Laffer, best known for his role as a pioneer of supply-side economics, warned host Harris Faulkner that America’s inflation problem is about to get a lot worse.
“As you know, I was involved with the Reagan administration extensively, and we watched that inflation [from the late 1970s and early 1980s] build up, and if you think inflation is a problem now, just wait. They are doing nothing to stop it. Nothing.”
Laffer went on to criticize the Fed’s practices of spending and printing more money and buying bonds.
He also discussed the consequences of combating inflation by raising interest rates, saying the rates would have to reach higher than the rate of inflation.
“They’re spending more money, they’re printing more money, they’re buying bonds, they haven’t started doing what Paul Volcker did to get it under control.
“If they’re going to raise interest rates to stop inflation, they’ve got to raise them so they’re much higher than inflation. That would mean having interest rates in the 10-12% range,” he added, explaining that would lead to a recession.
“They’re not even thinking that way. They’re going to cause a recession and not stop inflation, a double whammy for them. It’s terrible. Just look at Jimmy Carter and what happened.”
He also warned that not only would lower-income Americans experience the biting effects of spiraling inflation, but so will investors and Democrats who lose their seats in November.