June 7, 2016

Bring America’s Money Back to a Gold-based Economy


In reading the book Reviving America by Steve Forbes (editor of Forbes Magazine) I found his ideas on the gold standard for money interesting.  As well as sensible, after all we must agree the fluctuation in dollar values can bring down an economy where government just prints more money rather than backing it with value-based gold. 
In part three, Forbes shares “If the U.S. and global economy is ever to fully rebound, we must return to a monetary system based on a sound dollar.  Allow today’s destructive policies to continue, and the nation faces a disheartening future of sub-par growth, declining living standards, slowing upward mobility, and growing discontent.  America will no longer be a bountiful land of opportunity for people who want to better their lives and improve the prospects of the children and grandchildren.”
To support that statement, he gives the example that what the government’s desired  2% inflation rate means to a family making $50,000 (which is supposed to be lower than median income level of 53K, although individual per capita is less than 29K) a year means their cost of living goes up $1,000.  How does having $1K less help this family spend more to boost the economy?
What does this have to do with the gold standard?  In part 3, chapter 12 Forbes gives understandable briefs on three different gold standards and highlights the benefits of each.  Then he proposes a hybrid that includes the best of each method and how it should be set into motion.
Another example in part three was credit given to small businesses (BTW: SBO is where the job market is going) in the past five years grew only 6%.  It is nearly impossible for these businesses to get loans based on the current reserve restriction.  Whereas credit increases to government is at 36% and 32% to corporations/big business.  How does that build business commerce and encourage innovation?
After these startling facts about how the Federal Reserve controls money, the book quotes Steve Moore, (past editor at The Wall Street Journal). “Here we are at the lowest interest rates in 50 years, but many businesses and aspiring home owners can’t qualify.”

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