Cspan beth and john have agreed to say and sign books if you will wind up down bohol. But mr. Bassett is driving home tonight to halfhours so lets not keep him too late to. Could 95. Steve forbes and Elizabeth Ames trace their economic troubles to the ending of the Gold Standard in the 70s and discuss what a weak u. S. Dollar means for the Global Economy. They call for a return to the Gold Standard to stabilize the economy. Coming up next on booktv. We are very privileged to have with us this evening a very recognizable figure in the media and the business world. Steve forbes is of course editorinchief of forbes magazine, the nations leading business magazine and he has headed a Media Company that includes not only asian and european editions but a number of Web Properties focused on politics, sports and financial markets. Many of you will also remember steve Spirited Campaign for the republican president ial nomination in 1996 and 2000 during which he promoted the idea of among other things the flat tax along with the new Social Security system, medical savings account, term limits and Strong National defense. This evening steve comes to us as an author which also is not a new role for him. He has written or cowritten five previous books. His sixth and latest one money how the destruction of the dollar threatens the Global Economy and what we can do about it is every bit as emphatic, reasoned and clearly written as the earlier works. Anyone familiar with his freemarket libertarian views will not be surprised to read his criticisms of Central Banks in existing monetary policies with the fed now winding down its quantitative easing, steve sees an especially opportune moment to rethink our Monetary System and ensure a more sound and Stable Currency by returning to the Gold Standard. He writes in the book quote freeing the dollars from gold was supposed to make United States stronger. Instead, it has made the country weaker. Something has to be done done. Ladies and gentlemen here to explain what needs to be done along with steves coauthor, Elizabeth Ames who is a Communications Executive is steve forbes. [applause] thank you very much bread and 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. As a result, the Federal Reserve for example as less formal oversight from capitol hill, from congress than our intelligence agencies and the thesis of this book is that won the topic of money is very straightforward and simple. Even though shrouded in a lot of jargon and a lot of equations, the idea of money is very basic. We have gotten away from it and our policymakers today know less about money and monetary policies than they did 100 years ago. Since the early 1970s even though we had booming decades in the 80s and 90s overall our growth rates since we went off 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 maintain the growth rates that we had for 180 years up to 1971, if we 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 fact reverse compounding adds up to a lot. Saber for a moment having 50 higher incomes and what it would mean for the deficit, what it would mean for Social Security, what it would mean for a lot of the social conditions today. This thing over time adds up. Its a critical reason why it takes two incomes in the family to do what one income could do in previous generations. Obviously taxes are large part of it but the debasement of the dollar since the 70s is a part of it as well. When this happens, when they dont have a Stable Currency unit up with people not getting ahead the way they should. Median income has not grown the way it should and leading as my coauthor elizabeth will discuss in a few minutes to a fraying of the social fabric, rejection of social trust and more divisions. As keynes said its a process about one in 1 million will be able to diagnose. So that is why we wrote the bo book. Since Monetary Policy doesnt usually get the heart beating a flutter away some of the reality shows do, i will begin by just giving you an advance reward and that is to give you a travel ticket. If you ever find yourself in an airplane in and coach, middle seat, on the runway watching your life pass away you want a little bit of elbow room from your seat mate start about Monetary Policy. They will cut you a wide girth. [laughter] so as a result of the chaos that we have had slow moving 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 tapering the thing, which is a good thing, it ended up subtracting from the economy rather than stimulating the economy. Now in terms of money the thing to understand about money is very basic. Transactions, buying and selling is how we move our standard of living and how we exist. It makes buying and selling much easier. In the old days we had barter. It was very inefficient so lets say i an added forbes how would i get paid . Perhaps with a herd of goats. Im being a little facetious here but lets say we are writers so lets say i went to the apple store 3000 years ago with my herd of goats. The apple store owner says i dont want goats, i want sheep so i have to figure out how to swap the goats for sheep and maybe have to hire a sheepherder because the sheepherder come you dont want the wolves to eat the sheep. The sheepherder wants to be paid and wine. I have red wine and he wants white wine. Imagine if we still had barter today. Imagine trying to deposit a cow in an atm. It becomes very inefficient. So in essence, what money does, money most of the time does not have Intrinsic Value. Unless you have old gold gold coins in the light that money makes transactions easier. In that sense money measures value. Its all it does. It measures value the way clocks measure time, scales measure weights, rulers measure length, money measures value. So because it represents value it makes transactions easier and in that sense its a form of communications that latino 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 well but it represents a claim on products and services. Think of it as you would a coat check. A coat check has no Intrinsic Value. In a restaurant you put your coat in a closet in a coat check and 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 up money it would be like a restaurant saying if we create more coat checks that will stimulate the production of more codes. 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 the clock has 60 minutes in an hour. Imagine what the world would be like and what daily life would be like if the Federal Reserve did to clocks were due to the dollar. Imagine floating the clock so you have 60 minutes one day, 48 minutes the next and 22 minutes the next, 80 the next you would still have to have hedges and derivatives and futures to figure out how many hours or working a day. Lets say you are baking a cake. Bake the batter at 45 minutes. You have to figure out is that inflationadjusted minutes are real minutes . It just makes life much more difficult. Imagine what would happen if they change the number of inches and a foot. You are building a bridge. Some of you have learned instead of 12 inches is 10 inches. Imagine building a house. Just makes things much more chaotic. So money works best when it has a fixed value and then the question becomes whats the best way to do it . Even though its absolutely out of fashion in the economics profession the way it works in this country for the first 180 years of existence is you fi fit to gold. Why gold . Because more than anything else in the world gold keeps its Intrinsic Value. It has for 4000 years. He cant destroy it. Every ounce of it has been mined and is still in the world today. It has been pointed out that the gold ring you are wearing may have certain grains going back to egyptian pharaoh times. You cant destroy it. Its hard to make but not too hard so you dont get to do much of it at a time. Because you cant destroy if you find a big goldmine. You dont get a lot of gold. The California Gold rush which was one of the biggest ever only increase the annual supply three or 4 and then taper down back to the average of 1. 5 or 2 . So unlike wheat, you dont get droughts are things like that so you dont have to worry about storage and about mice eating the gold. So whether you freeze it for heated or beaded up you cant destroy it because its got unique properties. So it stood the test of time for 4000 years. Now people think if you mention gold does that mean we have to have gold coins in 100 backing in all back . Think of gold issue with the ruler. Its just a fixed measure of value so lets say you fix the dollar of gold at 1200 an ounce. All that would mean is if the one above 1200 in the marketplace, 1200 an ounce that has created too much money so it creates less money. If it goes below 1200 it means youve got to create a little more money so that the marketplace determines the need of whats needed in terms of money. If you have a vibrant economy you are going to create more money. You dont have to own an ounce of gold to do it. The british ran it with the Gold Standard with very little amount of gold. They knew what they were doing and they responded to signals in the marketplace and it worked right up into world war i which lasted along with a lot of other things. So gold golden that sense is like the ruler. The fact that a mile has 5280 feet does not restrict the number of miles of highway you can build. Just to give you one little factoid that you can use at a Cocktail Party to show how brilliant you are from the time of arch distance, go back to the revolutionary war in 1775 when we were a Small Agricultural nation, up to 1900 population increased 20 fivefold. We went from a small ad nation to the mightiest industrial nation in the world. During that period of time the amount of gold mined in the world went only up 3. 50. The money supply went up even though the dollar was fixed at gold. So gold just make sure the value stays fixed. It does not restrict the supply. If you have a vibrant economy that sustains the marker placement in a stagnant economy you dont created so its just very very very basic. So when people lose sight of that, when you end up having what we have had since 1971. We have gone from one crisis to another. We had a terrible decade in the 70s. We got a semiright in the 80s and 90s and boy we moved ahead but in the last decade we went backwards and starting, and this is not a partisan thing started under the bush administration, Treasury DepartmentFederal Reserve started to weaken the dollar. They thought that would stimulate exports and thats how we got the housing bubble. Anytime you undermine the integrity of the dollar, people dont own hard assets. In the mid1980s the last decade the average price of a barrel of oil was a little over 21 a barrel. What is a twoday . 80, 90, 100 this crisis may not get up to 110 . In the 70s if any of you are old enough to remember the 70 70s. [laughter] tried politics which didnt work which is why im peddling books now but back in the 1970s, oil went from 3 a barrel last time when off the rails to almost 40. Everyone thought we were running out of oil and we were going to go to 100 then reagan came and with paul volcker and they killed the inflation in the 70s. Oil went crashing down to 10 a barrel and averaged 2225 a barrel. Its like putting a virus in a computer. If you dont trust the value of money what it means is you get less investment, investment is less productive because you buy existing things rather than things for the future. Investing is risky enough that you dont know whether youre going to get back the 110 for a factory that may not pay over five years or 100cent dollar, 80cent dollar, 20cent dollar. That is more uncertainty which is why you can stagnate dead in the water by our historic standards. So thats why we wrote the book money. Educate about money. With money represents value. Gold is the best way to fix that value. If we understand that then we can move ahead and get back to the growth rates we had before 1971. Obviously there are a lot of other things we have to do but experience shows us if you dont get the money right in terms of the fixed value you get other things right. You have the tax is right in the spending right, the regulations right but if you dont get the money right its just going to undermine everything else. This is the basis of everything else. The basis of transaction come the basis of trust, the basis of investment and when it works we dont realize what makes it wo work. Its like the air. When its cleanly taken for granted and when we have pollution oh my goodness there is important. So money is the same way. One aspect of money gets overlooked because we always focus for me think of money and economics, gdp and the like, is social trust. We have a chapter which lives will discuss for a few moments talking about how debasing money to base a society. It undermines the fabric, the social fabric and the ways that go beyond simply gdp numbers and exchange numbers. So i will call up elizabeth but one thing to keep in mind is that when money is stable and value brainpower goes for conductive use. Just one example before 1971 when currency didnt fluctuate because we were at fixed gold. Little currency trading. Now currently trading is a huge activity all around the world. Daily volume over 3 trillion. Tens of thousands of the best brains in the world focusing on an activity would not exist if we had stable money, brainpower that could be used for medical research, other things, productive things. So this thing has consequences that go beyond merely gdp in qb and whatever acronyms that drought. With that let me say thank you and turned over to my elizabeth Elizabeth Ames. [applause] good evening. Its good to be here and i would like to talk a little bit about that chapter, chapter 5 which is money and morality, how debates and money to base a society and people have found this chapter particularly thoughtprovoking about money. Starts out with that quote a famous quote from John Maynard Keynes and i will read it and in its entirety. Lenin was certainly right. There is no set subtler sure means of overturning the existing society than to the bots the currency. The process engages all the Hidden Forces of economic laws on the side of distraction and it does it in a manner in which not one man in a million is able to diagnose. And we say in the book that unstable money is a little bit like carbon monoxide. Its odorless and colorless. If you dont know the damage its doing until its nearly too late and people are really not always aware when the government is tweaking the currency and they only see the effects which is one reason why debasing money is so corrosive. People say money is about greed but in fact its about trust. Money from strangers from all nations and societies in all walks of life come together and conduct transactions based on a commonly agreedupon measure of value. Money promotes cooperation between people. It serves as an instrument of communication as well. It tells us what society values not just materially but what its priorities are. So when money is corrupted its ability to act as a facilitator of cooperation is corrupted as well. Unstable debased money and of mind survival relationships between buyer and seller, between lender and debtor. The philosopher john locke described this issue that is produced at societies correnti wrote, and you have also heard this as well, whether the creditor is forced to receive less for the debtors be forced to pay more than his contract the damage and injury is the same whenever a man is defrauded of his due. And during periods of unstable money you often see a particular scenario unfold scapegoating corruption social unrest and increasingly coercive government. In the worst cases it can unleash forces of political extremism that can lead to the rise of dictators. Recently an investment strategist named dylan rice wrote a particularly good piece describing this classic scenario that has occurred throughout history. It he points out that monetary debasement has coincided not only with persecution of preworld war ii germany but also with the french revolutions reign of terror in the salem witch trials and other bloody episodes through the centuries. But this kind of distraction 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 and to a certain extent the u. S. Analytics south African Investment advisory house has issued reports which predict the worlds most likely troubled spots. The firm has been able to forecast unrest based on nations rates o