Forbes Predicts U.S. Gold Standard Within 5 Years

[dualstow]

I'm not for this, necessarily, but it's an interesting article.

A return to the gold standard by the United States within the next five years now seems likely, because that move would help the nation solve a variety of economic, fiscal, and monetary ills, Steve Forbes predicted during an exclusive interview this week with HUMAN EVENTS.

http://www.humanevents.com/article.php?id=43439

[MediumTex]

Steve Forbes is a tool.

As I have watched his market predictions over the years I have been amazed at how little he seems to know about the way the world really works.

It's surprising, since one would think that a wealthy publisher of a financial magazine would have a more nuanced grasp of things.

If you haven't followed his positions over the years, check them out.  He makes my dart parlor monkeys look like a bunch of Warren Buffetts.

[moda0306]

"Such a move would help to stabilize the value of the dollar, restore confidence among foreign investors in U.S. government bonds, and discourage reckless federal spending."

I didn't realize that at rates of 0%-4.3% we needed to restore confidence among foreign investors in U.S. government bonds.

Yes, MT, what a tool.  The thing is, legitimate points about the fed and government trying to engineer an economy to their liking are valid and should be discussed, but when guys like Forbes get on their hyperbole-filled rants they don't do anyone any good.  In fact they scare people out of smart investments like LT treasuries, which have proven an absolutely phenominal diversifier to stocks over the years.

Then his prediction that we'll actually move to the gold standard within 5 years... how does he see this happening?  Would it take a new fed chairman?  Presidential approval?  Are you telling me that Obama, with a 60% approval rating and weak opponents (probably will get reelected IMO), the guy who brought us Summers and Geitner, is going to send us back to the gold standard?

MAYBE if Ron Paul got elected, it MIGHT have a chance of happening.

[MediumTex]

Then his prediction that we'll actually move to the gold standard within 5 years... how does he see this happening?  Would it take a new fed chairman?  Presidential approval?  Are you telling me that Obama, with a 60% approval rating and weak opponents (probably will get reelected IMO), the guy who brought us Summers and Geitner, is going to send us back to the gold standard?

If Forbes had any sense of history he would know that the last time the economy was in the midst of a deflationary contraction following the bursting of an asset bubble (i.e., 1933), the gold standard was perceived to be the problem, not the solution.

The idea that we would go back on the gold standard in this kind of environment is naive and ridiculous.  It is during periods like this that politicians and central bankers seek the most power over the money supply, credit and reserves because they think they can engineer a recovery through their superior grasp of the inner workings of the economy (see last 20 years in Japan and FDR's bumbling policies in the 1930s). 

The idea that in this kind of environment a gold standard would re-emerge just doesn't make any sense.  What politician or central banker would back something like that?  Why? 

I think that part of the reason gold is rising is that the market knows that the current crop of world economic leaders has no interest in sound money and believes that any past bad decisions can simply be inflated away and a new equilibrium will be restored somewhere down the road, but still within a debt-based fiat money paradigm.

[TBV]

The prospect of establishing a gold standard within five years is separate and apart from the issue of the desirability of having one .  In any event, a "gold-backed" currency is mere window dressing unless it is also gold-redeemable. 

At present, the Fed is hardly functioning as the independent entity it is always touted as being.  A true gold standard would at least limit the ability of pols to debase our currency while rewarding their political clients.

[AdamA]

i could see removing the collectables tax from gold as a possible step in that direction, but even that would take a far more libertarian president than we are likely to get.
I think the 5 year prediction is way off and not even remotely likely, the central bankers want to have the ability to manipulate the currency, it is a form of power, and not one they will give up easily...

Gold stories and predictions are showing up more and more frequently in the popular financial media.  This would make me very nervous if I was invested strictly/heavily in precious metals or mining stocks. 

[moda0306]

Adam,

If the double-digit drops in commodities these days weren't already making those people nervous...

[AdamA]

Adam,

If the double-digit drops in commodities these days weren't already making those people nervous...

I know...but a lot of these people have the it's-just-a-pullback attitude.  They may be right, but the more mainstream gold and silver become, the more likely it is, IMO, that this opinion will be wrong.