Forbes calls for return to Gold standard

by The City Wire staff ([email protected]) 119 views 

With the pending loss of Whirlpool and the recent struggles of the Air National Guard’s 188th Fighter Wing, Fort Smith has seen its share of turmoil. But according to Steve Forbes, chairman and editor-in-chief of Forbes Media, the city, and the country, can pick up steam again.

Forbes told The City Wire following his Wednesday (Feb. 8) address at the Fort Smith Chamber of Commerce annual meeting, “On the local level, you’ve got to get the barriers removed for people to come in. It may not always be manufacturing you attract, but businesses like a good environment, and getting the word out is important.”

Forbes added that the private sector is “how you make things happen in this country.”

The barriers to growth Forbes referred to were the primary forces behind his address, in which the former Republican U.S. Presidential candidate highlighted “three key numbers”: 3.3, 1.8, and 3.3.

“Three-point-three percent is the rate this economy grew annually from the end of World War II through most of the Sixties. Then, in the Seventies, a tough decade, we only grew at 1.8 percent and Western Europe caught up to us. In the Eighties, we saw another 3.3 percent, and with the financial crisis of 2007, we’re back to 1.8 again. Why?” Forbes said.

Forbes said the four barriers he feels are responsible for impeding the country’s economic growth: the Federal Reserve’s penchant for “printing money,” government overspending, an overly complicated tax code, and “rampant” regulation.

“With the Reagan reforms, we had the largest economy in the world and we were growing faster than anywhere else in the world. Now in 2012 we’re doing a little better than we were in 2007, but we’ve got the car maybe up to 40 miles per hour on the superhighway when we should be going 70 to 75.”

Forbes told attendees he believed there was “no reason we can’t get back to a vigorous economy,” and scoffed at the notion that slow U.S. economic growth is the “new normal,” referring to it instead as the “new abnormal.”

Forbes joked with the audience that if one wanted to achieve elbow room on a crowded coach flight or wanted to get out of a bad date, “just start discussing monetary policy.”

“It’s deadly and dull and the most boring subject in the world,” Forbes said. But, “it has enormous impact and importance, probably the most importance on the current economic climate.”

Forbes blamed the Federal Reserve for “printing too much money” and compared the practice to “a magnificent vehicle.”

“Without sufficient fuel, you’ll stall the engine. With too much, you’ll flood it. The right amount gives you the chance to move ahead. Since the start of the last decade, they’ve printed too much money, artificially lowered interest rates and weakened the dollar. And a weak dollar means a weak recovery,” Forbes said.

Forbes continued: “If printing money worked, then Zimbabwe or Argentina would own the world today. You create the money. Not the government.”

Forbes also blamed the Federal Reserve for the burst of the housing bubble, noting “that could not have happened if the Fed hadn’t printed the money. But no one is pointing the finger at the Federal Reserve, who are the big enablers on this thing.”

“Long story short: as long as Ben Bernanke continues on this course, this country will continue to struggle. Prediction: given the distortions we’ve had, in the next 5 years, we’ll get something relinking the dollar to G-O-L-D. And we’ll start to see capital markets reflect real things again. We’ll get it done. This (crisis) is an aberration. We’ve got to get steady money and a gold based dollar again,” Forbes said.

With regards to government overspending, Forbes asked, “Where does the money come from? Not from Mars. It’s not manna from Heaven. It comes from you, and when the government goes on these spending binges, they take from you, put it through the political sausage factory, and spray it out while taking a cut. That’s not stimulating, that’s draining,” Forbes said, adding that “the more the public sector takes, the less the private sector has.”

Forbes noted that “fortunately” on the spending side, people were “on to it,” using his own state of New Jersey as an example. “I come from a blue state, and there we have a governor, Chris Christie, who’s a Republican. The Democrats control the legislature, and over the last few years, we’ve cut spending from $34 billion to $29 billion. People realize you cannot continue to spend beyond your means” he said.

On the tax code issue, Forbes supported the flat-tax concept, which he endorsed in his previous presidential bids.

“The Declaration of Independence is 1,500 words. The Holy Bible, compiled over thousands of years, is 773,000 words. The tax code is 9 million words and rising,” Forbes said.

Forbes continued: “Clearly, this is an abomination. As a free people, we need to take this abomination, kill it, drive a stake through its heart, bury it, and hope it never rises again.”

Forbes favored a 17% flat-tax with “generous exemptions for adults with children” and those in lower income situations. He also wanted to outlaw death taxes, taxes on savings, and require no income tax on “families of four for the first $46,000.”

The last issue Forbes addressed Wednesday was one of entitlements, particularly the future of social security.

“The way the government has handled social security would put all of you in jail if you did the same thing in the private sector,” he said, noting there was “nothing in the trust fund but IOUs.”

“Imagine taking your employees’ pension money and spending it, only to throw in a non-working IOU,” Forbes said, stating the country needed to “turn its liabilities into assets.”

He noted the city of Galveston, Texas, and three counties within the Lone Star State that willingly withdrew from the social security system.

“They didn’t put their money in the stock market, only fixed income instruments. Today, those folks are retiring with benefits 50-200% higher than the federal system,” noting that in Galveston a person making $18,000 per year would earn $1,100 per month compared to $650-$700 in the federal system.

On health care, Forbes continued to attack regulation, stating, “In every other sector of the economy, increased demand is seen as a growth opportunity. Why not in health care? Answer: we don’t have real free markets. It’s a distorted system. We have pieces of the free market, but there is a distance there between the providers and the consumers. We’ve grown up with this system and don’t realize how crazy it is.”

Forbes advocated a national playing field for free market health insurance, where companies in one state could freely compete for customers in another state.

“We need more people like Steve Jobs finding ways to provide more health care. We need more breakthroughs, not fewer. Can it work? Yes,” Forbes said, noting that sectors such as laser eye surgery and cosmetic surgery have not seen the inflation of cost because “you’re the one, who pays; you write the check,” and that providers have an incentive under such a system “to make it more affordable,” he said.

Forbes closed: “The bottom line on all of this: the economy, the troubles in Europe —they’re not permanent as they weren’t 30 years ago. With a simplified tax code, living within our means, and positive reforms, you’ll be amazed at what happens.”