(Video Above: Sen. Richard Shelby (R-Ala.) discusses Federal Reserve Chairman Janet Yellen’s congressional testimony.)
WASHINGTON — Sen. Richard Shelby (R-Ala.) has a simple but pointed response to questions about the United States Federal Reserve and its Chairman Janet Yellen: “I’m not sure the Fed knows what they’re doing.”
In the wake of Yellen testifying before the Shelby-chaired Senate Banking Committee, Alabama’s senior senator told CNBC he believes The Fed, as it is known, has a credibility problem.
“They’ve got a credibility issue in a lot of ways,” said Shelby. “The one I was referring to is that I’m not sure the data they collect everywhere and claim to be such experts at is working for them… Something’s amiss there, and we’re not sure what it is. I think it’s inside The Fed.”
The Fed’s money printing operation has pumped over four times as much money into the economy as President Obama’s stimulus package, all without the approval of Congress.
As a result, Shelby has in the past referred to the Federal Reserve as “the biggest enabler of our exploding debt.”
But in spite of their efforts, the U.S. economy remains sluggish.
“If you look at the history of artificial fiscal stimulus, it generally doesn’t work,” Shelby intoned. “The economy is really not as bright as the Fed chairman would tell us. The real unemployment rate is still too high, the economy is not growing the way we’d like it to do.”
Shelby also placed some of the blame on Congress.
“I’ve always thought we borrow too much money, we save too little money and we spend too much,” he said. “That’s congress and this administration, too.”
Many Republicans, including Sen. Shelby, believe Yellen’s monetary policies put the United States at enormous risk of experiencing rapid inflation. That would make every product Americans buy more expensive.
Also of note, while China is often mentioned by budget hawks as a major holder of U.S. debt — and it certainly is — the U.S. Federal Reserve actually holds almost twice as much of the U.S. debt than do the Chinese.
“She should know what she’s doing,” Shelby concluded of Yellen. “I’m not sure The Fed knows what they’re doing.”
