Investing

Why The Fed Must Stop Manipulating Interest Rates

It’s long been accepted that central banks—the Federal Reserve in our case—should be setting interest rates. Why?

Most economists will tell you how price controls distort markets. Rent controls are a prime example. Yet they don’t blink when the Fed engages in this exercise when it comes to the “renting” of money. 

We’d be better off if the Fed and its peers left the price of borrowing money to the marketplace, and this episode of What’s Ahead lays out why.

Distortions are growing, from negative interest rates to dicey companies able to float mammoth amounts of low-yield bonds. 

Manipulating rates is a key central bank tool for trying to guide the economy—itself a futile and often destructive activity.

Enough!

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Steve Forbes is Chairman and Editor-in-Chief of Forbes Media.

Steve’s newest project is the podcast “What’s Ahead,” where he engages the world’s top newsmakers,

Steve Forbes is Chairman and Editor-in-Chief of Forbes Media.

Steve’s newest project is the podcast “What’s Ahead,” where he engages the world’s top newsmakers, politicians and pioneers in business and economics in honest conversations meant to challenge traditional conventions as well as featuring Steve’s signature views on the intersection of society, economic and policy.

Steve helped create the recently released and highly acclaimed public television documentary, In Money We Trust?, which was produced under the auspices of Maryland Public television. The film was inspired by the book he co-authored, Money: How the Destruction of the Dollar Threatens the Global Economy – and What We Can Do About It.

Steve’s latest book is Reviving America: How Repealing Obamacare, Replacing the Tax Code and Reforming The Fed will Restore Hope and Prosperity co-authored by Elizabeth Ames (McGraw-Hill Professional).

Steve writes editorials for each issue of Forbes under the heading of “Fact and Comment.” A widely respected economic prognosticator, he is the only writer to have won the highly prestigious Crystal Owl Award four times. The prize was formerly given by U.S. Steel Corporation to the financial journalist whose economic forecasts for the coming year proved most accurate.

In both 1996 and 2000, Steve campaigned vigorously for the Republican nomination for the Presidency. Key to his platform were a flat tax, medical savings accounts, a new Social Security system for working Americans, parental choice of schools for their children, term limits and a strong national defense. Steve continues to energetically promote this agenda.


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