Kevin Warsh Criticizes Federal Reserve's Expansive Role in Economic Policy

According to BlockBeats, Kevin Warsh, a former Federal Reserve governor and considered a leading candidate to succeed the current Fed Chair Jerome Powell, expressed concerns in a Wall Street Journal column about the Federal Reserve's approach to its statutory and implicit powers. Warsh argues that the Fed has overstepped certain long-standing central bank principles and practices. The Federal Reserve's expanding role in government economic policy has led to systemic errors in macroeconomic policy, according to Warsh. He believes that monetary policymakers should avoid discussing fiscal matters. However, if the Fed chooses to cross these boundaries, it should maintain consistency in its actions and statements during both crises and periods of prosperity. Warsh emphasizes that the Fed's independence largely depends on its own actions, but this does not mean central bank experts should be treated as privileged figures. Warsh asserts that when monetary policy outcomes are poor, the Federal Reserve should be subject to rigorous questioning, strong oversight, and appropriate criticism for its mistakes. He attributes the Fed's current predicament to its own actions and suggests that a strategic reset is necessary to restore credibility, repair its standing, and most importantly, prevent worse economic outcomes for citizens.