I imagine (I hope) this has occurred to someone other than me, but just in case: No one who’d accept the position of Fed chair under the current domestic political circumstances in America deserves “the benefit of the doubt.”

True, we knew enough about Donald Trump’s autocratic tendencies to harbor legitimate concerns about the future of American democracy when Jerome Powell took the reins from Janet Yellen in 2018.

But I dare say even the most pessimistic observers had only an inkling of how far down the road to autocracy Trump would ultimately go while indulging his authoritarian predilections.

I was surprised, and I must say a bit dismayed, this week, to see and hear so many intelligent people draw a distinction between Warsh and everyone else who’s accepted a leadership role in Trump’s second-term government.

The notion that comparing Warsh to, say, Pete Hegseth or Howard Lutnick, is apples-to-oranges given that the Fed’s not beholden to Trump in the same way the Pentagon and the Commerce Department are is an exercise in question-begging. And a rather exasperating one at that. Fed independence is the crux of the issue. To take it as a given for the purposes of discussing Warsh’s chairmanship is to assume away the very question being asked.

If you think that’s safe or excusable, note that Jerome Powell begs to differ. As he put it a mere seven weeks ago while announcing his intention to remain on the Fed board past his tenure as chair, “I had long planned to be retiring, but the things that’ve happened over the last three months have left me no choice but to stay.”

That wasn’t Powell’s pride talking. That was Powell regretting, aloud, that he’s being forced to choose between riding off into the sunset with $75 million taped to his butt and leaving the fate of the world’s most important institution to chance.

If Powell thought the Fed was in good hands and that giving Trump another board seat to fill wouldn’t be a risk too great to take, he’d be spending every day doing whatever someone like Jay does when he’s not working. (You know: Tooling around his neighborhood on a bicycle and reading books that are just as terribly boring as what he probably eats for lunch.)

Whoever hasn’t thought this through, I can assure you Trump and Powell have: If Powell stepped away and, between them, Samuel Alito, Clarence Thomas, Neil Gorsuch, Brett Kavanaugh and Amy Coney Barrett let Trump fire Lisa Cook, The White House would end up with enormous de facto representation on the Fed board.

Although Chris Waller and Miki Bowman aren’t lost to us entirely, it’s fair, I think, to suggest they’re “MAGA curious.” Once you get down to, let’s call it core PCE 2.5%, those two will be amenable to politicized rate cuts. Warsh + Waller + Bowman + two lackeys = five out of seven board members. That’d be bad news for credibility.

I don’t think SCOTUS will ultimately open this particular Pandora’s box recognizing, as at least some of the conservative majority surely will, that giving The White House leeway to fire Fed governors could come back to haunt Republicans in the event Trump isn’t immortal after all, and as such won’t be president forever.

But the near-term risk is very, very real. Just ask Stephen Miran’s unblemished record of dissents in favor of rate cuts during his tenure filling in for Adriana Kugler (whose husband likes to trade).

Warsh, I reckon, thought all of that through just like Trump and Powell. And he took a side. Trump’s. Because, as alluded to here at the outset, only someone sympathetic to Trump’s agenda or, if that’s too conspiratorial, amenable to his overbearing bearing, if you will, would take this job having borne witness, as we all have, to the events which Powell viewed as concerning enough to delay his own retirement.

What I don’t think Warsh thought through, or not all the way through anyway, are the potential ramifications of loudly forswearing forward guidance in an extremely fraught geopolitical environment and at what many believe to be the apogee of a US stock market bubble, all while serving under a man whose vanity is the stuff of legend.

The figure above, from BofA, gives you some historical context for the market dominance of the Mag7 plus Broadcom, AMD and Micron.

“AI is now 39% of the S&P 500,” BofA’s Michael Hartnett remarked, in this week’s installment of his popular “Flow Show” series. That, he went on, is usually “the ceiling” for “bubble concentration” if you don’t include the railroad boom.

Fingers crossed, Warsh will be lucky, where that means oil prices will recede and an AI-assisted, productivity renaissance will help cap underlying inflation, allowing him to cut rates or at least eschew raising them, in the face of brisk growth and a booming equity market. All while staying relatively mum.

But if anything goes “wrong-way” on Warsh — and Fed chair tenures are like US presidencies in that something will invariably go wrong-way at some point — a self-imposed ban on forward guidance and an insistence on curt FOMC statements could be a severe liability.

If we get a bear market, Trump will want Warsh “out there” talking stocks back higher and signaling rate cuts. In a downturn, he (Trump) would also want promises regarding low rates enshrined into official Fed communications.

You could also a picture a scenario where another supply shock — or, if the last five years are any indication, a series of rolling supply shocks — prevents inflation from coming down sustainably, forcing Warsh to hike.

In that case, a market addicted to forward guidance and accustomed to knowing, with something like certainty, how large any rate move’s likely to be ahead of the official announcement, may have a hard time grappling with a terse FOMC statement that says little more than “We’re raising rates.”

The figure above, from BMO’s Ian Lyngen, gives you a sense of what I meant on Wednesday when I said the June statement “looks more like something that might’ve emanated from a pre-Lehman Fed.”

Lehman was nearly two decades ago. Some of today’s STIR traders were in Kindergarten the last time FOMC statements were as short as the one Warsh issued this week.

Additionally, consider that market structure’s different now than it was back then. Many algos and programmatic strats trade on textual analysis and natural language processing. If there’s no text to parse and no language to process, what are those models going to “think”?

I’m not arguing for excessive forward guidance, nor for over-communication. All I’m suggesting is that Warsh’s approach, whatever the merits, may be conducive to “extra” volatility in the presence of shocks and uncertainty. As Hartnett put it, describing the zeitgeist, “Warsh is the best thing that’s happened to macro trading in a long time.”

I don’t think that’s tenable for a beholden Fed chair. Warsh would say he’s not beholden. And I’d laugh in his face. Then I’d tell him that his plan to draw the proverbial blinds in the interest of, among other things, reducing moral hazard associated with forward guidance, could quite easily backfire.

My guess is Warsh will end up talking more than he says he wants to, beginning promptly at the first sign of real trouble. That’ll be true even if he doesn’t say much publicly. Because if his penchant for rhetorical frugality manifests in “too much” volatility to the detriment of US stocks, Warsh will be Lucy to Trump’s Ricky. That is, he’ll have a lot of “‘splainin’ to do” behind the scenes.