Nearly every Democrat in the Senate opposed Kevin Warsh’s nomination as Fed chair mainly because they said he would be a tool of the man who appointed him, President Trump. 

This past week, Warsh made them look downright foolish. 

Yes, the knock on Warsh was that he would deliver lower short-term rates to goose the economy as the midterms approach, despite persistent inflationary pressures, because he owes his loyalty to The Donald as opposed to his long-held beliefs about monetary policy.

That such BS came from lefties like Sen. Elizabeth Warren (D-Mass.) should have been a tell of their political nature, as opposed to the reality of what Warsh — a long-time inflationary hawk — brings to the table. 

These are, after all, people who really didn’t care about price stability when sleepy Joe Biden was inflating the economy away with trillions of needless fiscal stimuli, goosed by the rock-bottom interest rates unleashed by Warsh’s predecessor, Jerome Powell. 

But Warsh came out swinging against inflation and held rates steady amid persistent inflationary pressures.

His hawkish sentiments were delivered in comments after presiding over his first Federal Reserve Open Market Committee — during his first, very brief FOMC press conference. 

Sorry Lizzy & Co., Warsh is no tool — right out of the gate, he proved he will be his own man on many levels.

That also includes alerting markets that the Fed would be letting data decide the course of interest rates, as opposed to signaling its moves based on uneven forecasting. 

Data over politics 

Being a Fed chair who puts data over politics was in itself a relief from the recent boring albeit market-moving monologues on interest rates and the economy regularly puked up by people who have held his position. 

Since the latter years of the Greenspan Fed, you got the impression that people running a central bank thought they had an extra layer of responsibility on top of price stability in the context of economic growth. 

The Fed chair should be giving lots of guidance to the markets, as if telling speculators how to behave is key to the central bank’s premise to make sure that the wages of average Americans aren’t eaten away by inflation. 

Warsh will be breaking from that noxious tradition.

Rather, he will focus on whipping inflation and studying numbers — and not obsessing about the opinions offered by various Fed governors. 

Hence his short press conference. 

Hence his refusal to submit to the finger-in-the-wind “dot plot” analysis Fed policy makers used to submit.

Hence calls to reform various parts of the Fed’s analytical arms, including its overreliance on a Phillips Curve analysis when setting interest rates, which argues growth always begets inflation when in fact common sense and evidence show the trade-off to be a figment of poor economic modeling. 

Hence his stated premise that the Fed’s goal to work to a 2% inflation target remains — despite what Trump wants — because the data shows prices remain above that threshold. 

All of the above are much-needed reforms that Warsh has been touting in the years leading up to his appointment to the job over the hapless Powell, who got a free pass from the Trump-hating business media not because he was good at his job.

He wasn’t. If you don’t believe me, Google the term “transitory inflation” that he allowed to fester during the Biden presidency. 

Yes, Powell — who remains as a governor — is supposed to be qualifying for sainthood because he stood up to mean old Trump. 

Powell supposedly stood for Fed independence — the central bank was created by Congress in 1913 to be free of political pressure.

That’s why he is staying as a governor, as is his right. 

Trump countered that Powell doesn’t have anything else to do with his time, which I have to admit was pretty funny.

What wasn’t funny was Powell’s abysmal record in the job and the notion that the very independent man who replaced him was supposedly a tool of the president. 

I know what you’re saying: One strong FOMC meeting doesn’t really prove anything.

True.

But if you know Warsh like I do, you also know his background: A longtime Fed governor, academic, investor and thought leader who believes taming inflation is what the Fed should be spending its time doing, not giving forward guidance to markets. 

It’s central to his belief in reducing the Fed’s massive balance sheet. 

He held rates steady in his first meeting; the Iran conflict coming to a conclusion means lower energy prices are likely in the not-so-distant future.

AI-related productivity could soon be taking down prices another notch.

So he may hold them steady again in September, but all bets are off the table if inflation doesn’t recede. 

It all depends on the data, he said. 

It’s why he’s no tool.