As if to punctuate the changing of the guard at the Federal Reserve, former Chairman Alan Greenspan died this morning at age 100. Last week, New Chairman Kevin Warsh appointed five task forces and began to outline his plan for the Fed. In a strange way, the two news items remind me of Benjamin Franklin’s idiom, “In this world nothing can be said to be certain, except death and taxes.”

Greenspan was appointed by Ronald Reagan, and he served for 19 years under four presidents. “As one of the longest-serving Federal Reserve chairs in U.S. history,” notes CBS News, “Greenspan’s reign at the central bank coincided with the so-called Great Moderation, a period of stability from the mid-1980s until 2007 that was marked by low inflation, stock market gains and strong economic growth.” Greenspan also gets some blame for the 2008 financial crisis, but Democrats largely seeded that crisis.

Warsh clearly hopes to leave his own track record of success.

Following his first Federal Reserve meeting as chairman last week, he announced five task forces as part of the broad initiative of review and reform he promised in his confirmation hearing. According to the Washington Examiner, “The first task force will focus on Fed communications, the second on the Fed’s balance sheet, the third on the use and reliance on existing data sources, another will focus on productivity and jobs, and the final task force will examine the Fed’s inflation frameworks.”

Warsh explained, “They’ll have a straightforward charge — start with first principles, ask hard questions, examine current practice, consider alternatives, and ultimately propose next steps for policymaker consideration.” He wants “a Federal Reserve that is clear-eyed about its mission, fit for purpose, and focused on the future.”

He obviously knows that’s a lot easier said than done. As I wrote in 2022, “Among the 780 economists across the entire Federal Reserve System, Democrats outnumber Republicans more than 10 to one. On the Board of Governors, that ratio is an appalling 48.5 to one.” Economist Emre Kuvvet sussed out those numbers. Four years later, no one has offered much of an update, and there’s little reason to think those ratios don’t persist.

Warsh may have great intentions, but changing the Federal Reserve’s course will only be achieved by changing its partisan makeup. I don’t mean to play the role of Debbie Downer, but left-wing economists and governors are going to push left-wing policies.

Hence, the task forces. It seems Warsh aims to persuade with data rather than diktats.

Still, Warsh already delivered somewhat of a win after that first meeting. The Wall Street Journal’s editorial board explains, “The central bank’s policy decision — to maintain the target fed funds rate at 3.5%-3.75% — hadn’t been in doubt before the Federal Open Market Committee meeting. The news was that Mr. Warsh managed to corral a unanimous 12-0 vote in favor despite the previous public views of some governors that a rate increase was called for.”

Another big part of his change is reigning in the forward guidance regarding interest rates. Prognosticators love the Fed might do X rumors and projections, but Warsh seems to want to dial that back. Instead of the market fluctuations brought by such projections, Warsh said the Federal Open Market Committee “will deliver price stability.”

“I think financial markets perform best when they react to incoming data,” he said. “I think the financial markets work less efficiently when they ask a question, ‘How will the Federal Reserve react to that incoming information?’”

On a final note, since 2021, the U.S. Bureau of Labor Statistics has estimated cumulative inflation at 28%, though that figure is misleadingly low, given that many goods and services saw price increases far beyond that. Regardless, one thing is certain: Americans are exhausted with five years of persistent high inflation. Warsh definitely has a mandate to get back to normal.

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