Many conservatives say the Federal Reserve has gone too far in its easing and has sown the seeds for the next bout of inflation.
But Forbes CEO Steve Forbes takes the opposite view. “They [the Fed] should be much more aggressive than they are today,” he tells CNBC.
“They should go to banks and say if you make mortgages available, we’ll buy those mortgage-backed securities, get that mortgage market really moving again, get housing sales moving again.”
The result: “You’d start to see this economy move again,” Forbes says, “but right now the Federal Reserve has been talking a better game than it’s been practicing.”
Indeed, he accuses the central bank of being “derelict” in its duty for withdrawing $400 billion from the financial system between December and March.
The financial sector, of course, is key to any recovery for the economy, and there Forbes is actually optimistic.
“The financial system has the wherewithal to get this economy back on track,” he says. “And if the regulators do right on this mark-to-market, stretch it as much as they can from the Financial Accounting Standards Board, that would be a very positive thing.”
Some agree with Forbes that inflation shouldn’t be the Fed’s primary concern now.
"I think the market's anticipation of those inflationary risks have been exaggerated and telescoped too quickly into the present," Edward Morse, chief economist for LCM Commodities, tells Reuters.
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