Steve forbes and Elizabeth Ames trace our current economic troubles to the end of the Gold Standard in the 1970s and discuss what a weak u. S. Dollar means for the Global Economy. They called for a return to the Gold Standard to help stabilize the economy coming up next on the booktv. We are very privileged to have with us this evening a very recognizable figure in the media and business world. Steve forbes is of course editorinchief of forbes magazine, the nations leading business magazine, and he is headed a Media Company that includes not only asian and european editions, but a number of Web Properties focus on politics, sports and financial markets. Many of you will also remember steves Spirited Campaign for the republican president ial nomination in 1996, and 2000, during which he promoted the idea of among other things a flat tax. Along with the new Social Security system, medical savings accounts, term limits and a Strong National defense. This evening steve comes to us as an author, which also is not a new role for him. Is written or cowritten five previous books are kissed sixth and latest one, money how the destruction of the dollar threatens the Global Economy and what we can do about it him is every bit as emphatic, reasoned and clearly written as the earlier works. Anyone familiar with this free market libertarian views will not be surprised to read his criticisms of Central Banks and existing monetary policies. With the fed that whiny doubt its quantitative easing, steve sees an especially opportune moment everything our Monetary System and ensure a more sound and Stable Currency by returning to the Gold Standard. He writes in the book, quote, creating a dollars from gold was supposed to make the United States stronger. Instead, it is made the country weaker. Something has to be done. Ladies and gentlemen, here to explain what needs to be done, alonalong with steves coautho, Elizabeth Ames who is a communications executive, is steve forbes. [applause] thank you very much, brad, i thank all of you for coming out. As brad indicated, the book is about money, Monetary Policy. And money, particularly Monetary Policy, is one of those topics that seems to intimidate a lot of people for some strange reason, and as a result, the Federal Reserve, for example, its less formal oversight from capitol hill, from congress, and do our intelligence agencies. And the thesis of this book is that, one, the topic of money is very straightforward and simple, even though it is shrouded in a lot of jargon, a lot of equations. The idea of money is very basic. Weve gotten away from it. Our policymakers do they know less about money and Monetary Policy than they did 100 years ago. Since the early 1970s even though we have had booming decades in the 80s and 90s, overall our growth rate since we would of the Bretton Woods system, the old Gold Standard in 1971, the u. S. Average growth rates are less than they were before 1971. If we had maintain the growth rates that we had for 180 years up to 1971, if we had maintain those growth rates after 1971, on average, the u. S. Economy today would be 50 larger than it is now. 40 years compounding, in effect reverse compounding, adds up to a lot. Saver for a moment having 50 higher incomes, what it would mean for the deficit from what it would mean for Social Security, what it would mean for a lot of the social divisions today. This thing over time adds up. Its a critical reason why, take two incomes and, to do what one income could do in previous generations. Obviously, taxes are a large part of it, but the defacement of the dollar since the early 70s is a critical part of it as well. When this thing happened, when you dont have a Stable Currency, you end up with people not getting ahead the way they should. Median incomes not going the way they should. And leading as my coauthor elizabeth will discuss in a few minutes, a friend of the social fabric, reduction of social trust and more divisions. Its a process that not one in a million will be able to diagnose. And so thats why we wrote the book. Now, since Monetary Policy doesnt usually get the hard beating a flutter the way some of the reality shows do, ill il begin by just giving you an advanced reward, and that is to give you a travel tip. If you ever find yourself in an airplane in coach, middle seat, on the runway watching your life pass away, and you want a little bit of elbow room to your seatmates, Start Talking about Monetary Policy. They will cut you a wide berth. So as a result of the chaos that weve had, slowmoving for most of the time since the 1970s, the Federal Reserve has gotten up in terms of more and more power, but the thing is the more power it gets, the worse we are. Take quantitative easing, which i will discuss in a moment, even though they are now taping thing, which is a good thing, it ended up contracting the economy rather than stimulating the economy. In terms of money the thing to understand about money is that its very basic. It makes transactions, buying and selling, which is how we prove our standard of living, which is how we exist, makes buying and selling much easier. In the old days we have barber, which was very inefficient. So lets i sold an ad in forbes 3000 years ago. How would i get paid . Perhaps with a herd of goats. Im being a little facetious here but lets say i wanted to buy ipads for our writers. Lets i went to the apple store 3000 years ago, my herd of goats, the apple store owners as i dont want goats. I want sheep. To forget how to swap the goats or sheep. Maybe have to hire a sheepherder because the sheepherder, you know, you want the wolves to eat the she. A sheepherder wants to be paid in wind. I have red wine and he wants a white one. He becomes very efficient to imagine if we still have barber today. Imagine trying to deposit a cow in an atm, just becomes very