Steve Forbes, chairman of Forbes Media and former Republican presidential candidate, was on Newsmax yesterday to talk monetary policy.
According to Forbes, the instability of the dollar, a result of the easy money policies of the Federal Reserve, is a major cause of our recent economic woes, and in order to return to economic growth, we need a monetary policy which will stabilize the dollar. The gold standard, he argues, is just the policy to accomplish this:
“Gold gives money . . . stability just like the ruler measures length, the clock measures time, a scale measures weight,” Forbes added. “A dollar measures value and when the value is stable, you get a lot more investment, a lot more growth, a lot more opportunity.”
Without the gold standard in place, the dollar has grown increasingly unstable, even though there have been “periods of strength,” Forbes says.
“When you have an unstable dollar, you get more speculation,” he explained. “You get the kind of thing you saw with the housing bubble, and so that spells trouble for all of us.”
Forbes makes a similar argument with Elizabeth Ames in their recently published book, Money: How The Destruction of the Dollar Threatens the Global Economy – And What We Can Do About It (which APIA’s Ralph Benko has called “by far, the most important book on economic policy published this year”).
In his review of Money for today’s Washington Times, John Tamny summarizes the argument:
Precisely because money is a measure, much like a foot and minute are, it’s essential that its value be as stable as possible. Gold has historically been used to define money not because it’s nice to look at, but simply because its stability renders it “money, par excellence,” in the words of Karl Marx.
In modern times, the economics profession has perverted money, and turned it into wealth itself. We’ve seen this most notably through the monetary machinations (quantitative easing — QE) foisted on the economy by then-Federal Reserve Chairman Ben S. Bernanke. Money is no longer seen by economists as a low-entropy measure; now, its simple creation is viewed as the path to actual production. In light of this, it’s no surprise that the economy took a dive under our former Fed chairman.
The dollar is a unit of measure, hence the reason why the Constitution gives Congress the power to “coin Money” in the same sentence it also gives Congress authority to “fix the Standard of Weights and Measures.” It would make sense then that ensuring the dollar’s value is as stable as possible would also ensure greater stability in the economy.
Furthermore, history has shown that a stable dollar, particularly under the gold standard, is a proven ingredient in economic growth (if you don’t believe me, just ask the Bank of England). If Americans want to begin stimulating job growth and combating rising prices, implementing a 21st century gold standard would be a good place to start.