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Hi, everybody—and welcome to this week’s Receipts newsletter. Before we get into today’s big news from the Fed, here’s some big news from me: My new Receipts podcast launches this Friday. Not to worry, JVL and I will keep doing our regular live Receipts podcast on Fridays, but we’ll also have more episodes earlier in the week with other Bulwarkers and outside guests. It’ll all be released under a separate feed (rather than the Bulwark Takes feed), wherever you get your podcasts.
Now on to the headline: Trump picked Kevin Warsh to chair the Fed on one condition: cut interest rates. Instead, the Fed under Warsh’s leadership just unanimously voted to raise rates—and signaled more hikes are coming. The irony is that Trump gave them no choice. His own policies reignited inflation, and now the central bank is doing exactly what central banks do when inflation runs hot.
Have a theory as to how Warsh escapes this rate-hiking cycle without Trump going to war with him? Drop me a note in the comments. And if you’re not already a Bulwark+ member I hope you’ll take this opportunity to join our community:
Support ‘Receipts’—join Bulwark+
–Catherine
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THE FEDERAL RESERVE RAISED interest rates today, and Donald Trump is Big Mad. After all, his litmus test when choosing a new Fed chair was a pledge to cut rates, and Kevin Warsh delivered the opposite.
But if Trump doesn’t like how things turned out, he has only himself to blame.
Most of the time, Trump is a master marketer and a manipulator of media narratives, someone who can flood the zone with shit and then sculpt from that shit whatever he likes. Just think back to everything he promised as he ran for president in 2024: In Trump’s telling, as soon as he re-entered the White House, prices would immediately come down. All his tariffs would be paid by foreigners. Cleansing the country of our brown immigrants would usher in a hiring boom for “heritage” Americans. Allowing coal plants to pollute more (among other “deregulatory” moves) would precipitate a surge of economic investment. Somehow, we’d pay off the national debt and also get new tax cuts. And by sheer force of his political will, we’d all bask in his new economic “golden age.”
Before January 20, 2025, maybe some of this seemed plausible. Twenty months later, reality has finally caught up with him.
It caught up with him via his approval numbers; he’s deeply underwater on the economy and (nearly) every other issue.
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It’s also caught up with him in the economic data.
Inflation had been cooling when Trump first entered office, then began heating back up around “Liberation Day” (April 2025). But his one-two punch of tariffs and the Iran war sent prices surging for steel, oil, fertilizer, tomatoes, you name it.
Which brings us back to the Fed. Trump has basically boxed them in.
If Trump had done literally nothing when he entered office—just played golf each day—we probably would have achieved our “soft landing” on inflation and not needed additional rate hikes.
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Instead he has set into motion all those forces that drove up prices. Perhaps worse, he has also led the public to expect higher prices in the years ahead, which can become a self-fulfilling prophecy. This month, for example, consumers said they expected prices to rise by 4.6 percent over the next year; in the six months before Trump took office, that number had been in the high 2’s.
These are conditions under which the Fed has little choice but to show they’re serious about inflation by raising rates. And perhaps not just raising them once; based on anonymized projections the Fed released today, most Fed officials expect at least one more rate hike between now and the end of the year.
Receipts With Catherine Rampell—a new companion podcast to Catherine’s weekly Receipts newsletter—is launching September 18. Join Catherine, JVL, and other Bulwarkers and guests on YouTube or wherever you get your podcasts. Follow the Receipts:
Apple Podcasts | Spotify | YouTube | More
TRUMP APPEARS TO BE BOTH FURIOUS and confused about why the Fed is doing this. He’s furious because he wants lower rates to juice the economy ahead of the midterms. And he’s confused because, well, he’s a moron.
He thinks that America is the biggest and bestest and golden-age-iest economy in the world, with the “best credit,” so therefore we “should be paying the lowest interest rate in the world.” This is an argument you might expect a real estate developer to make about why they should get a low rate on a commercial loan.
But it is not how the Fed sets rates.
In fact it’s close to the opposite of how the Fed sets rates.
The Fed doesn’t lower interest rates because an economy is strong and booming. It lowers interest rates when an economy is weak and needs a boost.¹ Inversely, it raises rates when it worries the economy is running a little too hot and price growth is getting out of hand. The central bank’s job is to take away the punch bowl just as the party gets going.
This is precisely why the Fed felt compelled to act. As Christopher Waller, one of the seven Fed governors, put it this summer: “Sternly staring at inflation until it melts before our withering gaze is not an option.”
The Fed actually kinda tried that “withering gaze” thing for a while. (Waller made that comment before the July meeting, when the Fed chose not to change rates.) It didn’t work. And when Kevin Warsh was asked today at a press conference what, pray tell, changed between July and now, he alluded to the worsening Iran war.
