Inflation has already hit 40-year highs, stretching pocketbooks and causing hardship for many Americans. Some economists call it inflation shock, accompanied by dreaded predictions of a recession.
The Federal Reserve is responding by raising interest rates. Forbes media CEO and former Republican presidential candidate Steve Forbes believes the Fed's efforts to cool down the economy may only make matters worse.
"That's what they mean when they say soft landing," Forbes explained. "What they really mean is more unemployment. And all too often, it leads to a crash landing for the economy."
In his new book, Inflation: What It Is, Why It's Bad and How to Fix It, Forbes provides readers with an easy-to-understand primer on inflation.
He says skyrocketing price increases are only the symptoms, not the cause of inflation. Forbes blames out-of-control spending as one cause. Americans have seen the national debt triple since President Obama entered office in January 2009 and it now stands at more than $30 trillion.
Forbes points to a concept embraced by Congress and the president called a modern monetary theory.
"Modern monetary theory says you can devalue the dollar, you can print as many dollars as you like, spend as much as you like, without consequences," he said. "And that's what we're experiencing today. They trash the dollar. They hurt production. And prices go up."
What about non-monetary inflation? A COVID outbreak caused China's communist government to confine Shanghai residents to their homes during the month of April and that led to a slowdown in manufacturing.
Shanghai is a manufacturing hub and home to the world's largest port. Similar lockdowns are already underway in parts of Beijing.
So, how might that affect the global supply chain and prices here in the United States? Will prices of food and consumer products jump even more due to lack of availability?
"What that means is, is that price increases are going to be continuing to be with us," Forbes predicted. "And that's, again, the non-monetary kind of inflation, this kind of artificial disruption."
"Shutting down a whole city, the most sophisticated and largest city in China, (was) very foolish. But they did it and that hurts. And those kinds of things – that monetary kind of inflation is something that if governments just leave the economy alone, people will work it out, get around it."
Forbes believes Americans need to be prepared for worse inflation in the months ahead.
"Do you think prices are bad now? Wait until a year, a year-and-a-half when the Federal Reserve follows through on printing a lot more money, then you're going to really hurt at the pump and at the marketplace."
Forbes stands by his long-held belief in returning to the gold standard, an action that would restore a strong U.S. economy and keep inflation down. He believes tying the dollar to gold would stabilize the dollar and guarantee that its value wouldn't change.
For 180 years, the value of the dollar had been tied to gold until the 1970s when President Richard Nixon ended the policy and implemented a series of wage and price controls.
"And since then, the average growth rate of the United States has fallen by more than one third, from a little over 4% to about a little over two-and-a-half, two and three-quarters percent," Forbes explained.
"That doesn't sound like very much, but over a 50-year period, what that has meant is that household incomes today are about $68,000. If we'd maintain the kind of growth we had for 180 years under the gold standard, that average household income would be 100 to $110,000."
As individuals seek to protect their money and investments, they could be tempted to look to cryptocurrency. Forbes, however, prefers Stablecoins over Bitcoin.
"Stablecoin cryptocurrencies are tied to a specific asset like gold or the dollar, so you don't get the kind of fluctuations," he said.
"And so, you would never take a mortgage out in Bitcoin. Say you took a $250,000 mortgage out in Bitcoin. You may end up a year later owing $2.5 million. And so that kind of instability doesn't make it work as a currency."
But Forbes sees a time coming when Stablecoins could compete with government money like the U.S. dollar, British sterling, Japanese Yen, or the Euro. "People would use these Stablecoins rather than the untrustworthy money that comes from government," he explained.
And what about the flat tax? When Forbes ran for president in both 1996 and 2000, he proposed that the government adopt a simple, single rate of taxation. He said he still believes that would help Americans and stabilize the economy.
"We now have literally millions of words in the federal corrupt federal income tax code that nobody understands, the IRS is hopeless today," Forbes insisted.
"I used to say bury the code, but the EPA probably wouldn't allow that. It's toxic, so let's just throw it out and just start all over again. Single rate now under a flat tax. For example, a family of four, for their first $52,800 of salary would be free of federal income tax."
"Go to a simple flat tax. Go to doing what we did for 180 years. Fix the dollar to gold. And by golly, you'll see this country boom like it's never done before."