The Federal Reserve has erred in keeping interest rates near record lows, says former Morgan Stanley economist Stephen Roach, now a lecturer at Yale University.

“Financial repression is the right word” for what the Fed is doing, he tells Bloomberg.

The consumer sector is damaged, with the real growth rate of consumer spending averaging just 0.5 percent annually over the past four years, Roach says.

Editor's Note: Economist Unapologetically Calls Out Bernanke, Obama for Mishandling Economy. See What They Did

“Consumers are getting no interest income. They’re net lenders to the rest of the economy,” he says.

“The theory of the Fed is to keep lending rates down, because banks will do the work. They’re forgetting about the 71 percent of the economy, which is the American consumer, who desperately needs spending power and interest income.”

The Fed has to realize that the financial crisis is over, Roach says. “The banks that are going to survive have been saved,” he maintains.

“It’s time to think about producing more normal interest rates that give more normal returns to lenders. . . . We don’t need to inject more liquidity into banks that are unable to convince consumers to borrow.”

Some Fed policymakers lean toward Roach’s view.

"Further accommodation [by the Fed] at this stage of the business cycle could lead us down a very treacherous path that would . . . increase the already-substantial risk of higher inflation," Philadelphia Fed President Charles Plosser said Thursday, according to The Wall Street Journal.

Editor's Note: Economist Unapologetically Calls Out Bernanke, Obama for Mishandling Economy. See What They Did