'Why Is The Fed Manipulating Rates In The First Place?' - Steve Forbes
Wednesday July 20, 2016 14:05
Steve Forbes Backs Republican Nominee, Even If It's Trump - PART 1
(Kitco News) - Although investors continue to focus on the U.S. Federal Reserve’s next monetary policy move and whether rate hikes are coming, media mogul Steve Forbes questions the real issue: “Why is the Federal Reserve manipulating interest rates in the first place?”
Gold prices have struggled recently as the U.S. dollar gained upside traction from increased rate-hike expectations. The CME’s FedWatch tool shows investors are now pricing in a 24.6% chance of a rate hike in September, up from its previous day reading of 18.8%.
“Manipulating or controlling interest rates is a form of price controls,” Forbes told Kitco News at this year’s Freedom Fest convention in Las Vegas. “By manipulating interest rates, the Fed has deformed credit markets.”
According to Forbes, this distortion by the Fed has also spilled over into U.S. financial markets. “The Fed has made the credit markets very favorable to big business,” he said.
Despite the recent U.S. equity rally, Forbes doesn’t expect more upside in stocks, noting that smaller-cap companies have not performed as well as the bigger-cap ones. “That’s the sign of a mature phase of a bull market.”
Why Steve Forbes Was Surprised by Gold's Rally - PART 2
On gold, Forbes said he didn’t expect the metal’s 2016 rally. “I was surprised by the rise of gold this year given the Fed’s attitude in terms of starving credit to small and new businesses.” However, gold still plays a vital role for investors, he noted.
“Gold is an insurance policy against turmoil and governments misbehaving towards the currency,” he said. “When you see the price change, that’s people’s perceptions of currencies.”
Fee, Fi, Forbes…Trump
On the U.S. elections, the two-time Republican presidential candidate said although he doesn’t agree entirely with GOP frontrunner Donald Trump, he will endorse him if he becomes the nominee.
He added that Trump’s recent VP pick is also positive for his campaign. “It demonstrates to doubters and undecided voters maybe ‘we can take a chance on Trump, he’s capable of making good choices,’” he said.
Forbes does agree with Trump on one thing though, and that is the Fed.
“There’s a recognition that what the Federal Reserve has done, which I think Trump recognizes, has been harmful to the economy,” he said. “I think he recognizes that the Federal Reserve is a huge problem, we’ve got to have a stable dollar.”
Trump In The News – A Media Mogul’s Take
The Forbes Editor-in-Chief argued that news outlets haven’t been fair with their coverage of Donald Trump, especially when compared to Democratic politicians.
“The media’s treatment of Trump pales in comparison to the media’s treatment over the last 7 ½ years on Barrack Obama,” he said. “What hurts somebody in public life is repetition of a story or a theme,” he explained, noting that this never happened with Obama.
Forbes warned the picture might get uglier if Trump gets the nomination. “Many of them [news outlets] are in the pockets of Hillary Clinton.”