After Kevin Warsh was confirmed as Federal Reserve chairman last week, he received a stark reminder of the challenges facing the central bank. The reminder came in the form of a worldwide surge in the interest rates paid by government bonds. The surge followed the spike in oil prices caused by the Iran War.

The rise in bond yields comes along with the news that, according to government statistics (which are manipulated to understate the real rate of inflation), consumer prices increased by 3.8 percent over the past year while wages increased by 3.6 percent. This means that, even though many Americans received nominal wage increases, their real (adjusted for inflation) incomes fell.

The decline in real income is why more Americans are maxing out their credit cards or carrying large balances on cards. The high interest rates on those cards trap many Americans in debt burdens from which they are unable to escape.

President Trump’s “solution” to the economic problems facing many Americans is lower interest rates. Jerome Powell, who Warsh is succeeding as Fed chair, has refused to lower rates to the level desired by President Trump. This is a big part of why the president has said he chose not to reappoint Powell.

Concerns that Warsh would allow President Trump to dictate monetary policy help explain why only one Democratic Senator voted for Warsh’s confirmation.