What A Day - Fed Up: Kevin Warsh Defies Trump

Episode Date: September 17, 2026

On today's show, we get into a rebellion at the heart of President Donald Trump's empire, led by some of the least rebellious guys you can think of: the finance geeks at the Federal Reserve.Greg Walters is joined by labor economist and policy consultant Kathryn Anne Edwards to talk about Trump the Fed, gas prices, and you.Show Notes: Check out Kathryn's work – kathrynanneedwards.com Call Congress – 202-224-3121 Subscribe to the What A Day Newsletter – https://tinyurl.com/y4y2e9jy What A Day – YouTube – https://www.youtube.com/@whatadaypodcast Follow us on Instagram – https://www.instagram.com/crookedmedia/ For a transcript of this episode, please email [e-mail]

I think it was hard for me yesterday to be rooting for something that I knew was going to be hard for American consumers. But at the same time, you were, you know, championing and celebrating that at least one institution has managed to maintain its independence and do its job. It's Thursday, September 17th. I'm Greg Walters in for Jane Koston, and this is what a day. The show that can't help noticing that former Georgia congresswoman Marjorie Taylor Green is posing out in front of gas stations and blaming President Donald. Donald Trump for high prices. All right. 849 for diesel in California. Let me tell you something.

It's 6.659 in Georgia. I don't care if it's Georgia or California. It's way too high. This is ridiculous. Let me look. Everything you buy, your food, your supplies, all of your goods, gets delivered by diesel. The war in Iran has got to stop.

This is Trump's fault. This should not be this. be this high, it needs to end. Ridiculous. Ridiculous. Gas and diesel are hitting record highs, which is making everything else more expensive, too. But what's even more ridiculous is that someone just did something about that, designed to get those prices down, and Trump is incredibly mad about it. That's the real drama around the Federal Reserve raising interest rates yesterday. A group of buttoned-up finance nerds just staged a remarkable uprising against Donald Trump. And we'll get to that in just

Just a moment. But first, billionaire and owner of the New England Patriots Robert Kraft said that musician Ed Sheeran asked him to donate $2 million to humanitarian aid organizations in the Middle East after Kraft reportedly forced Sheeran to drop rapper Macklemore from his tour for making pro-Palestinian comments on stage. And will Trump knock down the Kennedy Center, America's premier government-owned performing arts venue? Well, he was just photographed through the window of Air Force One looking at a giant blow-up poster board that said Kennedy Center demolished. I'd say, not looking good. But I want to talk about a rebellion at the heart of Trump's empire, which is being led by some of the least rebellious guys you can think of, the finance geeks at the Federal Reserve.

And joining me is labor economist and policy consultant Catherine Ann Edwards to talk about Trump, the Fed, gas prices, and you. Catherine, thanks for joining one today. Thank you so much for having me. So let's start with the news, but I want to get into some context here, which is that yesterday, the Federal Reserve announced that it's raising interest rates by a quarter of a percentage point. And I know that a lot of people might treat this as like boring econ news. They don't need to understand. But this is a decision that has been unusually full of political drama because President Donald Trump has been pounding the table for the Fed to lower interest rates. And instead, it raised them. So to kind of get into this question, could you explain why Trump has been so fixated on the Fed lowering rates? Like, what's in this for him? Yeah, lowering interest rates is stimulative economic policy, aka the money button, right?

It's the button you push to make the economy juiced a little bit. So it's easier to borrow. I mean, technically the interest rate is the Fed's price for borrowing, but it influences interest rates in the economy, which makes things more or less expensive. So if it's, you know, cheaper for you to buy a house, cheaper for you to get a loan for various large purchases, everything else becomes easier to afford to and you can spend more money. Well, I mean, who wouldn't want that if you're a politician, right? You want people to have an easier time affording things and this is a very direct way to go about it. Yeah, he wants to smash the money button.

Yeah, smash the money button. Just pour that money out. But, of course, the problem there is that, you know, actions have consequences, especially in the economy. And if you don't push that button at the right time, it can be pretty disastrous. for an economy for a fairly long amount of time. And the way that it shows up is higher inflation for longer. Like that is the consequence of a politician pushing the money button at the wrong time or getting a, you know, a central banker to push the money button at the wrong time is that it tends to lead to a long period of high inflation. So low interest rates can be dangerous because,

