David Stockman to Newsmax: 'Rogue' Federal Reserve 'Must Be Reformed'

The Federal Reserve is a "rogue institution" that holds too much sway, and it "must be reformed," David Stockman, a prominent author and former budget director to President Ronald Reagan, said on Newsmax, Sunday.

"They do not know what they're doing," Stockman told Newsmax's "Wake Up America," while discussing Fed Chair Jay Powell's statement last week that it may be time to cut interest rates.

"The incoming data is totally unreliable and noise-ridden," Stockman added. "It is constantly revised. They should not be trying to micromanage the economy week to week, month to month in terms of the inflation rate, the employment rate and everything else.

"They have given themselves that mission, and it's a complete failure."

He added that the Fed's continued actions are "wrecking the free enterprise economy that could bring prosperity to the United States."

Powell said Friday that he expects the central bank, which is set to meet next on Sept. 17, to cut its key interest rate in response to inflation and economic growth that has cooled.

"The time has come for policy to adjust," Powell said in his speech at the annual Fed summit in Jackson Hole, Wyoming, reported NBC News.

"In the housing market, they cut rates down to zero in March 2020," Stockman said Sunday. "The average house in the U.S. was $260,000. And you paid about $7,000 for a mortgage annually at, you know, at 20% down. Today, you pay $21,000 annually at 20% down because housing prices are up by 40%. How did that happen? Because they flooded the economy, the market with cheap money and artificially depressed interest rates."

Meanwhile, Wall Street is "feeding [the Fed] all kinds of juice to get the stock market going up again," said Stockman.

"We really need to understand, the biggest problem in America today is the Fed, the Fed, the Fed, and it needs to be radically reformed," he added.

Paul Mueller, a senior research fellow at the American Institute for Economic Research who also appeared on Sunday's show, commented that in an "ideal world," Powell might have wanted to wait until after the election to cut interest rates.

However, "given the rise in unemployment, the revision to job numbers, softening demand in other parts of the economy, I think the Fed is going to be very ready to start cutting rates in September," said Mueller.

Stockman said that the timing is "so suspect."

"Inflation has not been whipped," he said. "It's still running at 3%. Plus people have had a 20% increase in grocery prices, 40% increase in gasoline, 22% increase in rents. Why in the world do they think at this moment it's time to turn on the printing presses again?"

But Wall Street is "demanding another sugar high" so it can drive up the stock market even higher, said Stockman.

"This is a terrible announcement," he said. "It almost suggests that Powell's in the tank for [Kamala] Harris and the Democrats because otherwise it's inexplicable to me."

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