Reagan economic advisor blasts Fed as incompetent, slow to fight inflation

Ronald Reagan's former economic advisor is sharply criticizing the Federal Reserve Board, saying it has been slow to fight inflation and shown a lack of competence.

"Unfortunately, the Fed is not a very competent Fed Board. And I don't mean that meanly at all. They're very nice people. They're good people," Laffer told "Just the News – Not Noise" on Wednesday. 

"This is a Fed that has been selected based upon characteristics other than competence in economics. And that's not what you want running your country. You want the most competent people," Laffer added.

The Senate voted earlier this month to confirm Jerome Powell to a second term as Fed chairman, even though inflation is at a record high under his tenure. 

Laffer, also known for his famous Laffer Curve tax theory, said the Fed has been "very slow, very slack" to fight inflation, thus risking a downturn.

"The Fed is wrong that it stopping inflation should not hurt the economy. If we had no inflation whatsoever, the stock market goes through the ceiling. The Fed needs to get on top of this right away," he urged.

Interest rates should be above the rate of inflation, Laffer said.

The Fed raised interest rates by 50% earlier this month, putting the rate at 0.75% to 1.00%. 

The U.S. is experiencing record inflation. In April, the consumer price index rose 8.3% and wholesale prices skyrocketed 11% from the year prior.

The Fed has been "very slow" in acting on inflation, Laffer said, explaining, "the consequences are here."

However, the economist said there is a "huge silver lining" for America.

"The poll numbers for Biden are way way down. The prospects for the elections in 2022 are way up," Lauffer observed. 

Republicans look like they will gain control of the House and possibly the Senate during midterms this fall, he added. 

"All of that would be very much for the better, because that means that Biden in his last two years, wouldn't be able to do with his crazy agenda," Laffer predicted. 

"Maybe then we get a good president come in 2024, taking office in 2025, and getting a set of policies into place maybe as early as 2026. And that would be a wonderful news for the country," he said.