change yields on $40 trillion in U.S. debt for long.