I attended the annual Goldman Sachs economic outlook forum this past week at the El Encanto resort. It felt less like a forecast than a reminder of how policy choices shape outcomes. Much of the discussion, slowing growth, restrictive financial conditions, heavy government spending, and regulatory drag echoed the late Jimmy Carter era. In important respects, the economic failures associated with “Bidenomics” follow a similar path.
When Ronald Reagan took office in 1981, the economy was already unraveling. Interest rates neared 20%. Inflation was rampant. Unemployment was rising. Confidence had collapsed. I was running a high-tech business in Detroit at the time, where unemployment exceeded 20%. Capital dried up. Hiring stopped. Morale vanished. Reagan’s administration pivoted decisively, restoring discipline, curbing inflation, and easing rates once conditions allowed. The result was one of the most durable economic expansions in U.S. history. The lesson is straightforward: in fragile economies, delay and policy misalignment can inflict more damage than timely course correction. That lesson now confronts the Federal Reserve at a moment of both policy hesitation and leadership transition. After tightening aggressively to counter the inflation surge of 2022–2023, the Fed has settled into a prolonged pause. Under Chair Jerome Powell, rates remain restrictive even as inflation cools, growth slows, and labor-market momentum weakens. The risk is no longer under-tightening; it is over-tightening, and for too long. The leadership transition heightens that risk. Chair Powell’s term ends this spring, and President Trump has signaled his intention to appoint Kevin Warsh as the next Fed chair. Markets have reacted anxiously, with some observers branding Warsh a “hawk” and attributing recent volatility to that assumption. That reading is superficial. Warsh’s public record reflects a disciplined and historically informed view of monetary policy. He has repeatedly pointed to Alan Greenspan’s leadership in the early 1990s, when the internet-driven productivity boom rewired the inflation-growth relationship. Greenspan resisted pressure to tighten prematurely, recognizing that productivity gains could absorb growth without igniting inflation. His patience delivered stronger expansion, stable prices, and improved U.S. competitiveness.
The parallel today is compelling. Artificial intelligence, automation, and software-driven efficiency are again reshaping productivity across the economy. These forces are often disinflationary, not inflationary. Applying a backward-looking framework to a structurally changing economy risks repeating the mistakes Greenspan avoided, tightening too early, suppressing growth, and mistaking transformation for overheating. Against that backdrop, a measured rate cut is not radical. It is orthodox.
The Fed was right to raise rates when inflation surged. But monetary policy operates with long and variable lags. The danger now is overshoot, holding rates too high for too long and inducing a slowdown that is neither necessary nor inevitable. Monetary policy is not about optics or politics; it is about judgment. Today, the greater risk is holding rates too high for too long. High rates impose real costs. They raise the price of capital for businesses weighing hiring and investment. They strain household finances through elevated mortgage, auto, and credit-card rates. They freeze housing mobility and construction. And they add tens of billions of dollars annually to federal debt-service costs.
Some argue that cutting rates now would appear political. But monetary policy is not theater. It is results-driven. Credibility flows from judgment, not stubbornness. This is not a call for reckless easing. It is a call for disciplined, data-driven leadership. A gradual reduction in the federal funds rate, begun now, would support employment, ease financing pressures, reduce taxpayer costs, and align policy with current conditions rather than outdated fears. Reagan understood when decisiveness was required. Greenspan understood when patience served growth. The Federal Reserve should draw from both lessons.
Delaying action in the name of neutrality is itself a choice, one that risks turning caution into error. The Fed should cut rates modestly and restore momentum before a manageable slowdown becomes an avoidable one.
Igor M. Sill is a Santa Barbara resident and the founding partner of San Francisco-based Geneva Venture Partners. He previously managed U.S. investments for AXA, Société Générale, Financial de Brienne, the François Pinault family office and many family offices.
