Sep 17, 2026 · 1h 20m
Fed Rate Hike Tests Warsh’s Independence and Credibility
SPECIAL REPORT: Fed Hikes Rates! | Axel Merk
The decision offers a test of whether the Federal Reserve can prioritize price stability and institutional discipline amid political pressure, weak labor mobility, and heavy government debt.
- 1The rate hike signals less monetary accommodation, but its larger importance lies in the Fed’s policy bias and credibility.
- 2Axel Merk argues that preserving inflation control ultimately supports employment better than allowing political pressure to dictate interest rates.
- 3A large balance sheet need not equal quantitative easing, while gold offers long-term protection against currency debasement and excessive debt.
Don't miss
Axel Merk argues that Kevin Warsh may be more likely than many predecessors to resist an easy bailout when a severe crisis arrives.
The brief
Adam Taggart and Axel Merk examine the Federal Reserve’s first rate hike since 2023, treating it as a test of monetary discipline rather than a routine policy adjustment.
Merk frames the Fed as the institution that shapes the risk-free rate, asset prices, inflation, and purchasing power, while arguing that price stability remains the foundation for employment.
The central tension is political: Donald Trump wants much lower rates, while the Treasury and Federal Reserve must keep fiscal and monetary responsibilities distinct to preserve credibility.
The discussion separates an ample-reserves balance sheet from quantitative easing and asks whether Kevin Warsh can communicate a clear framework without becoming captive to markets or politics.
Merk’s most consequential test for Warsh is a future crisis: whether he can resist an easy bailout response while protecting the Fed’s authority and long-term purchasing power.
The conversation closes on gold and real rates, presenting gold as protection against currency debasement, excessive debt, expensive equities, and overinvestment in artificial intelligence.
What was said on this episode
7 statements · 7 positive
Kevin Warsh does not favor postponing problems for future policymakers.
“Walsh, by the way, philosophically doesn't have that attitude.”
Listen at 54:55
Axel Merk personally invests substantially in gold.
“I personally invest a lot in gold.”
Listen at 55:19
Alan Greenspan, rather than Paul Volcker, brought inflation down to 2%.
“Volcker did not get inflation down to 2%. It was Greenspan that got it down.”
Listen at 58:04
The Federal Reserve should credibly target 2% inflation rather than accept 3%.
“we are in an era where you need to tell the market hey guys three percent is not good enough we want to be at two percent”
Listen at 58:30
Kevin Warsh would lower interest rates if the economy collapsed.
“if the economy falls apart, he's going to lower rates? Yeah, I guess that's what he would do.”
Listen at 58:56
Kevin Warsh would not change policy because of direct pressure from President Trump.
“No. A, this call wouldn't happen. And B, no, he wouldn't move.”
Listen at 59:16
Kevin Warsh is more likely than many predecessors to resist severe pressure.
“I give him better chances of standing up to being... quote-unquote punched in the face than many others”
Listen at 1:00:17
Statements are attributed to the speaker as said on the episode and reflect their view at the time, not PodLume's. They are not advice.