Republican presidential candidate Vivek Ramaswamy called for reform of the Federal Reserve Wednesday following its tenth interest rate hike over a 14-month period, bringing rates their highest level since before the 2008 financial crisis.
“We need to put the Federal Reserve back in its place, stabilize the U.S. dollar,” Ramaswamy told Fox Business host Larry Kudlow. “It’s like the equivalent if the number of minutes in an hour were floating and it was volatile, none of us would show up at meetings on time. You and I wouldn’t have this conversation on time.”
The Federal Reserve increased interest rates by 25 basis points, or 0.25%, Wednesday, the latest in a series of interest rate increases that started in March 2022. The Fed increased interest rates despite the U.S. economy slowing to a 1.1% growth in gross domestic product in the first quarter of 2022.
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“It’s almost as though we’ve abandoned GDP growth in the country. We’re talking about tax increases, or debate which cuts we need to make, forgetting that growth itself is an option. We’re growing at one-point-something percent now, if we’re growing at over 3+% GDP growth, that actually makes our other fiscal problems melt away. Unshackle the energy sector, put people back to work, and yes, reform the Federal Reserve, to make it not hostile to wage growth,” Ramaswamy said. “Every time wages go up, they treat it as a leading indicator of inflation when in fact wage growth is a trailing indicator of inflation. Which means the Fed tightens monetary policy into a business cycle decline anyway, triggering crises like they did in 2008, 2023 now.”
“But even more importantly, if you have a Federal Reserve that is just stabilizing the dollar, will actually stimulate GDP growth in the country,” Ramaswamy said. “We don’t need 23,000 employees in the U.S. Federal Reserve to do that.”
Ramaswamy noted that the Federal Reserve’s hostility to wage growth in its efforts to fight inflation had hurt the vast majority of Americans.
“Part of the reason the bottom 99% haven’t had as much wage growth, the Federal Reserve is fundamentally hostile to it. So I don’t think you can play the game hitting two targets with one arrow, because then you hit neither one, inflation and unemployment, is what I’m referring to, the dual mandate,” Ramaswamy said. “Forget about that, go back to stabilizing the dollar.”
The Federal Reserve has also been dealing with a banking crisis that started when Silicon Valley Bank was shut down by federal regulators on March 10 after its stock price collapsed and customers began a bank run. Signature Bank and First Republic Bank collapsed and were taken over by regulators after Silicon Valley Bank’s failure.
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