inefficient. So in essence what money does, most of the time does not have insurance about you unless you have old gold coins and the like. Money makes transactions easier. In that sense money measures valley. Thats all it does. Measures value, the way clocks measure time, scales measure weight, rulers measure length. Money measures value. So because it represents value, makes transactions easier, and in that sense its a form of communications that lets you know information to do all the billions of transactions we do around the world each and every day. So money in and of itself is not wealth, but represents a claim on products and services. Think of it as you would a coat check. A coat check has no engine technology. But in a restaurant if you get your coat in the closet, you get a coat check. It represents a claim on the coat. So the idea that creating money, money represents products and services that have already been produced. So it would be, so the idea if we stimulate the economy by printing of money it would be a like a restaurant saying if we great marcoux checks, that will stimulate the production of more coats. No, it does not. Its a claim. It represents a claim on a product or service, money does. So money works best when it has a fixed value. So just like a clock as 60 minutes in an hour, imagine what the world would be like, your daily life would be like if the Federal Reserve is a clock, to 2 00 what it does to the dollar. Imagine floating a clock. You have 60 minutes in our one day. 48 minutes the next, 22 minutes the next, a dmx. You would have to edges and derivatives and futures to figure out in the hours are working today. Lets say youre baking a cake. It says bake the batter 40 minutes to get to figure out is that inflationadjusted minutes, real minutes . It makes life much were difficult. Imagine what would happen if they changed the number of inches in a foot. Youre building a bridge and suddenly you learn instead of 12 inches, a foot is now 10 inches. Imagine building a house. It makes things much more chaotic. Money works best and it has a fixed value and then the question becomes whats the best way to do it. Even though its absurdly out of fashion still in the economics profession, the way it worked in this country for first 180 years of existence is you fix it to gold. Why gold . Because more than anything else in the world gold keeps its Intrinsic Value. Has for 4000 years. You cant destroy it. Every ounce that has been mined is still in the world today. Its been point out that perhaps the gold ring youre wearing, certain rings going back to egyptian pharaohs. You cant destroy. Its hard to make but not too hard. So you dont get too much of it at a time. Because you cant destroy it, you find a big gold mine, you dont get a glut of gold, including the California Gold rush which was one of the biggest minds ever. Only increase the annual supply but three of 4 and then tapered by county the average of one and a half or 2 . You dont get droughts the things i fit. You dont have to worry about storage, about my speed in the gold so whether you freeze it or keep it or vetoed that, you cant destroy it. Its got unique properties. Its withstood the test of time for 4000 years. People think if you mention gold, does that mean we have to gold coins and 100 backing in all of that . Think of gold as you would the ruler. Its a fixed measure of value. So lets say we fix the dollar to gold at 1200 an ounce. All that would mean isnt the went about 1200 in the marketplace, 1200 an ounce, that means the fed is creating too much money so it creates less money. If it goes below 1200 innings youve got to greet a little more money. It lets the market place determine the needs of whats needed in terms of money. If you have a vibrant economy youre going to create more money. You dont have to ow on an ouncf gold to do. The british ran it. Across the Gold Standard with very, very little amount of gold but they knew what they were doing. They respond to signals in the marketplace and to work right up until world war i which blasted that and a lot of other things. So gold in the sense is like the ruler. The fact that a mile has 5280 feet does not restrict the number of miles of highway bill. To give you a factoid you can use at a Cocktail Party to show brilliant you are, from the time of our existence can go back to the revolution of war in 1775 when we were a Small Agricultural nation, up to 1900, our popular increased 25 fold. We went from a Small Agricultural nation to a vibrant intellectual nation. During that period of time in out of gold mined in the world went up three and have full. The money supply in the u. S. Went up 164th even though the dollar was fixed to gold. So gold just make sure the value states expect it doesnt restrict the supply. If you have a vibrant economy, these are the needs of the marketplace. If you have a stagnant economy, you dont created. So its very, very, very basic. So when people lose sight of that, you wind up having what we have had since 1971. We lurch from one crisis to another. A terrible decade in the 70s. We got it see me right in the 80s and 90s, and boy, we moved ahead. But in the last decade we went backwards. Starting, if this is not a partisan thing, started under the bush administration, treasury department, Federal Reserve started to weaken the dollar. They thought that would stimulate exports. Thats how we got the housing bubble. Anytime you undermine the integrity of a dollar, the dollar, people go into hard assets. From the mid 1980s to the early part of last decade the average price of a pair of what was a little over 21 a barrel. What is it today, 80, 9100 . May not get up to 110. Back in the 70s, none of you are old enough to remember the 70s, its called pandering [laughter] tried it in politics, didnt work which is why im peddling books now. [laughter] but