The True Gold Standard (Second Edition)
Thegoldstandardnow.org is pleased to have held an extended interview with prominent gold standard advocate Steve Forbes, chairman of Forbes Media and editor-in-chief of Forbes Magazine, and author, with Elizabeth Ames, of a new book published to glowing critical notice: Money: How the Destruction of the Dollar Threatens the Global Economy – and What We Can Do About It.
This interview, to be presented in three parts over three weeks, provides a uniquely personal insights, including as to how Forbes became interested in the gold standard, with generous praise for the founder and chairman of the Lehrman Institute, Lewis E. Lehrman, about whom Forbes says: “Lew’s writings—and our conversations—were crucial to reforming my youthful views on money!”
Today we offer our readers Part Two of this fascinating exclusive interview.
Q: In 2011, you also presented at the Atlas Network's 2011 Liberty Forum on Monetary Policy and the Gold Standard. Impressions?
A: Conferences that bring together serious people who want to be part of serious discussion are all to the good.
Q: On May 29, 2012, you were called upon to brief almost three-dozen Representatives in Congress on economic growth policy, very much including the gold standard. Can you share a little bit about that presentation with our readers?
A: Most elected officials interested in growth “get it,” regarding taxes, spending and regulations. Many know instinctively that the Fed’s actions are not only not right but also may be setting us up for further trouble. Therefore, similar briefings should be seen as opportunities to start the process of getting people comfortable with the subject of monetary reform. That’s why the Brady bill, which would create a commission to conduct a thorough and objective examination of monetary policy, is so critical. And more and more people are eager for such a discussion.
At the congressional briefing my reception, and the questions posed, were respectful. You no longer face the outright disdain you’d have met a few years ago, when people thought Alan Greenspan was God. Now, in certain circles the contempt for gold is still there, but for the most part it’s receding.
Q: On February 12, 2014, you made a presentation at Cato, introducing Nathan Lewis' book, Gold: the Monetary Polaris, at which you spoke at length, and then again on June 19th. Impressions?
A: The Cato meeting was a delight! You could feel people were really starting to move on the subject of gold. Nathan Lewis’ charts, particularly those concerning interest rates under a classic gold standard, were “news” to a lot of people. Peeling away the numerous myths about gold is critical.
Q: You are rumored to be a big fan of Freedom Fest, "the world's largest gathering of free minds." Impressions?
A: It’s fun to be among people who are so politically incorrect! But contrary to myth, libertarians are not monolithic in their thinking. For instance, a number of them still have serious questions about the gold standard. You learn from the sessions and the debates, as well as from talking with people who know the fundamental importance of fighting to protect our eroding liberties.
Q: Any other forums at which you've presented that you might care to talk about?
A: A little over a year ago Jim Grant and I took part in a debate on the dollar [Editor’s Note: the nationally televised IntelligenceSquared Debates], which quickly focused on the gold standard. While we convinced some of the audience of the virtues of linking the dollar to gold, the opposing team won more to their side by attributing every disaster and plague in human history to the gold standard.
And therein lies a useful thing to remember: The proponents of funny money won’t hesitate to use fear-mongering. You know the approach—“You may not be happy with how things are going now, but they’d be a lot worse if those extremists got their way!”
This is why stoking the debate is critical. As more people become familiar with the topic and the arguments, fear-mongering and demagoguery lose their potency. For example, as people got to know Ronald Reagan during the 1980 campaign, the Democrats’ portrayal of him as a wild-eyed lunatic lost credibility, and he won the election in a landslide.
Q: My own impression is that the gold standard has moved, very notably in the political, policy, and media discourse, out of being seeing as the province of those with "with bleak economic outlooks or dystopian views of society" -- to steal a phrase from WSJ reporters Gregory Zuckerman and Carolyn Cui -- and into something that can be looked at as a very respectable policy option.
Your influence, as well as that of Mr. Lehrman and Dr. Paul, obviously has been significant. Both Cato and Heritage, for instance, are demonstrating far more interest in the gold standard than was evident just a few years ago. In addition to your own efforts and those of your colleagues, to what do you attribute this shift in the elite opinion stream?
A: The idea of reinstating a gold standard has indeed made strides. In addition to the efforts of those you cited and those of a growing number of others, the greatest tailwind has been in events themselves. Overnight Alan Greenspan went from being the infallible maestro to an out-of-touch and discredited figure. While Ben Bernanke is still lionized in some circles the way Greenspan once was, the Fed’s bloated balance sheet and the punk recovery have created considerable unease. The fact that other central bankers are floundering adds to the unease, which leads people to be more open to new ideas.
Q: In October 2011, pollster Scott Rasmussen polled 1000 voters and discovered that 44% of likely voters favor returning to the gold standard, 28% opposed. Of even greater interest was his finding that Blacks and members of labor unions were even more favorably disposed to the gold standard than conservatives, tea partiers, and libertarians. To what do you attribute the vast disparity toward gold between the elite and popular opinion streams?
A: Most Americans recognize what John Kennedy and Ronald Reagan recognized, that no country can remain great if its currency is weak. Elite opinion takes its cue from credentialed economists--until events and intellectual ferment force a change.
While the Rasmussen poll is heartening, we have to remember that for a while funny money advocates will be able to use scare tactics to try to prevent change.
Q: Why do elected officials have such a resistance to the gold standard?
A: Elected officials are no different from a lot of other folks who are intimidated and made extremely uneasy by the subject of monetary policy. They don’t feel they’re up to the task of mastering it and are afraid that if something goes wrong after they’ve said or done something regarding monetary policy, they’ll destroy their careers. It’s an amazing phenomenon! No other area causes such inhibitions.
Q: What about the Fed? End it or mend it? Should the Fed be audited?
A: The Fed should be drastically downsized. It should have two tasks only: to keep the dollar fixed to gold; and to deal quickly and decisively with panics. If the Fed performed its first task right, a panic should be a once-in-a-century occurrence.
By the way, laws impeding the creation of competing currencies should be repealed, and the government should be required to buy and sell gold on demand at the fixed dollar-to-gold ratio.