(Kitco News) - A weak U.S. dollar is a threat to the global economy and the only way to stop the greenback’s decline is to reintroduce a gold standard, said media tycoon, Steve Forbes.
Forbes, the editor and chief of Forbes Media, was one of the keynote speakers at the annual Freedomfest conference in Las Vegas, an annual convention that looks to gather free minds for open discussions on politics and the economy.
In an interview with Kitco News’ Daniela Cambone, Forbes talked about gold’s role it the U.S. economy, which is also highlighted in his latest book MONEY: How The Destruction Of The Dollar Threatens The Global Economy And What We Can Do About It. He said to stop the decline in the U.S. dollar it only makes sense to link it to gold.
Forbes said different currency valuation methods have been tried for “more than 4,000 year,” and experience shows that having a gold standard is the way to go. He added a gold standard “done right” provides stability and value when it comes to money supply.
“Just as scales measure weight, money should measure value and it does that best when it has a fixed value,” he said. “Nothing else works.”
Although Forbes said that it is only a matter of time before the U.S. economy reverts back to a gold standard, it will take a dramatic shift to bring the change about because a big government prefers a weaker U.S. dollar. However, he sees some big changes on the horizon.
“A weak currency always means a stronger government and a weaker private sector,” he said. “I think people are looking forward to the elections. I think there are going to be some very big changes in our mid-term elections in November and that is going to set the stage for some very interesting showdowns in 2015.”
Also not helping the decline in the dollar is the continued action by the Federal Reserve. Forbes has been critical of the U.S. central bank and again said despite the new leadership from Chair Janet Yellen, it is still “rudderless.”
“(The Fed) has no appreciation for the need for a stable U.S. dollar,” he said. “She does not get it any more than (former Chairman Ben) Bernanke did.”
Although Forbes remains critical of the Fed, he admitted it is good the central bank will eventually exit its monthly bond-purchase program. On Wednesday, minutes from the June Federal Open Market Committee meeting revealed that the committee members favor exiting their quantitative easing strategy by October.
Looking at the gold market, Forbes said he is not expecting to see a significant rally in the yellow metal, unless geopolitical tensions rise out of control.
“Barring some international crisis, I think gold will be treading water as the Fed stops quantitative easing, as people get geared up for higher interest rates,” he said. “I think gold’s play will wait for a while until the Fed does something crazy again.”
Related Stories:
- Nothing Else Works But A Gold Standard: Steve Forbes
- Fed's Asset Purchase Could End In October - FOMC Minutes
By Neils Christensen and Daniela Cambone of Kitco News; nchristensen@kitco.com, dcambone@kitco.com
