On Aug. 4, financier and editor of Forbes Magazine, Steve Forbes, spoke in an interview with Global Financial Intelligence Blog (GFIB) about his new book, and how the world is using the dollar as the key point of attack to bring down U.S. hegemony. During his discussion with GFIB, Forbes spoke first on each historical checkpoint where the dollar has de-evolved from a basis of sound money and gold backing to how its eventual move to a purely fiat currency has allowed it to become vulnerable to outside attack, and is the very crack in the armor that could end the American empire that has reigned supreme for 24 years since the fall of the Soviet Union.
At the same time that Steve Forbes was assessing the nation’s destruction of the dollar foundation, former Congressman Ron Paul was speaking as a guest on the Alex Jones show regarding the same topic. During his 11 minute interview, Paul stressed that America’s use of the dollar as a weapon against any nation that threatens them, either through economic sanctions or through the exporting of inflation abroad to cripple their economies, is leading over 100 nations to look for alternatives to the reserve currency, and facilitate the end of U.S. hegemony through the rejecting of its currency, and the crippling of their ability to dominate the global financial system.
GFIB: Why and how did the United States start to destroy its own dollar?
Steve Forbes: The dollar was destroyed by ignorance. The Bretton Woods system created in 1944 was what was called a gold exchange standard: the dollar was fixed to gold and other currencies were fixed to the dollar. Central banks could turn in dollars to the US for gold at $35 an ounce.
American authorities could have preserved the system very simply: the Federal Reserve would sell Treasury securities from its portfolio if gold began to move above $35 an ounce in the global markets and buy Treasuries if gold went below $35.
Instead the US and many other countries wanted to use monetary policy to try to stimulate their economies with easy money. But you can’t print money like that and maintain a gold standard. Moreover, as we explain in our book, cheap money distorts investments and economic activity and never leads to sustainable growth. The housing bubble of the past decade is a dramatic example of this.
GFIB: Some weeks ago, the BRICS signed a series of agreements to create the New Development Bank and the Contingent Reserve Arrangement to bypass the Fed, the IMF and the World Bank. Is this the last nail in the dollar’s coffin?
Forbes: It is a symptom of what happens when the global currency, which the dollar is today, is increasingly unstable. The rest of the world becomes anxious and deeply frustrated. For a genuine alternative to emerge, a country or the European Central Bank must understand the simple fundamentals of money, starting with the basic fact that money itself is not wealth but rather measures wealth the way rulers measure length, clocks measure time and scales measure weight. Money conveys information that is crucial for a functioning market. It is based on trust. They must learn how to operate a successful gold standard. No central bank today would know how to do it. – GFIB
In July, Forbes published a new book showing the root causes for the destruction of the dollar, and offers Austrian economical solutions for staving off its ultimate collapse, and bringing back the idea of sound money over fiat currency and debt. It it his belief that unless the world goes back to a system of a gold backed currency, financial stability will be impossible and the ramifications for not just a single nation, but the entire global financial system, will be economic chaos.
Ron Paul and Steve Forbes are two highly respected financial analysts who have decades of correct prognostications on the how and why America’s economic system has moved from once being the greatest in the world, to the point of systematic rejection and ultimate collapse. And since the prevailing economic doctrine of Keynesian economics has ruled over the policies of government for more than 60 years, it is far more likely that the rise of the next global master of the financial system will come from another country, which will imperil the U.S. to instantly go from a first world superpower to a third world economy when its ability to create money from debt ceases to exist.