back in the 1970s, oil went from 3 a barrel, the last time we were off the rails, to almost 40. Everyone thought we were running out of oil and going to go to 100 to then reagan came in with paul volcker. They kille killed the terrible inflation of the 70s. Oil went crashing down to 10 a barrel an average 20 25 per barrel. Its like putting a virus in the computer. You dont trust about of money. What it means is you get less investment, investment is less productive if you buy existing things rather than things in the future. Investing is risky enough but if he dont know what it is you get a 100 cents a dollar for a fact it may not pay off for five years, seven years, whether you get back 80 cents, 20 cents combat at the more uncertainty which is why we have been stagnant, dead in the water by our historic standards. So thats why we wrote the book money. Educate about money. Money represents value. And gold is the best way to fix that valley. If we understand that then we can move ahead and get back to the kind of growth rates we had before 1971. Obviously, there a lot of other things we have to do, but experience shows us if you dont get the money right in terms of a fixed about you, you can get other things right, get taxes by, spending right, the regulations right there if you dont have the money right its going to undermine Everything Else because the basis of transactions the basis of trust, basis of investment. And because when it works, we dont realize what makes it work. Its like air. When its clean we take it for granted. When we have pollution, oh, my goodness, it is important, yes. So money is in the same way. The one aspect of money that gets overlooked because we always focus would think of money on economics and gdp and the like is social trust. We have a chapter which elizabeth will discuss in a few moments, a chapter talking about how be facing money defaces society, undermines the fabric, social fabric and in ways ago but simply gdp not an exchange neighbors. I will call up elizabeth but one thing to keep in mind is when money is stable and valley, brainpower goes for a productive use. One example before 1971 when currency didnt much fluctuate because we were fixed to gold, very low currency trading. Now currency trading is a huge activity all around the world. Daily volume over 3 trillion. Tens of thousands of the best brains in the world focus on activity that would not exist if a stable money, brainpower that could be used for medical research, other things, productive things. So this thing has consequences that go beyond merely gdp and judy, and whatever other acronyms they throw out. With that let me say thank you and turn over to my colleague, elizabeth. Thank you. [applause] good eating. Its good to be here. And i like to talk a little bit about that chapter, chapter five, which is money and marelli, how debasing money debases aside and people have found this chapter particularly thoughtprovoking, money. It starts out with a quote to see mentioned, a famous go from economist John Maynard Keynes and i will read it in its entirety. Lenin was certainly right, there is no subtler, no surer means of overturning the existing basis of society and to debauch the currency. The process engages all the Hidden Forces of economic law on the side of destruction, and it does it in a manner which not one man in a million is able to diagnose. And we say in the book that unstable mine is a little bit like carbon monoxide. Its odorless and powerless. And you dont know the damage its doing until its very nearly too late. Thats because people do not always aware when government weakens the courage and the only see the effects of it which is one reason why debasing money is so corrosive. People say money is about greed but, in fact, its about trust. Money permits strangers from all nations and societies at all walks of life to come together and conduct transactions based on a commonly agreed upon measure of value. Money in this way promotes cooperation between people. It serves as an estimate of communicate should as well. It tells us what a society values. Not just materially but what its priorities are. So we money is corrupted its ability to act as a facilitator of trust and cooperation is corrupted as well. Unstable debasement undermines the vital relationship between buyer and seller, between lender and better. The philosopher john locke described this fisher that is produced at society score. And he wrote, you also buyer this as well, whether the creditor is forced to receive less or the debtor be forced to pay more than his contract, the damage and injury is the same whenever a man is defrauded of his do. And during periods of unstable money you often see a particular scenario unfold. Involved scapegoating, social unrest and often increasingly coercive government. In the worst cases they can unleash the force of political extremism that can lead to the rise of dictators. Recently and investment strategist wrote a particularly good piece describing this classic scenario thats occurred throughout history, and he points out that monetary debasement has coincided not only with the persecution of the jews in preworld war ii germany, but also with the french revolutions reign of terror, the salem witch trials and other bloody episodes through the centuries. But this kind of destruction of trust and unrest is not just a remote historical occurrence. Its taking place in many areas of the world today such as the middle east, europe. Into a certain extent the u. S. Analytics, a south African Investment advisor house has issued reports called riot alert which predict the worlds most likely trouble spots. The firm has been able to forecast unrest based on nations rates of monetary abuse, and syria which has suffered only 200 hyperinflation tops the list in february 2013 followed by argentina, south af