US Federal Reserve

Kevin Warsh's PredictIt odds to be the next Fed chair soared moments ago after the WSJ reported that President Trump and Treasury Secretary Steven Mnuchin met with the former Fed governor on Thursday to discuss his potential nomination as the next Federal Reserve chairman, "a White House official said, signaling that the West Wing is moving ahead with a process that the president has said he would like to have completed by the end of the year."

In immediate reaction, Warsh's odds jumped by 10% to 45% while Janet Yellen's tumbled by 8 to 24%.

Authored by Stephen Roach via Project Syndicate,

A decade after the onset of the global financial crisis, it seems more than appropriate for central bankers to move the levers of policy off their emergency settings. A world in recovery – no matter how anemic it may be – does not require a crisis-like approach to monetary policy.

With the Fed finally admitting it is confused by the "mystery" of inflation, it has also become painfully clear how perplexed it is by the biggest asset bubble in history that the Fed and its central bank peers have blown. But don't call it a humorless bubble.

Yesterday, Janet Yellen stated that the Fed was “wrong” about employment and inflation.

I realize that the significance of this might be lost on many individuals. The Fed’s ENTIRE purpose is to pursue “maximum employment” and “stable prices”(aka low inflation). Indeed, these are LITERALLY the words in the Fed’s official “Dual Mandate” from Congress.

As ZeroHedge readers are keenly aware, 2008 kicked off the largest financial engineering experiment in history – namely, the beginning of 12.3 Trillion in QE and the lowest interest rates in 5,000 years. The plan, hatched by Bush-era Fed Chairman Ben Bernanke and Treasury Secretary Hank Paulson, created a ‘Fed Put’ underneath the markets first made popular by Alan Greenspan – an implicit guarantee that no matter how bad things got, the Fed would actively combat financial disaster.