The previous post discusses Steve Forbes’ financial opinion on how money is going. It also discussed his opinion on what happened to the bondholders after the abrogation of gold clauses in 1933. Still in an interview with students at Johns Hopkins University, Steve Forbes discussed some other topics. They include things that make Forbes and Ames have similar or different perspectives.

Financial Opinion by Steve Forbes: Forbes vs. Ames

Steve Forbes and Elizabeth Ames, who wrote the book Money, have some similarities when it comes to financial opinion. For instance, both refused the idea of closed economy model. They prefer open economy model. For them, the only closed economy is the world itself. Their opinion is certainly different from that of Ben Bernanke (the last Fed Chairman), who did not put information on USD/EUR exchange rate on his dashboard.

Forbes and Ames also have some other similarities in common when it comes to their view on the economy. They include the following:

• Both rejected the idea of equilibrium and stability in economy
• They agree with the important roles of entrepreneurs in markets. For them, entrepreneurs are agents that disseminate knowledge and information on business and technology.
• They agree that economy is made up of many important aspects, including enterprise and trade, which are combined with information. Money can bring them all together.
• Both refuse the complicated idea on money. Unlike most of money and banking professionals, both are more straightforward and clear. They questioned the complicated writing on money and finance, particularly writing that is filled with complicated language from academicians.
• Both questioned the idea that inflation is necessary to provide more job opportunities. They doubted the scientific reasons behind the idea.

Financial Opinion by Steve Forbes: About Substance and Spirit of Money

Steve Forbes actually has less theoretical view on money. Therefore, he quoted Paul Volcker’s book The Central Banks. In his book, Volcker notes that the main power of a central bank is to create money. On the other hand, the power to create also means the power to destroy. Steve Forbes reminded us few things, including the following.

• Central bank is an invention of the past. The idea has been around for more than one hundred years, even though few central banks could actually trace their own story to the early 19th century or even before. Of course, the invention was based upon its expected role in the economy.
• The central bank mostly dominates as its existence coincides with the tendency toward more (instead of less) inflation. For instance, if its main objective is to stabilize price, then price stability was even better in the 19th century, when gold became the dominant commodity and when central banks were actually more passive.

So far, four opinions of Steve Forbes on money and economy have been discussed. There are some other interesting ideas he shared during the interview with the students. Most of all, he tried to remind us about the history and important events in the US economy. Therefore, do not miss more on Steve Forbes’ financial opinion in the next post.