WASHINGTON, DC – MAY 22: Chairman of the Federal Reserve Kevin Warsh arrives to his swearing-in ceremony to be the new Chairman of the Federal Reserve in the East Room of the White House on May 22, 2026 in Washington, DC. Warsh succeeds Jerome Powell, who served as Chair for eight years. (Photo by Anna Moneymaker/Getty Images)
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Conservatives are falling all over themselves to cheer newly installed Fed Chairman Kevin Warsh’s disdain for the Phillips Curve. Which explains the title of this opinion piece.
To celebrate a Fed Chair for not believing that economic growth causes inflation is like cheering excitedly upon seeing a sixth grader complete Charlotte’s Web. Good for the 6th grader for knowing how to read a chapter book. Get it?
Which raises questions about the unwittingly condescending cheers. Isn’t it a bare minimum that a Fed Chair appointed by a Republican wouldn’t believe in the fiction that inflation is an effect of the impossibility that is too much economic growth, as opposed to what inflation solely is, a decline in the unit of measure? One would think, but then these same conservatives patting Warsh on the head for knowing the basics cheered on George W. Bush’s appointment of Ben Bernanke as Fed Chair back in 2005.
Bernanke of course believed that growth caused inflation, and was explicit about it. Which means maybe the conservatives cheering on Warsh today for knowing what’s obvious should be the individuals receiving playful pats on the head. If they thought Bernanke was a great choice, and they did, it seems they used to formerly believe in the Phillips Curve.
Probably the better question conservatives should be asking Warsh is what he thinks inflation is. Do conservatives even know?
Lest we forget, it was conservatives blaming government spending for inflation during the Biden years. To be clear, government spending is the biggest, most economy-sapping tax of all. But it logically could not cause inflation, and this is true even if what’s false is actually believed by conservatives, that government spending causes “excess demand.” That was the conservative explanation for inflation during the Biden years, which was conservatives sadly admitting they agreed with Paul Krugman, who said there was a spending multiplier from the government.
There’s not. All demand is preceded by production. Does Warsh believe in Say’s Law? Conservatives don’t seem to anymore.
Still, what remains a mystery is how conservatives define inflation. If it’s not the impossibility that is too much growth, is it still government spending, or is it a decline in the unit? The last one is how inflation has always been defined, but do conservatives agree?
It’s an essential question to ask mainly because from 2021 to 2023, when so-called “Bidenflation” was raging, and at 40-year highs according to the conservatives in rapture over Warsh, the dollar crushed foreign currencies on the WSJ Dollar Index. As for gold, it was largely flat in dollar terms from 2021-2023.
What say conservatives about this? If they now believe inflation is a decline in the unit, then how could they say there was inflation under Biden?
No doubt prices of certain goods soared under Biden, but prices are an effect of remarkably sophisticated cooperation among billions of hands and machines all over the world. How could Biden have caused the latter? Wasn’t the point that he was cognitively challenged during his White House term?
About the questions, how interesting to ask Warsh them including, most crucially, the one about the dollar. The dollar’s exchange value has long been a president/Treasury function, and never a Fed function, so what is Warsh’s definition of inflation.
If he thinks the Phillips Curve is bogus, Warsh will correctly say the Fed as barrier to inflation is rooted in Phillips Curve mysticism. Get it?