“No central banker today — hardly any — talks about stable currencies,” Steve Forbes said Monday at the Forbes Global CEO Conference in Singapore, CNBC reports.
Instead, central banks’ focus has been on “depressing the economy to fight inflation” at the expense of the middle class and the poor, Forbes said.
“The real cure is to stabilize the currency,” Forbes said. “You don’t have to make people poor to conquer inflation.”
Forbes called the Federal Reserve’s and other central bank’s focus on raising interest rates a one-track “dogma.”
Instead, said the Forbes Media chairman, central banks should shore up their currencies. Forbes pointed to how the Reagan administration in the 1980s did more than just cut taxes and regulations and work with Fed Chair Paul Volcker to raise interest rates above 20%.
Forbes noted how the U.S., under the Reagan administration, spearheaded global efforts to sell U.S. dollars in order to boost other currencies.
Following the U.K.’s announcement Friday it will implement tax cuts and investment incentives to fight inflation, the British pound fell 4% to $1.0382 Monday in Asia, an all-time low. The Chinese yuan and Japanese yen also fell heavily as they stuck by their accommodative monetary policies.
“Today, unfortunately, not only is the Biden administration putting up obstacles to deal with supply-side problems, but, also, the Federal Reserve and other central banks think you have to depress the economy to bring inflation down,” Forbes said.
“They do it artificially by raising interest rates, so they have fewer people employed….That is not the real cure,” he continued.
Forbes suggested using gold to stabilize currencies, perhaps by tying the U.S. dollar once again to gold, as it was from the 1940s to the 1970s, in order to give it a fixed value.
“Gold holds its intrinsic value better than anything else on earth,” Forbes said. “Gold is not perfect as a stable value, but it is better than anything we have found in over 4,000 years. With unstable currencies, you get less productive long-term investments, which is key to economic growth.”