Former Fed Governor Kevin Warsh on the Fed
Kevin Warsh, who served with Bernanke. Said that, ultimately, what happens with policy will come down to Janet Yellen. He said Yellen "has a lot of votes in her pocket" and noted that a Fed Governor hadn't dissented in 15 years.
He then started to spit some fire.
Warsh said he would have begun to shrink the Fed balance sheet two years ago and slowly moved up rates.
On Brainard and Yellen, he notes repeated comments on the dollar. He believes there is a concerted, co-ordinated effort to talk down the dollar.
He railed against models and forecasts too. He said it was an error for the Fed to set policy based on dots that have been wrong for seven years and dangerous for markets to believe in them.
He said the Fed needs to get out of the business of manipulating the currency and long-term rates.
He said the Fed needs to listen to markets, not try to push them.
On communication, he said it will be hard to change the discussion in December.
He said the current Fed seems to be of the view that markets need to be spoon fed. And that the Fed is a slave to markets.
