Argentina, Lebanon, Turkey and numerous other countries are in the grips of serious inflation.
This episode of What’s Ahead discusses a device, which when properly employed promptly ends debilitating bouts of inflation. Always.
It’s called a currency board. A country simply employs a sound or widely used currency, such as the dollar or the euro, to back up its domestic currency 100%. Its central bank has no discretion.
Hong Kong has successfully used a currency board to back up its money with the U.S. dollar since the early 1980s.
Bulgaria, Estonia, Latvia and Lithuania all used currency boards to swiftly halt virulent inflation.
It’s astonishing, given their unbroken record of success since their inception 150 years ago, that currency boards aren’t more widely used. On the contrary, the IMF routinely recommends the opposite course: currency devaluations.
The U.S. should immediately pressure the IMF to push currency boards, thereby enabling troubled countries to mend quickly, which would be great for them and good for the world.
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,
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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, 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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