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US economic downturn could get ‘very serious’ as Fed risks crushing demand with rate hikes: Judy Shelton

Judy Shelton, former Federal Reserve Board candidate, warned Friday that the Fed’s strategy to fight inflation with rate hikes could crush supply and worsen the country’s economic situation. On ‘Mornings with Maria’, Shelton also criticized Treasury Secretary Janet Yellen for approving the ‘wrong initiatives’, such as increased policies and regulations on government spending.

JANET YELLEN SAYS ECONOMIC RECOVERY DEPENDS ON SUPPLY CHAIN, GREEN AGENDA AND END OF UKRANEAN WAR

JUDY SHELTON: I think it can get really serious the longer it goes on because if the… The Fed’s Efforts to Crush Inflation instead just crush the supply, then you won’t see much improvement in the inflation outlook, which the Fed will take as a sign they need to be even tougher. And so they end up higher and higher. And so I think we’re potentially looking at the worst of all worlds — an inflationary recession or stagflation. And that’s what we want to avoid. But I don’t see how they get out of here. If you have Treasury Secretary Janet Yellen, in her comments yesterday she also made comments praising the Inflation Reduction Act and she knows better. She endorsed the green agenda. And she said the unfinished business of… the Biden administration is to raise taxes for the rich and for corporations. These are exactly the wrong initiatives if you want to increase the supply. What we really need is less regulation, lower taxes, better energy, better trade policy, and we need to expand the supply. Economic growth is not inflationary. Low unemployment is not inflationary. It’s fiscal overspending.

Read:The Fed’s fight against inflation could cost the US 1.2 million jobs

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