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 Three of this fascinating exclusive interview.
Q: Your and Elizabeth Ames's latest book, Money: How the Destruction of the Dollar Threatens the Global Economy -- and what we can do about it? recently was published to rave reviews (my own included). What are you hearing from your readers and from thought leaders?
A: Most readers like the book because it strips away all the mind-numbing jargon that obfuscates the subject of money, not to mention numerous myths and misunderstandings about money and gold.
One surprise is how many people have responded very positively to chapter five: “Money and Morality: How Debasing Money Debases Society.” Money is more than “economics;” it’s the basis for social trust and for breaking down barriers between peoples. Keynes had it right: Debauching the currency is the surest way to undermine the social order, and not one person in a million will understand what’s going on.
Q: Money dispels a lot of the myths about the gold standard and, among other things, lays out the four most prominent gold standard models. The arguments you make for the gold standard is that it brought, in the past, and will bring again, gangbuster growth. And that this growth will be of the JFK "rising tides lifts all boats" kind, not privileging the wealthy. You also make moral and good-government arguments for the gold standard as well. What do you consider the most important argument for the gold standard? Any points you might like to highlight here?
A: The principal argument for a gold standard is moral. When people make an agreement such as that between lender and borrower or investor and entrepreneur, or when they engage in a transaction such as that between buyer and seller, government has no right to arbitrarily change the terms, thereby cheating one party and giving an unearned windfall to another. For instance, if you had hired a contractor to build a 2,500 square foot house and then the government changed the number of inches in a foot from 12 inches to 8 inches, you’d end up with a house that was only two-thirds the size you’d contracted for.
The Federal Reserve’s weak-dollar policy has fueled false booms in commodities, farmland and, most disastrously, housing. Capital was misdirected and then destroyed. These resources could instead have been used for new businesses and technologies and for medical devices and medicines.
Unsound money jeopardizes liberty. The ensuing crisis always leads to larger government. The horrific failure of the Federal Reserve’s monetary actions since the early part of the last decade have garnered new and unprecedented powers for the Fed, including a power once reserved for Congress: the power to tax. The head of the Fed has openly proclaimed her goal to generate more inflation, which will cost the typical American family an additional $1,000 a year in expenses. Keynes got this one right, too: Inflation is a tax. Yet Congress has raised nary a peep in protest.
Government spending takes resources from the people. Since the U.S. went off gold in 1971, the federal budget has ballooned eighteenfold; the national debt, more than fortyfold.
A gold standard would give us more honesty in government and the marketplace and a higher standard of living. If we had maintained gold-standard average growth rates, the economy would be 50% bigger than it is today. We, the people, have lost a stupendous amount of wealth and income growth for all.
Q: America has been struggling through over a decade of subnormal growth. How much of that stagnation do you attribute to monetary policy and how much to other government policies, such as tax and regulatory?
A: The biggest villain in our subnormal growth is the weak dollar. Capital was misdirected and destroyed, thereby reducing opportunities for people to move up the income ladder.
Q: Now that you've got so many people talking about the importance of monetary integrity -- and the desirability of the gold standard -- what's next for you in this area?
A: Continuing the education and agitation!
Q: Forbes.com Opinions has become "the gold standard" of the (mainstream media) gold standard public conversation. How widespread is the public interest?
Thank you, Steve Forbes.