Well, he didn’t mention the war specifically; he instead vaguely cited “geopolitics” and “hotspots”: “There’s no hiding from hotspots around the world and our judgment about what is the most likely or least likely of the geopolitical situation has changed.”
Likewise, the central bank’s statement announcing today’s rate hike referred just to “geopolitical developments,” stepping away from the specificity the Fed had used in prior months when it referred to “conflict in the Middle East.”
It’s unclear whether that shift was intended to avoid inflaming Trump; if that was the plan, it appears to have worked. Trump lashed out on social media about the rate hike:
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But note that he did not trash, bully, threaten or criminally investigate Warsh, as Trump had done with Warsh’s predecessor Jerome Powell (another Trump appointee) when Trump was similarly unhappy about the path of interest rates. In fact he didn’t namecheck Warsh at all.
Assuming Fed officials’ forecasts are roughly correct, and today’s decision was not a one-off but rather the first of multiple rate hikes, I don’t know how long Warsh will be able to avoid the Powell treatment. It’s possible Warsh thinks he can charm or cajole his way out of similar harassment and lawfare; in yet another violation of longstanding norms, Warsh and Trump reportedly talk regularly,² and at today’s press conference Warsh declined to answer questions about when they last spoke.
Of course, other public officials have thought they could “handle” Trump in the past. And reality caught up with them, too.
Ramparts
— The Fed sets short-term interest rates, but long-term interest rates have been rising too (for multiple reasons, including elevated inflation, deficit concerns, and AI-related companies issuing a lot of their own debt). The ten-year Treasury yield recently hit its highest level since 2007; this has knock-on effects for other kinds of debt, including mortgages, which are now hovering around 7 percent.
— Remember how I warned last month that Congress was about to give Trump the nuclear bomb of tariff authorities? Yeah, that bill just passed the House today—with bipartisan support, as happened when it passed the Senate last month—and it now goes to Trump’s desk to await his signature. What’s the over/under on how long it takes before Trump decides to deploy his new power to place 100 percent tariffs on virtually whatever country he chooses?
— Thirteen of sixteen developing economies surveyed by the Rockefeller Foundation rank the United States as the greatest threat to their own country—ahead of both China and Russia.
— Turns out it literally pays to bet against Trump. A new study examines how well pro-Trump vs. anti-Trump trading strategies have performed on Polymarket. The results show that the anti-Trump trading strategy consistently outperformed both the pro-Trump strategy and a neutral benchmark.
— Tariffs for thee, none for me.
— Trump has made 28,700 securities trades since returning to office, which is more than all of Congress combined. Note that he is pushing for a stock-trading ban for lawmakers (a ban that wouldn’t affect him, naturally).
— A judge has temporarily blocked Trump’s latest effort to destroy the country’s ability to attract and retain international students, by limiting student visas to four years (regardless of how long an academic program lasts). Meanwhile, in a throwback to the Mao era, the Chinese government is now restricting the ability of Chinese citizens to travel abroad, which would perhaps do Trump’s work for him.
— The EPA is launching a study that will test for traces of the abortion pills mifepristone and misoprostol in the water. Separately, the EPA says that regulating greenhouse gas emissions at coal plants is none of its business.
— I had missed this last month: The Census Bureau has indefinitely delayed release of the one-year estimates from its American Community Survey data. ACS data are critical for businesses to make investment decisions, federal/state/local governments to set funding levels for public services, etc. You can find my long-running thread tracking data deletions and scientific censorship here (scroll up).
— About a quarter of U.S. workers, a new high, worry that technology could soon make their jobs obsolete. It used to be that non-college-educated workers were a lot more anxious about getting replaced by robots, but lately the gap has narrowed.
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— I hopped on the Bulwark Daily pod with Tim Miller today to talk about Scott Bessent, interest rates, and the hijacking of the census. You can catch it on Substack here, on YouTube here, or via whatever podcast platform you like best.
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The easiest way Trump can get his beloved rate cuts would be throwing the economy into recession—but let’s not give him any ideas.
For many years the Fed chair and Treasury secretary have had a weekly standing meeting, but due to concerns about both real and perceived central bank independence, presidents have had limited direct contact with Fed officials. It was a big deal in Trump’s first term when the president summoned Powell to the White House. The Fed was so worried about the optics that it released a statement at the time declaring that Powell told the president “that he and his colleagues on the Federal Open Market Committee will set monetary policy, as required by law, to support maximum employment and stable prices and will make those decisions based solely on careful, objective and non-political analysis.” By contrast, here’s Warsh today: “I’ve got nothing for you on a discussion with the president.”
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