These presidents found out how trying to control the Fed chair can backfire

Subscribe to enjoy similar stories. President Trump chose a Federal Reserve chair, Kevin Warsh, he thinks he can count on to lower interest rates. History suggests three different ways presidents have come to regret that bet.

The chair could deliver the lower rates the president wants and unleash inflation, which is what happened to Richard Nixon with Arthur Burns. He could be loyal but unable to bring his colleagues along, as Jimmy Carter discovered with G. William Miller.

Or he could turn independent and raise rates against the president’s wishes, as Harry Truman learned with William McChesney Martin Jr. Their experiences offer a road map for how Warsh’s chairmanship could unfold—for Trump and the nation. Trump made clear what he expects from Warsh at Saturday night’s Alfalfa Club dinner in Washington.

After asking Warsh to stand, Trump wisecracked that he would sue him if he failed to lower rates. It was a loaded joke given his public attacks on the current chair, Jerome Powell, which includes a Justice Department criminal investigation. Powell, whom Trump appointed in 2018, was in attendance.

It isn’t the first time a president used humor to tell his Fed chair appointee what he wants. At Burns’s swearing-in in 1970, Nixon quipped that the audience’s applause was “a standing vote of appreciation in advance for lower interest rates and more money." Burns had been Nixon’s longtime economic adviser, and Nixon made no effort to hide his expectations: “I respect his independence. However, I hope that—independently—he will conclude that my views are the ones that should be followed." Burns delivered, holding rates low before the 1972 election.