Fed Zeppelin: 5 Songs That Explain the Biggest Central Bank in the World
Jimmy Page and Robert Plant have a lot to say about Donald Trump, Kevin Warsh and "regime change" at the Fed.
Entire careers in financial journalism are built on being able to understand and interpret what the Federal Reserve is doing with monetary policy.
Perhaps, instead of a bunch of "Fed whisperers" to describe our experience, the thing we really need right now is the "hammer of the gods." Subtlety, after all, is just not President Donald Trump's thing.
And though he may not know Jimmy Page from Robert Plant, a contention here is Trump would appreciate something like "Immigrant Song," if maybe ironically and only at the most superficial level.
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He did say Kevin Warsh was "from central casting" when he nominated him to replace Jerome Powell as Fed chair, so surely Trump knows the value of a good front man.
And Robert Plant is perhaps the greatest front man in modern musical history. Setting aside the question of Trump's relationship to Jimmy Page in this analogy (and ignoring Mick Jagger), we'll see about Kevin Warsh.
With all of that in mind, here are five Led Zeppelin tunes that explain the biggest central bank in the world at another critical point in its more than hundred-year history.
Whole Lotta Love
"I love the inflation."
That's a big, bold statement.
President Trump said it after the closing bell on June 10, the day the Bureau of Labor Statistics (BLS) reported the Consumer Price Index (CPI) had reached a three-year high on an annualized basis in May.
Perhaps he was a little dazed, somewhat confused.
Maybe, though, he's just ready to run it hot and rock and roll.
Battle of Evermore
During his confirmation hearing, Warsh talked about "regime change in the conduct of policy" — choosing his words for maximum impact during his time in the hot seat/spotlight.
Every chair wants to rule the central bank. More often than not in the modern age of fiscal sclerosis at the federal level, circumstances take charge.
You get things like "committees to save the world" co-led by activist monetary policymakers templatized by Alan Greenspan. Then there's Ben Bernanke's "quantitative easing" amid the global financial crisis/Great Recession.
And this one must grapple with Trump as he navigates the facts on the ground and how a bank like his might help the economy steer clear of things such as recessions and depressions.
At the same time, from its founding on Jekyll Island in 1912 to the recent confirmation hearing for its next leader, the Federal Reserve has stirred passionate debate in America.
Indeed, more than a century before the Fed was created, the First Bank of the United States generated all kinds of controversy about its constitutionality.
Then, Andrew Jackson built his populism-based political career and historical legacy on opposition to and destruction of the Second Bank of the United States.
We've been arguing these types of questions — what should a central bank do; who should it serve — for literally centuries. Note, too, that Donald Trump didn't invent the bully pulpit, and Kevin Warsh will be one of one if he avoids its reach.
Also, though, Kevin Warsh by word and deed is a central banker who respects the role of the Federal Reserve on the grand stage.
He was, in fact, Ben Bernanke's right-hand man when that Fed chair used the central bank's balance sheet to help the global economy get through the Great Recession – and avoid another Great Depression.
Communication Breakdown
Before he was confirmed by the Senate, Warsh said all kinds of things that suggest he wants to lower the profile of the world's most important central bank. But markets have grown accustomed to celebrity Fed chairs and the "transparency" they seem to support.
They and their fellow members of the Federal Reserve Board of Governors are all over the place these days speaking in support of things like their quarterly Summary of Economic Projections (SEP).
"The Fed tells the whole world what their dots are going to be, what their forecasts are going to be," Warsh said of the SEP during his testimony before the Senate Banking Committee. "Well, the Fed's human. And then they hold on to those forecasts longer than they should.”
Warsh alludes to a very human frailty known as "confirmation bias": the tendency we have to focus on information that supports our current view and exclude information that contradicts it.
"If the Fed were to wait until it gets into a meeting before making a decision," Warsh believes, "incremental deliberation can keep the central bank from compounding its errors."
The dot plots, as Warsh sees them, promise transparency but, ultimately, undermine credibility. "I think these are big changes that are needed," the nominee told the committee, "and if confirmed, I look forward to doing it.”
He'll hold one on June 17, but Warsh hasn't said whether he will or will not continue with post-FOMC-meeting press conferences for the long term.
"Fed chairs and other central bankers around the FOMC, they speak quite frequently," he said during his confirmation. "I would say this: I think truth seeking is more important than repetition. If one has a press conference, one wants to deliver some important news.”
When the Levee Breaks
We like to keep it real around here, so let's first acknowledge that "When the Levee Breaks" was written and first recorded by Kansas Joe McCoy and Memphis Minnie in 1929.
They knew firsthand about things like the Great Mississippi Flood of 1927. Page and Plant, not so much. Led Zeppelin's version is a ripper, though. Bluesmen by trade, they did have enough touch and feel to interpret others' lived experience.
Can we say the same about Trump and Warsh, specifically as it relates to things like the Fed serving the "lender of last resort" function in a dynamic modern economy?
Who will organize a collective global response if another financial crisis hits? Warsh's response to a question about the dollar and its position in the world during his confirmation hearing shed some light on his position.
Noting "risks to the U.S. position in the world, including economic" and from state actors, Warsh emphasized the "economic statecraft agenda led by Secretary Bessent and Secretary Rubio," referring to the respective heads of the Treasury Department and the State Department.
"The Fed will play a supporting role in ensuring that the financial system is as safe as it can be and work with them," Warsh said, "because it's outside of the conduct of monetary policy to ensure the U.S. is on its front foot and in a position of strength during this period of rivalry between the U.S. and another nation around the world."
No Quarter
Absent a major trend change, there will be no quarter-point cut or downward adjustment of any size to the federal funds rate, neither next week nor over the remaining four FOMC meetings in 2026.
While the president still seems to be stumping for lower interest rates as both consumer and wholesale prices accelerate, market-based measures of near-term Fed policy are rising.
The 2-year Treasury yield, a gauge of short-term Fed policy, has risen from 3.379% on February 27, the day before the war in the Middle East began, to 4.087% as of June 12.
And CME FedWatch reflects a 98.6% probability that the fed funds rate remains in a range of 3.50% to 3.75% through the June 16-17 meeting.
Indeed, the trend right now favors a rate hike as opposed to a rate cut.
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