Kevin Warsh

Donald Trump has never had many reservations about attacking the Federal Reserve. Last night, at a rally in North Carolina, he renewed his attacks on the Fed after it raised interest rates by a quarter of a point to 4 percent, which remains historically low. With inflation persisting at well over 2 percent, the hike was long overdue. The longer inflation is allowed to fester, the harder it becomes to tame. For the self-described “King of Debt,” however, the Fed’s move was an intolerable affront. It is a reminder of the independence of a government agency, something that Trump regards with anathema. He, and he alone, is supposed to dictate economic policy.

One of the sub-plots of the last twenty years has been the growth of “derangement syndromes.” It started with Bush Derangement Syndrome at the start of the century, morphed into the far more powerful Trump Derangement Syndrome, took a side trip to the other side of the Atlantic with Brexit Derangement Syndrome, and then turned into Tariff Derangement Syndrome. The basic symptoms are always the same. Some fairly minor, and probably not even very radical reforms, get reframed as an existential threat to the economy, democracy and even civilization itself. We are now seeing the latest example. Warsh Derangement Syndrome, named after the new Chairman of the Federal Reserve, Kevin Warsh – and for investors it is likely to prove the most expensive yet.