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Steve Forbes rips Fed Bank: ‘Done Enough Damage’ - Economy In State of ‘Walking Pneumonia’

By Mara Lafontaine · July 19, 2023

Former Presidential candidate Steve Forbes wags finger at Fed Bank over interest rates  Wiki Commons

Businessman and former presidential candidate Steve Forbes voiced strong criticism of the Federal Reserve, arguing the central bank’s actions have been a drag on the economy. Forbes told Fox Business that Fed’s series of aggressive interest-rate hikes have undermined the US economy.

“The Fed has this perverse view that the way to conquer inflation is by depressing the economy instead of stabilizing the dollar,” Forbes said. “I don’t even think they should do [a rate hike of] 25 basis points next week. They’ve already done enough damage.”

Recalling America’s halcyon economy following World War II, Forbes said the government and the Fed had successfully navigated severe inflationary challenges and global uncertainty by allowing the economy to find its own equilibrium. He asked, “Why should the Fed be manipulating interest rates anyway? Why should they be trying to control the economy?…Leave it alone… After World War II, we had massive price increases. We went from a wartime economy [to a peacetime economy], going from making tanks to refrigerators. The government left the economy alone; the Fed left the economy alone. [The economy] worked its way out pretty quickly…The Fed didn’t tighten up in those days…We had low unemployment…Had a brief [recession] in 1949. So, leave the economy alone!”

Forbes raised concerns about the Fed’s potential future actions, particularly if those actions undermined the dollar.”Inflation is [now] going down. The question is will [the Fed] go back to weakening the dollar?… Don’t try to depreciate the dollar [as] they did in the early 2000s. You saw where that led,” Forbes cautioned.

Forecasting the second half of 2023, Forbes said “You’re going to see the economy wobbling. The Fed will finally back off on rate increases…But they’ll be very reluctant to take their foot off the neck of the economy until next year.”

Forbes derisively said the economy will be in a state “walking pneumonia…Economic theologians may not call it a recession, but, by golly, people…won’t feel very good.” 

Many experts believe a 25-basis-point rate hike is likely when the Fed Board meets next week.

Light Wave commentary

Steve Forbes’ criticism of the Federal Reserve highlights concerns about the central bank’s actions and its profound impact on the economy. While Forbes argues that the Fed’s interest rate hikes have undermined economic stability, it is important to note that the Fed’s role in managing inflation and stabilizing the economy is a highly complex task. There is no pre-set formula for keeping the economy afloat. While many economists and financial experts have been predicting recession, the US economy somehow continues to chug along. The Fed would appear to deserve a modicum of credit for that — just as it will rightly receive blame if the economy tanks. That’s why Thomas Carlyle called economics “the dismal science.”