Paul: Fed vote reveals cracks in economy

The Fed's decision to reduce its massive asset-buying program by $10 billion this month was not a "serious move," Paul said, because the Fed had also given assurances about maintaining ultralow interest rates. That policy helped the stock market achieve record gains in 2013, which seemed to be the intent, he added.

"They think the stock market will translate into a healthy economy," Paul said. "I don't happen to believe that, and most of the people who are unemployed, the lower third of our population, don't believe that."

(Read more: Six years post-recession, a tale of two Americas)

Often described as dovish, Yellen doesn't seem poised to reduce the Fed's nearly $4 trillion balance sheet, he said.

"She is really an inflationist," Paul said. "All the market has to do is say 'boo' and there will be no more tapering and interest rates will stay at zero until the the market overwhelms this mismanagement and central economic planning by the Federal Reserve."

(Read more: For Yellen, headaches are only starting)

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Paul: Fed vote reveals cracks in economy