A week after former President Donald Trump secured a second term in the White House and days after the Federal Reserve announced a 25 basis point cut, Yahoo Finance’s Executive Editor Brian Sozzi sits down with Independent Institute senior fellow and former economic adviser to President Donald Trump, Judy Shelton. Sozzi and Shelton discuss the Fed’s duty, the state of inflation, Trump’s reelection, and crypto.

“I think that the Fed is straightforward in saying price stability is a responsibility of the Federal Reserve. That sounds good [and] even sounds noble,” Shelton tells Yahoo Finance, noting, “But we've gone through the worst inflation in 40 years. [When] it comes to accountability, I'm not sure of people being reimbursed for the loss and purchasing power [and] I don't think anyone got fired at the Fed.”

Shelton adds, “This is an interesting time when people are looking at the appropriate role of the Federal Reserve in a free market economy and, maybe, rethinking whether we want to have the interest rate, the most important price in a capitalist economy, the price of capital, do we want that to be set by a dozen people voting eight times a year, and deciding what it should be versus, say, having free market forces, demand and supply, allocate capital and establish interest rates?”

“I would be happy that kind of approach would dovetail with the incoming Trump administration because that would be a supply-side approach that would be same if you're going to have lower taxes, less regulation, you are empowering the private sector, and the goal is to also have reduced borrowing costs so that entrepreneurs can expand plant and equipment. They can hire people. They can start new businesses. And all of that feeds output. And if you have greater supply than demand, that is how you reduce inflation,” the economist says.

However, "the Fed fights [inflation], they say 'We can't do anything about supply without acknowledging that high borrowing costs are an obstacle to people who would otherwise expand production.' They just say, 'All we can do is cut demand.' So that's why they raise rates. And I think that's that's a fundamental problem with the Fed's model."

Watch the interview above for more of Shelton’s perspective on the right course of action for the Federal Reserve, Trump’s second term in the White House, what it means for Fed Chair Jerome Powell, crypto, and more.

To see every interview from Yahoo Finance Invest, click here.

This post was written by Naomi Buchanan.