Forbes Editor Calls on Fed to Shrink Balance Sheet, Boost Dollar
Steve Forbes told Larry Kudlow the Fed is misreading inflation. Retailers beating earnings may already be proving his point.
Steve Forbes, editor-in-chief of Forbes Media, told Fox Business host Larry Kudlow that the Federal Reserve is fighting the wrong inflationary battle, arguing the central bank should curtail money printing, reduce its balance sheet, and pursue a stronger dollar to bring down import-driven price pressures — rather than relying solely on interest rate adjustments.
Forbes's argument centers on the idea that inflation is not purely a demand-side problem requiring rate hikes, but is being fed by a weakened dollar that makes imported goods more expensive for American consumers and businesses. By shrinking the balance sheet and stabilizing the currency, Forbes contends, the Fed could directly attack that cost-push dynamic rather than blunt economic growth across the board.
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Adding weight to his critique, several retailers have recently posted surprise earnings beats — a data point that Forbes and his allies suggest signals consumer resilience that standard Fed tightening tools are ill-equipped to address. If inflation were primarily demand-driven, aggressive rate policy might cool spending enough to do the job; but if import costs are the primary culprit, a stronger dollar becomes the more precise instrument.
The debate reflects a broader tension inside economic policy circles over the root causes of the current inflationary environment and whether the Fed's conventional toolkit is properly calibrated. Critics like Forbes have long advocated for a rules-based monetary framework that ties policy more closely to currency stability, a view that remains outside the mainstream but gains renewed attention whenever price pressures prove stubborn.
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