Fed's inflation strategy could make economy worse, former Fed Board nominee warns

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Fed's inflation strategy could make economy worse, former Fed Board nominee warns

Former Federal Reserve Board nominee Judy Shelton warned on Friday that the Fed's strategy to combat inflation with rate hikes could make the nation's economic situation worse, and the nation's economic situation worse. Shelton criticized Treasury Secretary Janet Yellen for endorsing the wrong initiatives like more spending policies and regulations on Mornings with Maria.

JUDY SHELTON: I think it could get very serious the longer it drags on, because if the Fed is trying to crush inflation instead of just crushing supply, you won't see much improvement in the inflation outlook, which the Fed will take as a sign that they need to be even tougher. They end up ratcheting higher and higher. I think we're looking at the worst of all worlds -- an inflationary recession or stagflation. I don't see how they're going to get out of this. In her comments yesterday, Treasury Secretary Janet Yellen also included remarks praising the Inflation Reduction Act and she knows better. She was a proponent of the green agenda. She said that the Biden administration's unfinished business is to increase taxes on the wealthy and corporations. These are the wrong initiatives if you want to increase supply. We need lower regulation, lower taxes, better energy, better trade policies, and we need to expand supply.