President Donald Trump’s former economic advisor, and one-time Federal Reserve Board nominee, Judy Shelton, is praising his efforts to confront the U.S. central bank, calling it a necessary correction following decades of unchecked power.
Trump Challenging The Fed Is ‘Very Gratifying’
Shelton who was once nominated to the Federal Reserve’s Board of Governors, says that it’s “very gratifying that President Trump is challenging the Fed,” framing it as being “healthy” and something that was “long overdue,” during her appearance on MSNBC’s “Squawk Box” on Monday.
She says that the Central Bank has become “too powerful,” “too prominent in financial markets,” and “way too political,” while adding that the restrictive Federal policy has been hindering small and medium-sized businesses.
“I think that he [Trump], like myself, probably thinks that it’s ludicrous for the Federal Reserve to be deliberately imposing restrictive interest rates, which just prevents access to capital for the private sector,” she said.
She also criticized the system of paying interest on excess reserves, claiming it discourages lending. “It is a considerable part of the net interest income of banks,” she says, pointing to it as the reason why banks resist any changes to this mechanism.
Reflecting on the Fed's actions during and after the 2008 financial crisis, Shelton said the central bank's approach worsened inequality.
Trump’s Fed Meddling ‘A Risky Game’
Early this week, Sen. Elizabeth Warren (D-Mass.) accused Trump of “trying to take over the Fed,” while warning that his actions could result in higher costs for consumers.
“Mortgages, credit card interests, student loan payments, you name it,” she says, highlighting the broad-based inflation that could hit consumers, owing to political interference in the Fed.
Billionaire hedge fund manager, Ken Griffin, who is also a GOP megadonor, criticized Trump’s growing interference with the Federal Reserve, referring to it as a “risky game.”
“The president’s strategy of publicly criticizing the Fed, suggesting the dismissal of governors, and pressuring the central bank to adopt a more permissive stance toward inflation carries steep costs,” Griffin said, adding that America’s credibility, built over several years could be lost, as a result.
Photo Courtesy: Joey Sussman on Shutterstock.com
Read More:
