Quote of the Day by Kevin Warsh on inflation: ‘Money on Wall Street is too easy, and…’

Quote of the Day: “Money on Wall Street is too easy, and credit on Main Street is too tight” — Kevin Warsh.

Inflation has been a talking point in the US in the recent years, especially after Donald Trump took office as President. Since taking over as the President of the United States, Trump has sparred with Federal Reserve Chairperson Jerome Powell over his moves to not lower interest rates, saying that this action has kept Fed rates high.

Kevin Warsh, who was nominated as the new Chair of the Federal Reserve, echoed these sentiments on inflation and called it a ‘choice’ in a new Wall Street Journal op-ed.

The quote of the day today also talks about that. Here is everything you need to know about quote of the day today.

“Inflation is caused when government spends too much and prints too much. Money on Wall Street is too easy, and credit on Main Street is too tight,” he said.

The phrase “Money on Wall Street is too easy” criticises how large financial institutions like banks have easy access to money even during inflation.

The phrase “Credit on Main Street is too tight” means that small households still face tight credit conditions during periods of high inflation.

The line highlights the disparity of access to money between large financial institutions and small households.

Warsh said that the Fed made major mistakes by keeping the policy to loose for too long. This becomes relevant especially because Donald Trump has criticised the Fed for its policies, often training guns at Jerome Powell. Trump has claimed that lower interest rates would help with easing inflation and therefore take load off the economy.

“The Fed’s bloated balance sheet, designed to support the biggest firms in a bygone crisis era, can be reduced significantly,” according to Warsh.

Warsh served on the US central bank’s Board of Governors from 2006 to 2011. He is also close to Donald Trump and has advised the president on economic policy, according to a Bloomberg report.

Jerome Powell's term ends in May this year, but he is not obligated to leave the Fed's Board of Governors until 2028.

Warsh’s path to confirmation in the Senate, however, faces significant hurdles. Since the revelation in January that the Department of Justice was pursuing a criminal investigation into a building renovation project at the Fed, and into Powell’s congressional testimony about the project, Senator Thom Tillis, a Republican from North Carolina, has said he wouldn’t vote for any new nominees to the Fed until the investigation is resolved.