Warsh Isn't a 'Complete Partisan Clown,' Krugman Says

Summary

Paul Krugman joins Bloomberg The Close to discuss Kevin Warsh's nomination as Fed chair. Krugman says Warsh is not as extreme as some alternatives but is partisan and unclear, and questions his ability to build FOMC consensus or reassure markets in a crisis. He dismisses the prospect of 300 basis points of Fed rate cuts regardless of the chair, and notes markets mostly ignore Fed communication until crises.

• Krugman reacts to Kevin Warsh's nomination as Trump's Fed chair pick.
• He calls Warsh a partisan and a break from traditionally consensus-oriented Fed chairs.
• He questions Warsh's clarity, communication, and crisis-time credibility.
• He says Fed chairs drive policy through persuasion and coalition-building on the FOMC.
• He argues Trump's desired 300 basis point rate cut will not happen under any chair.
• He says markets typically pay limited attention to Fed messaging except in crises.
• No specific tradeable security or directional trade is recommended.