The True Gold Standard (Second Edition)
Fox News Channel host Greta Van Susteren rightly calls Steve Forbes and Elizabeth Ames’s new book, Money, “A gripping read….”
Steve Forbes, chairman and editor-in-chief of Forbes Media, and Elizabeth Ames have written their best book yet. It is entitled Money: How the Destruction of the Dollar Threatens the Global Economy—and What We Can Do About It. Money is, by far, the most important book on economic policy published this year. (Full disclosure, Forbes and Ames reference and acknowledge this writer’s work, including his collaboration with Forbes.com contributor Charles Kadlec, in this work.)
The authors succeed in making money — as in monetary policy itself — fascinating and accessible. It has drawn glowing praise from many important thought leaders, including virtuoso retired banking titan (now Cato Institute president John Allison; Fox News Channel host Greta Van Susteren; Whole Foods co-founder and co-CEO John Mackey; former CNBC contributor Lawrence Kudlow; public intellectual Dr. Ben Carson; and Atlas Economic Research Foundation’s Dr. Judy Shelton, among others.
Senator Rand Paul (R-Ky.) wants an up or down vote on his bill that would require a full audit of the Federal Reserve, but Senate Majority Leader Harry Reid doesn’t want to let that happen.
To force the issue, Paul is trying to block new nominees to the Federal Reserve’s Board of Governors.
On Wednesday, Paul failed to stop the confirmation of Stanley Fischer to the Board (although the former Bank of Israel governor hasn’t yet been confirmed as Vice Chair). That leaves two vacancies on the Board of Governors, with a third set to open up at the end of May when Jeremy Stein steps down.
Q&A with Steve Forbes about his upcoming book, MONEY: How The Destruction Of The Dollar Threatens The Global Economy And What We Can Do About It.
... What don’t people get about money?
Money is not wealth. Printing more of it doesn’t make society richer. You might get some short-term activity. But you end up with wealth destruction, not creation. For centuries our leaders have mistaken money for wealth. But it is an instrument of measurement like a scale, a ruler or a clock. Instead of measuring time or weight, it measures value.
How has this misunderstanding hurt people and the economy?
It resulted in the end of a gold monetary standard and the destruction of the dollar as a reliable measure of value. Had dollar remained stable and linked to gold, incomes today would be 50 percent higher than they are. We would have avoided the countless crises and market fluctuations that have been the result of unstable money–from the emerging countries crisis of the past year to the panic and financial crisis and many others before that.
The U.S. dollar was first regulated by the Coinage Act of 1792 and prescribed as 371.25 grains of pure silver. The eagle, worth $10, was 247.5 grains of gold. One cent, worth a hundredth of a dollar, was 24 grains of copper.
The value of the metal contained in the currency kept prices relatively constant before the founding of the Federal Reserve. During those 120 years, prices rose only 3%. In contrast, during the 100 years since the Federal Reserve, prices have risen 2,280%.
The Constitution gives Congress the power to “to coin money” and “regulate the value thereof.” This dictum was understood to be setting the currency’s weight and metallic content and was necessary to allow the currency to keep up with a growing economy.
In a new book, Forbes Media Chairman and Editor In Chief Steve Forbes explains that today’s wrong-headed monetary policies are setting the stage for a new global economic and social catastrophe that could rival the recent financial crisis and even the horrors of the 1930s. Coauthored by Forbes and Elizabeth Ames, MONEY: How the Destruction of the Dollar Threatens the Global Economy—and What We Can Do About It tells why a return to sound money is essential if the United States and other nations are to overcome today’s problems. Stable money, which can only be achieved through a gold standard, is the way to a true recovery and a prosperous economy.
Our policymakers and economists know less today about the critical subject of money than their forbears did a century ago. This ignorance was responsible in the 1970s for the ending of a monetary system based on fixed exchange rates. Its replacement, today’s system of fluctuating “fiat” money, has proved disastrous for the US and global economy.