Recently, I met and interviewed former Republican Presidential candidate (1996 and 2000), Steve Forbes in Nashville, Tennessee, who is also the publisher of Forbes Magazine, a prolific author of books about gold, inflation, money, and American capitalism. His latest book, which I highly recommend, co-authored with Nathan Lewis and Elizabeth Ames, is “Inflation: What It Is, Why It’s Bad, and How to Fix It.” The book came out in 2022, at the peak of the inflation surge caused by the US Federal Reserve and US Department of Treasury in the wake of the COVID-19 pandemic, which was made far worse by the spending policies under the Biden Administration in the last three years.
My friend, Gary Alexander, was active in supporting Forbes for President in the 1990s when Gary worked for Eagle Publishing, the political arm of Phillips Publishing. Gary also played opposite Steve Forbes in two Freedom Fest musical satires in Las Vegas, so I planned to open with two questions based on the roles Steve played – General George Washington in “1776,” and “Merlin the Magician” in “Camelot”. Below are the first two questions I asked Steve. In the future I will write about his responses.
Question #1: Steve, you played General George Washington in the patriotic musical “1776” at Freedom Fest, along with my friend and fellow gold writer Gary Alexander, who played John Adams. We know that General Washington had to ask the Continental Congress for supplies and monetary help for his continental army since, he told them that, “a wagonload of paper currency continentals cannot buy a wagonload of provisions.” What role did that early wartime inflation have on the future debate over putting hard money provisions into the US Constitution?
Question #2: You also played Merlin the Magician in a production of Camelot at Freedom Fest with Gary as King Arthur. Over the centuries, we’ve seen plenty of currency magicians try to create gold through the powers of alchemy. Could you discuss a few, starting with printing press paper and now computer code, like Bitcoin?
To get you started, I’ll cite some highlights from Forbes’ and his co-authors recent book on Inflation, below: which played a part in his responses to my questions.
Some Highlights from Steve Forbes’ Latest Book on Inflation
“In 1717, Sir Isaac Newton fixed the value of the British pound to gold at three pounds, 17 shillings, and ten-and-a-half pence (3.89 British pounds) an ounce, a ratio that held for more than 200 years. Britain’s commitment to unchanging, gold-based money formed the foundation for the country’s rising wealth and its emergence as a global financial center…. The reliable British pound helped turn that small island from a second-tier nation to the mightiest industrial power on earth.” (from the Introduction, page xiv)
“More than 70 years after Newton fixed the pound to the price of gold, Alexander Hamilton established a financial system for the young United States that emulated Britain’s example by pegging the dollar to gold and silver….The era of the classical gold standard saw an explosion of trade and innovation that, in many respects, remains unequalled….The ultimate lesson of history – and of this book – is that no nation has ever gotten rich by eroding the value of its money.” (Introduction, p. xiv)
“The yellow metal has long been used to gauge currency value because its intrinsic worth throughout history has remained largely unchanged. Experts estimate that some 7 billion ounces have been mined worldwide and almost all this gold is still accounted for today. Gold’s supply relative to demand has held steady; and its worth in relation to the rest of the economy has remained stable. Thus, when the price of gold rises or falls, the changes do not reflect the worth of the yellow metal, but fluctuations in the value of the dollar. Former Federal Reserve Chair Alan Greenspan has noted that over the decades, ‘prices of goods and services fluctuated; but the ratio of gold to the goods and services has remained a relatively constant number.’” (page 11)
“During the gold standard years between 1950 and 1970, real GDP per capita grew by an annual rate of 2.77 percent. But over the past five decades, with a slowly declining fiat dollar, this growth rate has dropped significantly, to 1.71 percent…. If the nation had the same growth rate today as we did in the 1950s and 1960s, per capita income would be 72 percent higher.” (page 59)
“Gold’s primary characteristic and greatest advantage is that it is stable. However, during periods when the dollar is losing value, the price of gold rises – a lot. For example, during the inflationary period that began in the late 1960s, gold was priced at $35 an ounce. Recently, it was priced at around $1,800 an ounce. This is evidence that the value of the dollar has fallen by about 98 percent since then.” (page 115)
“The best way to end inflation, and to spur economic growth, is through a return to a sound dollar anchored by gold. A gold standard simply links the greenback to gold, in much the same way that dozens of countries today link their currencies to the dollar or euro. The US relied on a sound dollar for nearly two centuries and became the wealthiest country in the history of the world…. With a gold standard, there would be no inflation. Full stop. A gold standard simply means that money has a fixed value and can fulfill its intended function as a trusted unit of worth.” (pages 131-132)