you know, when I hear push the money button, I mean, I think a lot of people would think of that as like a good thing. Like, why wouldn't you push the money button? But you're saying that there are consequences to just, like, leaving the money button pushed. Yes, exactly. And those consequences are higher prices for longer. You know, if you are stimulating the economy when price growth is taking off, you're basically adding fuel to the price fire. And that makes it harder control prices in the long run. And the other aspect of it, which is a little bit more nuanced, is it makes it harder for people to think that you are serious about dealing with price. prices in the long run. I mean, so much of what the Fed does is, you know, not just its actions,

but what it communicates in signals about those actions. Is the Fed going to be serious about inflation? What steps are they going to take? When the Fed loses credibility, it makes it harder for their actions to have quite as much impact. So one way that the Fed makes itself almost more impactful than just pushing the money button is that like it means something when they push the money button. Like people know that they're serious and this is what the economy means. So they don't have to push it as many times. If you lose credibility, if you lose authority, if people think that you're being influenced by something else, you have to keep pushing it.

And the money button goes two ways. I think of how high interest rates have to get in order to control inflation. It's a lot of pain to inflict on the economy. If you can convince people that you're serious, you essentially don't have to raise rates so high in order to have movement. I think that's really hard for regular people to understand how it can be so influential, if it's just an interest rate when you're not even buying a house right now. But the way that it influences the financial sector,

the way that the financial sector prices filters down to all of us, their credibility matters. And a lot of people point to the inflation of the late 70s and the very painful recession of the early 80s as the Fed basically having to take such drastic measures to get its authority and credibility back. So going into this decision that we saw yesterday, Why were people arguing that now the Fed needed to raise the rate and that its credibility was online?

The kind of like really, I think, necessary and long backstory is that in the 1970s, whoa, 70s? 70s. In the 1970s, we're going disco. We're going totally disco. Nixon interfered at the Fed. He interfered at a lot of the federal agencies, but he went after the Fed in particular. And the Fed governor was like totally on board. He was a yes man and he was a Nixon night. And he's like, oh, sure, I'll press the money button for you.

I mean, that sounds great. And one of the reasons why inflation in the 1970s got so out of control was because the Fed lost control of it. And so when Volker kind of like famously took over the Fed and said, I'm going to get rates as high as they need to be to break inflation, I mean, you're talking about interest rates in like the teens. That was horribly painful for the economy. It was an awful recession.

But a part of that was just getting back credibility. that the Fed is independent and will do what it takes to keep the economy under control. But that move also had big political consequences, if I remember, right? I mean, didn't George H.W. Bush blame his defeat on former Fed chairman Paul Volker. Yes, and politicians hate central bankers. I mean, they're powerful and they don't listen to you. So, like, what's there to like? And they influence something that Americans value so much, especially during an election year. So, like, I mean, yeah, there's no reason for a politician to like a central banker. I mean, they're the people who won't get in line.

They're the people who have a ton of authority over something that you want to win. And you don't have the same say over it. So, yeah, I get it. Like, I get why they don't like them. But that doesn't mean that the Fed is necessarily wrong. And there's a politician from both parties who's going to say that they hated the Federal Reserve chairman. But that's okay. I mean, it comes with the job.

I guess that that's the part that's probably the most interesting is that if you talk to people who have worked in central banks, they know this is what the job is. And so Trump, as we know, has been unusually. good at taking control of institutions that have historically had some degree of independence. And after Nixon, I think everybody began to say, wait a minute, we need to have an independent Fed so that it can stop the president from just pressing the money button whenever he wants. But so getting into like yesterday, you know, how does that kind of help us understand the drama of this decision, the political drama at the Fed? and with Fed Chairman Warsh.

Yeah, so the way that appointments work at the Federal Reserve, Board of Governors, is how you would probably want it to work for the Supreme Court. They're in very long, odd-year, staggered terms. And the who gets a, it's not like if, you know, you get this, like, appointment for life. They're on terms that end. The Board of Governors has a rotating set of people that it pulls from for the Open Market Committee meeting. It's a very insulated, not meant to be easily influenced by appointments. The Federal Reserve chair can be pulled from outside or inside the Fed.

And the chair position came up, like the old chair, Powell, his term ended under Trump. And so the question was, who is he going to appoint? Now, what's remarkable in what I mean by how this influence and independence matters, there were lots of whispers around lots of potential candidates in the months leading up to this decision of who is Trump going to a point. And essentially, whenever somebody, you know, was like allegedly at the top of the list, like Trump made a phone call and was like, well, I talked to this guy yesterday and he seems great for the job, like the markets would go up or down based on how serious and credible they thought the person was. So Warsh was someone that's, I, at this part, I'm not quite sure. I think his

wife is friends with the family, but Trump knows him. And he was someone that the markets kind of okayed. He had been a Fed governor under W. Bush, who was a very young Fed governor at the time, then, you know, went on to make millions and is now back. So the- So he's like a serious money guy, right? Like, he's a serious money guy. I mean, they all are. But they, what's interesting is that I think there's this really like, I remember in the days leading up to the nomination of who are they going to announce, I gave an interview in which I said, you know, essentially so much of the economy's future rides on how well a person is able to convince the sitting president that he will do what he says and that he's very good at lying.

