The Anti-Piketty

Steve Forbes is just out with the book we’ve been waiting for. It’s titled “Money.” It contains his treatise on the destruction of the dollar and the threat its collapse represents to the global economy. His prescription is for a return to sound money based on gold. He is learned, plain-spoken, and wise, with a fluent understanding of history rivaled by few editors of his generation. His book will stand for many of us as the first answer to the neo-Marxist Thomas Piketty, whose “Capital” is all the rage in the Obama administration.Mr. Piketty, after all, is advancing the view that the growing share of our wealth held by the top decile is creating a kind of irreversible plutocracy, an era of inequality. This theme is being echoed by all the panjandrums of the Left, from Paul Krugman to Senator Warren to President Obama. No doubt Secretary Clinton will try to get in on the act, too. This theme is going to be at the center not only of the 2014 bi-election campaign but of the 2016 presidential campaign. This is the issue that is written in the stars, and it will rarely get an answer as apt as Mr. Forbes’.What Mr. Forbes gets so clearly is that all this inequality, this is a function of the age of fiat money. We noted in an earlier editorial that the very chart that Professor Piketty uses to show the soaring inequality shows it taking off in the mid-1970s, just after the collapse of Bretton Woods. Mr. Forbes nails this point. “Much of the speculation that takes place in today’s financial markets is a response to the volatility produced by the collapse of the Bretton Woods gold system,” he writes at one point (and under a heading that says: “George Soros May Have to Find a New Job.”).One of the rhetorical delights of Mr. Forbes’ book is the inclusion at the end of each chapter of a summary that he calls “the nugget.” They include, to cite but three, “An unstable currency means an unstable economy and less prosperity”; “Money measures wealth, but it does not create it”; and “To paraphrase Ron Paul: if printing money created wealth, there’d be no poverty left on earth.” The whole batch of these nuggets could be printed on palm cards for our politicians to take to the hustings.When Mr. Forbes went out on the hustings himself, he got his head handed to him, a fact that will no doubt be lobbed at this book. But those were different times — 1996 and 2000, when we were still in or enjoying the fruits of the vast boom that began under President Reagan. That was a period, extending through the presidencies of George H.W. Bush and William Clinton, when the value of the dollar had stabilized in a range of around 350th of an ounce of gold. Even Mr. Forbes’ flat tax, the best fiscal idea since Reagan, was failing to resonate.Experience since then has moved the monetary question to the fore. It is at the heart of our troubles, including the crisis of 2008. Loose money policies of the early 2000s led to what Mr. Forbes calls the “worldwide panic and global recession in 2008.” The Keynesians threw everything they had at it, including expanding the balance sheet of the Federal Reserve by trillions of dollars in an effort to create growth and, in line with Humphrey Hawkins mandate, jobs, too. So a recession was lengthened into what we now call the Great Recession.We had hoped that Governor Romney would take this issue to the voters in 2012. The long Republican primaries had actually forced the party to adopt a monetary reform plank in its platform. It called for a monetary commission to be established to open up the question. Mr. Romney, in the biggest blunder of the campaign, failed to stand on the very plank his party gave him. The importance of Mr. Forbes’s book is that it will be there for the next candidate. It gives better expression to such a plank than has ever been given and at just the right moment. It is the answer to Professor Piketty and whatever Democrat runs in his name.

The Anti-Piketty

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