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After months of teasing, President Trump announced Friday morning that he would pick Kevin Warsh to replace current Fed Chair Jerome Powell when his term ends in May. Leaks from reporters Thursday night have already given the market predictions, with the odds of Warsh at around 91% before the announcement.
Warsh, 55, was a somewhat surprising choice by Trump. For one, the two fundamentally disagree on monetary policy. The former Fed governor is a known inflation hawk who famously resigned from his post in 2011 over concerns that the Fed was pumping too much money into the system. He is a classic “hard-money guy” who favors a strong dollar and a tight balance sheet.
Trump, meanwhile, has made his desire for a more dovish seat well known, with beaten and threatened Powell throughout his term because of what he sees as too high interest rates. The president believes in a weaker dollar and looser monetary conditions to boost business investment and support foreign and domestic spending.
But one quality in a Fed chair that is more desirable than dovishness, as Trump suggested recently, is loyalty. on World Economic Forum in DavosSwitzerland, Trump complained to Fed chairs saying “everything I want to hear” until they actually get the job—then, “all of a sudden, ‘let’s change rates a little bit.'”
“It’s very bad—a kind of disloyalty—but they have to do what they think is right,” he added.
With Warsh, the president may be betting the opposite will happen: that one who is theoretically opposed to ideology proves more flexible in practice.
Warsh has the right kind of pedigree for Trump. He was a young executive on Wall Street became a rebel governor of the Fed and now runs the gamut of prestigious think tanks. He also happens to be related to the President’s family.
His wifeJane Lauder, a billionaire granddaughter of Estée Lauder, the entrepreneur behind the skincare brand that bears her name. His father was Ronald Lauder, who knows Trump because the two were undergraduates together at the Wharton business school at the University of Pennsylvania. Trump and Lauder have remained close friends and confidants ever since.
Lauder is widely credited with Trump’s interest in claiming Greenland back in 2020, and continues to advise him on the issue. The Guardian reported earlier this month Lauder acquired commercial assets in Greenland, and is part of a consortium seeking access to Ukrainian materials.
Per local reporting in the Arctic press, Lauder is a participant in an investor group called Greenland Development Partners, which backs water, energy, and infrastructure projects in the Arctic territory. He also reportedly invested in a small bottled water company called Greenland Water Bank.
“Trump’s Greenland concept is not stupid at all – it’s strategic,” Lauder WRITES in an op-ed for New York Post titled “I’m an expert on Greenland – these 3 trails could make it America’s next frontier.”
“I have worked closely with Greenland’s business and government leaders for many years to develop strategic investments there, although the Biden administration, not surprisingly, has ignored and underestimated its enormous opportunity,” Lauder wrote.
Also sole heir of Estee Lauder Companies, Lauder became president of the World Jewish Congress and was previously named by Ronald Reagan as ambassador to Austria.
Lauder also appears to be in tune with Trump’s way of thinking. Speaking to a crowd at a Jewish National Fund breakfast in Arizona in 2017, he CEBU Trump as a populist elites fail to understand.
“The Donald I know is very good,” Lauder said, according to The Arizona Republic. “He speaks for the American people, and the question is why a company should be allowed to close its doors, put 2,000 or 3,000 people out of work who may never find work again, and move to Mexico without any consequences.” But Warsh himself recently toned down his hawkishness, arguing in a Wall Street Journal op-ed that artificial intelligence could prove a significant force in deflation by improving productivity, which could make room to reduce the cost of borrowing.
In the same op-ed, he also echoed Lauder’s praise of Trump as a man of the people.
“Perhaps the most underappreciated trait of the Trump administration is its appreciation of individual achievement,” Warsh wrote. “Treating people based on their merits rather than their status or feelings is the renewed American creed.”
This story was originally featured on Fortune.com
