The United States hasn’t been affiliated with a gold standard since the administration of President Richard Nixon in 1971. Known as the Nixon Shock, in which the president imposed a series of damaging economic policies, like price and wage controls, the resigning Commander in Chief declared that the U.S. was engulfed with Keynesianism now.
Since then, there have been many calls, particularly by libertarians and paleoconservatives, for the U.S. government and the Federal Reserve to return the nation to a gold standard, which essentially means that the dollar would be backed by gold and silver rather than by absolutely nothing.
In an interview with Newsmax, Steve Forbes, business mogul and head of Forbes Media, predicted that the Land of the Free will return to a gold standard and future elements in the economy will necessitate such a dramatic monetary policy shift.
When the Fed was incepted in 1913, the U.S. dollar began to erode and has since then lost approximately 90 percent of its value. Over the years, contrarian financial experts say that the greenback has become unstable and has been perceptible to the political will of government officials and central bank heads.
“If we’d been on a gold standard since 1971, when Richard Nixon took us off the gold standard, today our economy would be 50 percent larger if we’d just maintained historic growth rates we had for the first 180 years of our existence,” explained Forbes, who said the Dow Jones would be at around 25,000 at this time.
“Gold gives money . . . stability just like the ruler measures length, the clock measures time, a scale measures weight. A dollar measures value and when the value is stable, you get a lot more investment, a lot more growth, a lot more opportunity.”
Forbes further stated that a fiat monetary system incites speculation which then creates all of the bubbles, whether they’re in housing, bonds, technology or credit. He added that there is enough gold in U.S. vaults to constitute a return to a gold standard.
The conservative commentator lambasted the Fed by criticizing its quantitative easing as being a hindrance to any economic recovery. Instead of boosting the economy in the long-term, Forbes said those who are attempting to utilize the tools of QE are “guilty of economic malpractice.”
Forbes has been making the media rounds as part of his tour to promote his book entitled “Money: How the Destruction of the Dollar Threatens the Global Economy — and What We Can Do About It.” In each interview, he has repeated the gold standard talk and in one conversation he said if the U.S. doesn’t reintroduce a gold standard then it could face a second Great Depression.
Although Forbes seemed to be optimistic of his projections, there have been no signs by the Democratic or Republican leadership to urge the central bank to investigate a potential return to the gold standard. In fact, the likely general consensus is that both parties would shoot down the idea and the citizenry wouldn’t support an initiative since they have, according to Forbes, gotten used to a non-backed currency.