Right? Like he's got to be able to say like, yep, I understand you want interest rates lowered and that's what the economy needs. And then he has to turn around and raise rates because that's what the economy actually needs. And that was what we were hoping for. And actually, we got it. Now, that's the upside down that I'm describing. And it's not great. But, I mean, such are the times that this is what we were hoping for. The good news is that even if the chairperson was not going to make the right decision, he's just one vote. And the board votes, the open market committee votes, you know, as a group. And so the chair can be outvoted. So it was, there was always like some insulation of risk, but basically Trump appointed someone. He said at he as the appointment,

the guy was sworn in at the White House. That sent chills through the market that this guy was sworn in at the White House. But Trump appointed someone. He's the new Fed chair. In theory, he's going to do whatever Trump says, regard to the money button, and in fact, he did the opposite, which is, I think, what made yesterday so important on a historic level was that it was just a massive side relief for a lot of people that what the economy needed is what ruled the day and not what Trump wanted. We'll get back to my conversation with Catherine in just a moment. What a day is brought to you by Delete Me.

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For a limited time, try OneSkin with 15% off using code Wad at OneSkin.co slash Wad. That's 15% off OneSkin.com with code Wad. After you purchase, they'll ask you where you heard about them. Please support our show and tell them we send you. Let's get back to my conversation with Catherine. So to your point about the group vote and the board, Trump actually leaned into that dynamic when he was asked about this decision. We have a tape of Trump reacting. I talked to Kevin and I said you might as well vote with the board because it's not going to matter.

The board is very hostile. They're very political. They're doing the wrong thing. Okay. So even just that moment of commentary, I called the chairman of the Federal Reserve and rate what just happened on a scale of like zero normal to 10 wildly inappropriate. I mean, you have to gauge this from, like, how much do you take what he says on face value? I mean, Fed chairs talk to the president. A lot of times they're trying to answer economic questions. We know that they have a communication. But the idea that he's implying that, like, oh, shucks, Warsh tried really hard to do my thing, but he was outvoted. Never mind that I appointed many of the people who I say are the ones that outvoted him.

It's the bad politician appointees that are who are to blame. I mean, it's just wrong. It was a unanimous decision by the open market committee that they all voted to raise rates, including the chairman. But I think, you know, Trump doesn't like losing face or losing it all. And so he came up with a narrative that worked for him. And most people don't know the nuances of Fed board, open market committee voting decision, you know, notes to understand what he was trying to pull off. You know, one of the people who are on the board is the former chairman Powell. And he still has about two years left of his.

governor appointment, even though his chair term expired. So he went back to the board and he's still in the room. So it's, it's, it felt like he was still trying to blame Powell, which like, you know, don't let, you know, the actual fact stand in the way of a good blame story. As we know from the Trump administration, that's kind of how they, they operate. But not everyone in Trump's world is so chill. I mean, here's Peter Navarro. He's the White House trade advisor and an ultra-maga guy. I was not a worse guy. I'm not a worst guy. I see him not as MAGA. I see him, let's call him Mara or Masa, like make recessions great again. You know, it's like, or make Stagflation great again. I just, look, he sold himself and now he's selling us out. I think it's pretty much as simple as that. And I don't know, here's what I don't know. I don't know whether it's a gap in here. his training or whether he's just one of them. And this is political.

I fear it's political. I mean, if he understood this issue, he would have gone against the grain of what is a very politicized anti-Trump fed and tried to lead on the issue and maybe lose, but at least try to lead. He did not do that. Is Warsh make recessions great again? I mean, this is the thing about Peter Navarro. It's like one part kind of accurate to five parts. Like, what are you talking about? So, you know, when I said that we are living in the upside down, in the narrative of we are Americans who want a strong economy, a strong economy requires an independent, very good central bank. And what happened yesterday was we got a big affirmation that we have a good independent central bank. That doesn't, that's almost. separate from the thing they needed to do was raise interest rates to keep inflation under control. And that hurts. I mean, interest rates are meant to hurt. They're meant to make things more expensive so that you pull back on spending so you ease the pressure on prices. They work, but they often

