Steve Forbes advocates a gold standard

Interviewed here.

Interesting excerpt:

Hera Research Newsletter (HRN): Thank you for joining us today. With the U.S. economy struggling to recover from recession and financial crisis, what policies would you recommend?

Steve Forbes: The only way to recover is to stabilize our money, have a gold backed dollar, simplified tax code and return to a free market.

HRN: You advocate the gold standard?

Steve Forbes: If there’s any better system to ensure a stable value for money, it’s yet to be found. For nearly all of America’s first 200 years, the dollar was linked to gold. Since we went off the gold standard, we’ve had more and more financial, economic and banking crises. For example, if the Federal Reserve hadn’t started to print so much money ten years ago, we wouldn’t have experienced the housing bust or the commodities boom or the sovereign debt crisis in Europe. Eventually, events become a persuasive teacher.

I can appreciate where Mr. Forbes is coming from, but the reality of a paper gold standard is that it is still a fiat currency.  It is a government guaranteed gold standard.  It is not a gold coin standard, where the individual retains possession of the gold.

Fiat is Latin, for  “let it be done”. By decree.

Wikipedia tells us: “Executive Order 6102 is an Executive Order signed on April 5, 1933, by U.S. President Franklin D. Roosevelt “forbidding the Hoarding ofGold Coin, Gold Bullion, and Gold Certificates within the continental United States”. The order criminalized the possession of monetary gold by any individual, partnership, association or corporation.”

So, by decree, Roosevelt stole the gold of American citizens, and repriced it from $20.17 to and was then increased to $35 an ounce.  Or, a 42% devaluation overnight.

The answer to the question of “how do we create a more stable money?” is to repeal legal tender laws.  According to FA Hayek:

When one studies the history of money, one cannot help wondering why people should have put up for so long with governments exercising an exclusive power over 2,000 years that was regularly used to exploit and defraud them. This can be explained only by the myth — that the government prerogative was necessary.

And according to Gary North:

Here is the real thing: a free market standard without any government involvement — no mint, no central bank, no legal tender laws, no printing presses, no warehouse receipts, no “free” storage. Just this: laws against fraud and laws enforcing contracts. That system will produce a gold coin standard for large transactions and a silver coin standard for smaller ones. The users can decide what they want to use as money. The ruling elites will no longer be allowed to counterfeit, confiscate, or manipulate money.

When an economist who defends this system wins the Nobel Prize on the basis of his defense, we will know that our deliverance draweth nigh. If the prize is awarded in gold coins, we have entered the Golden Age.

We are on the way there when people of influence are advocating a gold dollar standard.  But we still have a long way to go.

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