Carl Icahn, the chair of hedge fund Icahn Enterprises, warned last week that inflation in the United States is comparable to the monetary phenomena that contributed to the fall of the Roman Empire.
Price levels between August 2021 and August 2022 rose 8.3%, according to data from the Bureau of Labor Statistics, marking a slight moderation from an 8.5% year-over-year increase in July and a 9.1% year-over-year increase in June. The Federal Reserve responded on Wednesday by increasing the target federal funds rate by 0.75% — a move that caused a stock market selloff and mirrored identical aggressive rate hikes in June and July.
During an interview with MarketWatch, Icahn pointed to the central bank’s quantitative easing regime over the past two years as the key impetus for soaring inflation and warned that “the worst is yet to come.”
“We printed up too much money, and just thought the party would never end,” remarked Icahn, who worked as a special regulatory reform adviser during the Trump administration.
To encourage business and consumer activity during the lockdown-induced recession, the Federal Reserve had pegged a near-zero target interest rate and acquired bonds from the market. The rollback of the monetary stimulus occurs as price levels rise at the fastest rate in four decades.
“Inflation is a terrible thing. You can’t cure it,” Icahn added, observing that rapidly rising price levels led to the collapse of the Roman Empire. “You can’t get that genie back in the bottle too easily.”
In addition to political turmoil and military conflict, the period between 200 AD and 300 AD saw multiple currency devaluations, with prices rising nearly 1,000% between 258 AD and 275 AD alone, according to a lecture from Baruch College history professor Joseph Peden. The last Western Roman emperor was deposed by Germanic barbarian forces in 476 AD.
However, policymakers have sought to convince market actors that the Federal Reserve is serious about curbing inflation. During a speech at the central bank’s symposium in Jackson Hole, Wyoming, Federal Reserve Chair Jerome Powell said that officials are prepared to “bring some pain” to combat rising price levels and return inflation to the long-term target of 2%.
“Price stability is the responsibility of the Federal Reserve and serves as the bedrock of our economy,” he asserted. “Without price stability, the economy does not work for anyone. In particular, without price stability, we will not achieve a sustained period of strong labor market conditions that benefit all.”
The central bank’s newfound hawkishness has provoked criticism from other experts. Steve Forbes, the chair of Forbes Media and editor-in-chief of Forbes Magazine, argued on Monday that monetary policymakers do not need to dampen the economy in order to fight inflation. “No central banker today — hardly any — talks about stable currencies. It’s about depressing the economy to fight inflation,” Forbes remarked. “With unstable currencies you get less productive long-term investments, which is key to economic growth.”
Lawrence Summers, who led the Treasury Department and the National Economic Council during the Clinton and Obama administrations, said that policymakers will likely fail at curbing inflation without increases in joblessness. “Core inflation is higher this month than for the quarter, higher this quarter than last quarter, higher this half of the year than the previous one, and higher last year than the previous one,” he said.