Inflation will be long-term problem if Fed doesn’t ‘wake up and smell the coffee’: Art Laffer
Former Reagan economist Art Laffer argues interest rate hikes need to be higher, otherwise the U.S. economy could face ‘tragedy.’
Former Reagan economist and “Trumponomics” author Art Laffer warned the U.S. economy is headed towards a recession if the Federal Reserve doesn’t raise interest rates at a quicker, hawkish pace.
“This Fed has not a clue as to how to stop inflation,” Laffer said on “Mornings with Maria” Thursday. “And as such, I think we’re dealing with a long-term problem until they wake up and smell the coffee.”
On Wednesday, the Fed approved a 0.25 percentage point rate hike – the first in more than three years. However, Laffer argued the rate should be closer to 4% above the current inflation rate.
“The rate should be much, much higher. If we’ve got an inflation rate of about 7 or 8%… the rate should be around 4% above that, it should be 11 or 12%,” Laffer told FOX Business’ Dagen McDowell. “This is what [former Fed Chair] Paul Volcker did to stop inflation in the late 70s, early 80s.”
US Federal Reserve Chairman Jerome Powell testifies before the House Oversight And Government Reform Committee. (Photo by AL DRAGO/AFP via Getty Images | istock / Getty Images)
HERE’S HOW THE FED’S RATE HIKE COULD IMPACT MORTGAGES
By not tackling inflation aggressively enough, Laffer pointed out, the weight could fall on Americans’ wallets.
“When you get these inflations up, it destroys the capital market, it destroys values, it creates huge capital gains that are taxable, that are just to offset inflation,” Laffer explained.
“It has a lot of negative impacts on the society and will lead to a lot slower growth, if not a deep recession,” he continued.
GET FOX BUSINESS ON THE GO BY CLICKING HERE
While stopping inflation is not easy nor costless, Laffer said the Biden administration is simply not doing their job to tackle the issue.
Former Reagan administration economist Art Laffer says he can’t think of one Biden policy that won’t damage the economy.
“These people have an unbelievable capacity to make errors. And Joe Biden so far is making about every single one in the book,” Laffer pointed out. “I think it’s going to lead to a lot of damage to the U.S. economy.”
Source link
