Today&#x27;s Post - https://bahnsen.co/4wQ3FUF From the Reagan Library during a week of speeches, David Bahnsen discusses the politicized debate over Federal Reserve independence following Kevin Warsh’s confirmation as Fed chair and the recent Trump–Powell conflict. He argues the Fed is not constitutionally independent: Congress created it in 1913, set its mandate (including via Humphrey-Hawkins), requires semiannual reporting, and presidents appoint governors who serve staggered terms and cannot be fired without cause. Bahnsen notes monetary policy is inherently political because it affects prices, employment, and government borrowing, and he cites historical Fed–Treasury coordination in the 1990s crises, 2008 (TARP/AIG), and 2020 (CARES Act). He calls for Congress to clarify the Fed’s legal structure and increase oversight, supports practical independence from political pressure, and criticizes both election-driven rate cuts and Phillips-curve-driven tightening. 00:00 Intro to Today&#x27;s Topic 01:41 Warsh Pick and Market Reaction 03:08 Why Fed Independence Matters 05:37 Trump Quote on Independence 06:11 Fed Origins and Legal Structure 08:46 Why Monetary Policy Is Political 10:22 Crisis Coordination Examples 13:35 Do We Want Independence 15:25 Congress Oversight and Reform 17:11 Warsh Expectations and Fed Fixes 19:49 Conclusion Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

The Myth of an Independent Fed

The Dividend Cafe

# Full Transcript

**Podcast:** The Dividend Cafe

## Participants

- **David Bahnsen** (The Bahnsen Group)

## Transcript

Welcome to The Dividend Cafe, weekly market commentary focused on dividends in your portfolio and dividends in your understanding of economic life. Hello and welcome to this week's Dividend Cafe. I am your host, David Bahnsen. I am recording from just outside the Reagan Museum and Library here in beautiful Southern California.

It has been a whirlwind of a week. I am about to give my fifth speech in five days in four states. Is that right? Here at the Reagan Foundation Economic Forum. And I'll share more about some of that next week. But this really is today a very, very important topic. And it's one I extremely enjoyed writing.

And I really want everyone who doesn't care about monetary policy, who doesn't care about the Fed, to still listen. In the sense that I think what we're talking about has become a very important topic in terms of ongoing, aspirational economic health and stability. In the midst of what's become a very politicized issue. And I'm hoping to bring some clarity to the subject.

The catalyst to this debate discussion about Fed independence is political, as I will make clear in a moment. And the ability to have a sensible and grown-up conversation about it requires nuance. And nuance is the enemy of, well, everybody and everything these days. But it's not going to stop me. I am very excited for our new Fed chair, Kevin Warsh, for now.

I made a comment to a client who asked the question in Dallas this week, you know, are you excited about Kevin Warsh coming? And I said, I very much am. But of course, my excitements have led to disappointments many times in areas of public policy over my adult life. So I always brace for disappointment. But one of the big controversies about Kevin Warsh coming in, he was confirmed into this role a week ago. President Trump was there.

And then I heard media people say like, oh, they shook hands and they were smiling. And are we really going to get an independent Fed? And that question came up a lot throughout the not only confirmation process, but as President Trump himself was vetting different candidates, is he just going to appoint someone who does his bidding? And I think markets were reasonably pleased at the choice. And I think that's prudentially, Kevin Warsh is highly unlikely to be anybody's lapdog.

He's a man of tremendous intellect and independent thought. The reality is we don't know exactly how this will play out. But my thought is that President Trump selected Kevin Warsh because he believes he would be the right guy. And Kevin Warsh is very likely to prove to be the right guy. In what is a job that I don't know very many people, very many sane people who would want right now. Now, where does this come from? What is the reason people are so worried about Fed independence?

What does it even mean? I want to tackle all of this and I want to do it in the most de...

The Myth of an Independent Fed

Transcript

Built for investment professionals

Every day you wait, your competitors are finding
edge in conversations you're not hearing.

The Myth of an Independent Fed

Transcript

Built for investment professionals

Every day you wait, your competitors are findingedge in conversations you're not hearing.

Every day you wait, your competitors are finding
edge in conversations you're not hearing.