are so good at their job that the economy dips into a recession. And we have been in a will, they, won't they dance for like three seasons now of, is the U.S. going to fall into a recession? interest rates going up are just like a really big, this makes it more and more likely. The longer interest rates go up, the higher they go up, the more likely a recession can occur. So he's, you know, he's hitting on something, which is that nobody wants a recession and this makes it more likely. But he's ignoring that there are not, that there are tradeoffs to just hitting the money button in order to be popular. And that tradeoff hurts much more than a recession in the long run because you lose this very important part of your economy. So I think, It was hard for me yesterday to be rooting for something that I knew was going to be hard for American consumers. But at the same time, you were, you know, champion and celebrating that at least one institution has managed to maintain its independence and do its job. Yeah, Trump kind of reminds me of a quote by the late great Carrie Fisher, who played Princess Leia in Star Wars and once said, the problem with instant gratification is that it takes too long. I feel like that's kind of like Trump's approach to like managing the economy is he just wants everything right now.

But it sounds like what you're saying is that raising interest rates may be temporarily a slowdown, create a temporary slowdown for the economy, but that ultimately this is about making a tough choice to preserve long-term economic health. Did I get that right? Yes. And it's a long-term economic. health that could be very like, you know, intangible for most Americans of like, great, we have a strong central bank. I still can't afford heating. Thank you. But like that, but that intangible, when it becomes tangible, it's awful. So like keeping it as this intangible, like, I guess it's good we have a strong central bank. So smart lady told me on podcast is I understand that that's very

unsatisfying. But the alternative is much worse. And you would feel that pain with higher prices and inflation for years to come. eventually some awful interest rate fight. So I understand why it doesn't sound important. But it was a victory for institutional independence. I mean, the other thing to keep in mind, like the true elephant in the room is like Trump has terrible economic policy. You know, I think that in some ways his position is kind of presented as, you know, like he's trying to make the economy better and the Fed is getting in the way. And so like he's doing all of these things rights and the Fed is saying like, sorry, the economy can't accommodate all these things you're doing.

Trump's economic policy can be boiled down to inflation. Like, he is trying to raise prices. Tariffs are a price increase. They led to, you know, increasing inflation in the back half of last year. That started to come down a little bit. And then he started a war with an oil producer. And now prices are going back up again. And the Fed has too much credibility on the line. They can't just say, well, our target that we would like to hit is 2%. And even though we've been above that for six years, we're not going to do anything about it. Like this was a big moment at Trump, you know,

won't ever acknowledge that the problem with the economy is him. He is looking for a get out of jail free card. He is looking for, I have bad economic policy. It has very bad consequences. It runs counter to what the economy needs. It runs counter to what the American people want. It causes a lot of harm. But I want you to bail me out.

So even though it's, build as, you know, they don't know what they're doing. They just want to have a recession. Trump is essentially asking for the Fed to bail him out. And they're saying, no, we're not going to do it. You have, you have had bad policy. You walked back the progress we made with the inflation coming out of the pandemic. You do not get a bailout. We have to act in the economy's interest, not your political interest. So them saying no to the bailout is good. But us not getting a bailout also kind of sucks. But it's, this is, I mean, this is what is hard about being an independent institution when it comes to economic policy. You have to make the hard choices.

Trump is incapable of that. Yeah. I think somebody once said that the job of the Federal Reserve is to wait until the party gets started and then take the punch bowl away. But isn't, is it fair to look at this and say Trump is demanding that the Fed cut interest rates to spur the economy, to spur the stock market in the near term? And then he goes ahead and starts a war that he hasn't thought through the end of with Iran that makes oil prices and therefore the price of everything else go up. And he's also playing around with these tariffs and which also make the prices of stuff go up. And so does it, is it reasonable to say that Trump kind of forced Warsh's hand to do the very thing that he was urging Warsh not to do? Of course. It's what Powell's hand was forced as well.

And it's worth noting that they, the Fed has been very slow to act. for a lot of people's perspective. So this is like the kind of brief recent history. As we were coming out of the pandemic, kind of towards the end of 2021, start of 2022, it's like right around the Winter Olympics, inflation is starting to become a problem. Like every time there's a new price report, it keeps going up. And the Fed is waiting to act because the labor market out of the pandemic is still recovering. And they don't want to raise interest rates and hurt the economy when there are so many people who still haven't gone back to work after the pandemic. So they wait about as long as they can and they start raising interest rates in the spring of 2022. And they raise them very aggressively

