Steve Forbes, president and editor of Forbes magazine, claimed that the Biden administration and the Federal Reserve are ignoring the “real cure” of inflation and instead focusing their attention on raising interest rates.
Forbes made the comments at the Forbes Global CEO Conference in Singapore on Monday, CNBC reported, shortly after the U.S. central bank raised its benchmark interest rate by 75 basis points for the third consecutive month.
“Today, unfortunately, not only is the Biden administration putting up hurdles to deal with supply issues, but the Federal Reserve and other central banks are also thinking that you have to depress the economy to bring down the inflation,” he said.
“They do it by artificially raising interest rates. So they have fewer people employed… that’s not the real cure,” Forbes said, adding that “the real cure is to stabilize the currency. You don’t have to make people poorer to beat inflation.
In order to stabilize the US dollar, Forbes suggested using gold, specifically linking the currency directly to gold so that it has a fixed value.
“Gold retains its intrinsic value better than anything else on earth… Gold isn’t perfect as a stable value, but it’s better than anything we’ve found in over 4,000 years” , said Forbes. “With unstable currencies, you get less productive long-term investments, which is essential for economic growth.”
Inflation eats away at profits
He cited higher rates of economic growth after the introduction of the Bretton Woods gold standard in the 1940s. Bretton Woods established a universal standard by which the US dollar was pegged to gold and the currencies of virtually every country in the world was pegged to the US dollar.
However, the Bretton Woods system, although it provided the necessary stability at the time of its implementation, finally collapsed between 1968 and 1973 due to the increase in national and military expenditure, the decrease in gold reserves and other structural issues related to the standard. In 1971, President Nixon ended the convertibility of the dollar into gold.
Forbes’ appearance at the Forbes Global CEO Conference comes as inflation continues to significantly eat away at US households, and Fed Chairman Jerome Powell has acknowledged that achieving a so-called “soft landing” and Avoiding an economic downturn will be a difficult task.
Data compiled by The Heritage Foundation and released September 22 found that Americans had lost the equivalent of $4,200 in annual income under the Biden administration due to skyrocketing inflation and rising interest rates. interest.
Real annual earnings for the average American worker have risen by $4,000 under former President Donald Trump’s low-inflation economy, analysts noted.
Forbes told Fox Business Network last week that it believes the US economy is in a recession, although no official designation has yet been made, despite two straight quarters of negative gross domestic product growth in the US , which is the widely used definition for a recession.
“Maybe we’ll get a little bit of a boost up in the third quarter, but we’re in a recession, and the Fed wants a recession because the only way to fight inflation is to make people poorer,” said Forbes.
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