SPECIAL REPORT: Kevin Warsh Announces New Hawkish Era At The Fed | Axel Merk

**Adam Taggart** (0:02)
All right, and we should be live. Welcome to a Thoughtful Money Special Report. I'm Thoughtful Money founder and your host, Adam Taggart. We are doing our usual debrief of the latest Federal Reserve release, FOMC release and presser by the chairman of the Federal Reserve. What's exciting this time is we have a new sheriff in town. We've got Kevin Warsh taking over the reins at the Fed from Jerome Powell.
I'm joined as usual by Fed watcher Axel Merk, founder of the Merk Family of Funds, Merk Investments. Axel, how are you my friend?

**Axel Merk** (0:39)
I feel like a kid in a candy shop having listened to the Fed. To just put this in perspective, there are some folks that love chasing a ball, seeing that kick back and forth.
I do that with my dog. I don't see why humans chase balls and get all excited about a football, soccer, whatever it is. FOMC monetary policy, that's really exciting, far more exciting than a ball game. I'm just trying to set the stage here. Okay. All right.

**Adam Taggart** (1:07)
Well, now that you've convinced everybody of your nerd credentials. Listening to Kevin Warsh, I didn't get listened to the whole thing, but I definitely heard his prepared remarks. I was channeling you, Axel, thinking that you were probably really loving what you were hearing.
The key takeaways I took from Kevin Warsh were, he is going to take a very different approach than his recent predecessors. He is lashing himself to the mast of price stability, saying we're essentially going to kill inflation or at least tame inflation to Fed's target.
He said, look, I'm going to communicate a lot less. I don't think it's that appropriate. The Fed has been communicating as much as it has, which I know has been one of your central points, our central criticisms of the Fed, Axel. And he also said, if you have a question for me, I probably have a new committee for it. I think he announced about five different committees on the Fed, although I thought they were all very practical. And so he seems like a guy coming in with a different playbook than his predecessor, but a clear plan on what he wants to do. I'll hand the baton to you, Axel, because I know that you actually know Kevin Warsh. And I'm curious if Kevin validated most of what you knew about him yesterday or whether he threw you any curveballs.

**Axel Merk** (2:35)
Yes. And interrupt me before I go off on a rant for too many hours on this.
So yes, for context, I have followed Kevin's work ever since he was a governor during the financial crisis. I got to know him personally along the way. And I was lobbying for him to become Fed Chair. So I, and I am thrilled to see what he did yesterday. I think he achieved all this.

**Adam Taggart** (3:00)
Clearly they listened to you, Axel. Clearly you convinced everybody.

**Axel Merk** (3:03)
Well, yes. So I just want to put this out there. I have been a critic of the Fed over the years, many times over. And so this puts me into very different perspective. And I'm glad there's going to be some controversy here with people disagreeing. And that doesn't mean I won't be critical of anything, everything he's going to do. But the reason why I have been aligned with him, because he has shared many of the criticisms that I've had, many of which I've talked about with you on your program. So now let's just, let's set the stage here, right? There's a guy who doesn't, has never served on the Fed with any of the folks who are on the Federal Reserve. Now he got to know them over the years because he's spoken at the same conferences, he's been on the same panels, he's been fiercely critical of the Fed, sometimes using rather strong language. So he comes in and wants to change everything. And so how on earth are you going to do that? Also, the Fed has been highly politicized in recent years. I've been blaming the Fed for its own doing. One thing I may have mentioned on your program, Chris Waller, one of the governors, he started, who wanted to become Fed chair, he started his own initiative to rationalize some of the operations at the regional Feds. I mentioned that because that poisons the atmosphere, right? The regional Fed presidents are furious that they want to lose power. Over the decades, they have been losing power. And indeed, there's a question of how much more cost cutting you can do by them duplicating some infrastructure. In any case, you come in there, says, hey, do it my way, everybody get away. That's not going to happen, right? And unlike what some people may think, Kevin is actually quite charismatic, is a good team player, and is very good at arguing his points. So what are you going to do for your first meeting? Your goal is to have credibility. Your goal is to tell the market that there's a new sheriff in town, that changes in the year. But you're not going to be able to implement everything and everything you want to do the first day.