until August of 23. So we have almost a year and a half of interest rates going up. And if you feel like you're looking for a job and you can't find one, if you feel like you haven't gotten a raise, if you feel like everyone in your company is on tender hooks because no one's getting raises and no one's getting fired, but also no one's getting promotions, or they're just getting one of those congratulations, you have more task, but not more money type of promotions. That all coincides with the Fed raising interest rates. But it worked. And over the course of about a year and a half, they are able to get prices on this very steep upward trajectory to turn around and start to fall. And as we hit the end of 2024, the election has happened, we know who's coming to office. The

inflation is down to like 2.3. And we are so close to what the Fed target is, which is 2.0, and we've been, and price growth has been falling. And then the story of 2025 and 26 are two separate price shocks that have basically jeopardized that entire victory. And the first one was these series of tariffs and trade wars. And then the second one was the war in Iran. And both of them, prices started to go back up. And the Fed was like, we're just, going to see if this goes away on its own. Tariffs should only be a one-time hit to prices. We're just going to see if it goes away. Same thing with the warner-on. Like, okay, we're bombing in February, but what does that mean for June? We're just going to see what happens. So now we're in, like,

the second half of the second year where we're waiting and seeing if prices will go back down, and they haven't. And they can't wait any longer. Like now they have to, their credibility, their independence and inflation in the U.S. economy is on the line. So they've given him two years of runway. And now he doesn't have any more. So in some ways, I think they probably waited a little too long, but that is like the privilege of not having to be in the room and make the tough decision that I can be like, oh yeah, it's probably too long, whatever. But yeah, and a lot of people think that they waited too long. So the rate hike had to come and, you know, Trump only has himself in his economic policy to blame. He probably could have gotten away with some of what he was

doing, but not the way he did it for how long he did it and all of them together. So we're just about out of time here. But to kind of wrap this up, it strikes me that we've just seen something of a rebellion against Trump's empire over the federal government, over like the tools of federal administration where a group of guys I wouldn't necessarily have expected, you know, the finance guys and suits got together and said, like, no, we're not doing what you want. Do you think people who are concerned about the effects that Trump has having on this country that he might leave behind a country that people don't recognize in his wake should be reassured by what we just saw in the past 24 hours?

100%. Because the Fed is doing what every other agency has tried to do, but the Supreme Court didn't take their side. The Supreme Court took the Fed's side and said Trump has tried to fire some board of governor members in order to get more of his political appointees into the voting committee. And he's tried to have one of them fired. The first black, woman to serve, wouldn't you know. He's tried to fire her, and he said he's going to try again. The Supreme Court stopped his first attempt, and now he's going to try to fire her again. But she is really the only person of all of the federal employees and inspector generals and people who run agencies and voting members, the National Labor Relations Board. The one person

he has not been able to fire is Lisa Cook of the Federal Reserve Board of Governors. that is nothing to do with the will and the spirit and the fights and the hope of all those other agencies. That just has to do with who had the legal precedent on their side to actually keep their independence. I don't think that they are the lone fighters for independence. I think they are the lone victors, but there are a lot of people out there who have, you know, who have been told that their agency isn't important enough to actually be independent from the, you know, fat-fingered interference of a president who just wants things to line up. And that harms us in lots of ways. So you can be depressed by having a lone economic victory or you can be inspired

in knowing that when it works, it works. And there's easy fixes when all of this is said and done. Catherine, thank you so much. Thank you so much for having me. That was my conversation with Catherine Ann Edwards, labor economist and policy consultant. Before we go, is late night television dying? No, it's suffering an even worse fate, becoming podcasts. You won't want to miss this Friday's episode of Love It or Leave It. Hassan Piker will join John to talk about what Hassan has in mind now that he's the undisputed leader of the Democratic Party's agenda.

Plus, they'll dig into why Republicans are so obsessed with his sexy thirst traps. Watch Love It or Leave It on YouTube or listen wherever you get your podcasts. That's all for today. If you like the show, make sure you subscribe, leave a review, ask yourself whether Olympic rowing events in Australia should be held in a crocodile habitat and tell your friends to listen. And if you were into reading like me, and not just about how, yes, the crocodile habitat has been approved. What a Day is also a nightly newsletter. Check it out and subscribe at crooked.com slash subscribe. I'm Greg Walters and keep rowing.

What a Day is a production of Crooked Media. Our show is produced by Emily 4, Erica Morrison, and Adrian Hill. Our team includes Haley Jones, Greg Walters, Matt Berg, Adam Lippert, Johanna Case and Desmond Taylor. Our music is by Kyle Murdoch and Jordan Cantor. We had helped today from the Associated Press. Our production staff is proudly unionized for the Writers Guild of America East.