When non-monetary infl ation occurs, it is caused by free market incidents such as a drought that makes the price of wheat rise or, as recently seen in the foodservice equipment industry, when global supply chain shortages led to higher equipment prices. Non-monetary infl ation can work itself out, but undisrupted monetary infl ation can wreak havoc on our overall economy year after year, causing consumer and business costs to keep rising beyond manageability.
Forbes warned the Federal Reserve’s approach to addressing infl ation, which is to slow the economy and create more unemployment, will not work. “(The Federal Reserve) does not focus on keeping the stable money value … they want to depress the economy – they want to slow it down,” Forbes said at the Manhattan Institute event. “When they say soft landing, that’s Fed speak for ‘perhaps a recession.’”
Forbes said that’s not how to do it. “You fi x the value of the dollar, the government stops trashing the economy, and it would be amazing how things would quickly come back.”
Taxes Infl ation is a “stealth” tax that government creates by
overspending and “creating money out of thin air,” Forbes said in his What’s Ahead webcast. Consumers must reduce purchasing as prices go up. Forbes asserted Congress can address infl ation by creating a comprehensive tax cut plan, simplifying the federal income tax code and instituting a fl at tax. As Forbes has explained, “Low tax rates positively change incentives: Entrepreneurs, venture capitalists and investors are induced to take more risks; businesses become more expansion-minded; and individuals positively adjust their own behavior, knowing that they can keep more of what they earn and that success will not be punished.”
Regulations and Antitrust The Biden administration’s stated goal of protecting
America’s most vulnerable citizens is enabling new regulatory burdens that are dismantling private enterprise and driving infl ation, Forbes said on an episode of What’s Ahead. “Today’s neosocialists are smarter than their ancestors,” Forbes has observed. “Instead of outright takeovers, they are achieving much the same goal through rigid regulations.”
There are signs that Biden’s approach to improving quality of life through overregulation are failing. The Mercatus Center at George Mason University found that a 15 percent increase in the volume of federal regulations hikes the cost of consumer goods by a full percentage point, an increase that is diffi cult for America’s poorest families to absorb. According to Mercatus, “Regulators and policymakers often claim that regulations are intended to protect the poorest and most vulnerable consumers … unfortunately, the goods and services to which the poor devote much of their limited budgets, such as energy and food, are also the most heavily regulated.”
Forbes has addressed this regulatory overreach in What’s Ahead and other publications, noting that some of these new rules are intended to punish Big Tech companies and are being emboldened by individual concerns for data privacy and the right to online free speech. While this sounds noble in principle, Forbes has cautioned that proposed Big Tech regulations will kill innovation.
Even worse for business growth and development, the Biden administration is also trying to exert a high level of control over how companies operate by expanding antitrust regulations, which will have devastating long-term consequences for businesses. “For years the controlling criteria for an antitrust action was supposed to be maximizing benefi t for consumers,” Forbes said on What’s Ahead. “Now, all other sorts of criteria are to be applied to antitrust, such as not reducing the number of competitors, even if they’re not profi table.” He noted that the Biden administration also wants subsidies for smaller competitors and to require some larger industries to give money to smaller competitors. Forbes predicted antitrust actions will also address price gouging, “which would allow the government to determine if a price or a product or service is fair … and such actions always lead to more shortages.” That possibility will only lead to more hardships for business and consumers. “When it comes to antitrust,” Forbes said, “less would be more.”
KEYNOTE PRESENTATION Challenging the Barriers to Economic Recovery
2022 FEDA Annual Conference September 21, 2022 1:00 p.m. to 1:45 p.m. PDT Pacifi c Ballroom A-B-C
Steve Forbes is chairman and editor-in-chief of Forbes Media, which has published one of the world’s most successful business magazines for more than a century. An internationally recognized expert in global economics and fi nance and an advocate for businesses, Forbes will share his concerns about the most serious barriers impacting U.S. economic recovery, including infl ation’s effect on the current and coming stock market; proposed tax hikes; the impending wave of antitrust actions; and regulatory blunders that are crushing American ingenuity.
SESSION SPONSOR
Moderator Patricia Bible Chairwoman
FEDA Advocacy Council President KaTom
30 FEDA News & Views
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