By Ralph Benko
The Tax Revolt has run its course. A Money Revolt is needed. Steve Forbes, with Elizabeth Ames, in Money: How the Destruction of the Dollar Threatens the Global Economy—and What We Can Do About It has thought the issues through. So has, among others, Lewis E. Lehrman (founder and chairman of the Lehrman Institute, whose monetary policy website this columnist professionally edits) in The True Gold Standard and Money, Gold, and History.
Now, to these thinkers, comes activist Steve Lonegan. Lonegan, former mayor of Bogota, NJ and GOP US Senatorial nominee, ambitiously, is launching, for American Principles In Action, FixTheDollar.com (also advised by this columnist). FixTheDollar is designed to become a mass movement to ignite a Money Revolt and, with it, restore the American Dream.
The launch of this effort recently was described by The Ridgewood Blog in an article entitled Steve Forbes and Steve Lonegan Team up to Mend the Fed and Restore a Classical Gold Standard:
Steve Forbes and Steven Lonegan have joined forces and embarked on a mission to defend the liberty of the individual, which can only be protected when the wages, quality of life and savings earned through the fruits of one’s labor are preserved by the maintenance of sound currency.
By restoring the classical gold standard, and if possible changing a few laws so as to permit competing currencies, America can create a climate of equitable prosperity that will generate tens of millions of good new jobs, end wage stagnation, restore a climate of opportunity wherein everyone – blue or white collar, of every age, race, and creed – can climb the ladder to affluence, balance the federal budget via economic growth, provide the resources to improve the natural environment and fix our decaying national infrastructure.
Steve Forbes, at FixTheDollar’s debut rally, stated:
You can get it right on taxes. You can it right on regulation. You can get it right on government spending. But if you don’t get the money right it’s all for naught.
Tax policy did not change fundamentally around a dozen years ago, nor did trade, energy, or regulatory policy. Few argue that profligate spending, however deplorable, materially contributed to the Panic of 2008 and ensuing sullen, sodden, recovery. This strongly suggests that the real culprit for our economic “Little Dark Age” does not lie with tax policy.
What changed? Monetary policy changed, and dramatically. Fed Chairman Paul Volcker, under Reagan, had instituted the Great Moderation. This was sustained thereafter during the first two terms of his successor, Alan Greenspan. The Great Moderation led to sizzling job growth.
Thereafter… the Fed destabilized the dollar, causing boom and bust cycles. The economy soon collapsed, leading to further monetary shenanigans by a desperate Fed.
Want a vibrant economy? It will take a Money Revolt. Washington, curiously tone deaf on this issue, needs to hear from the people.
Forbes and Lonegan addressed a standing room only crowd in a bistro (converted from an old bank, with huge safe doors as décor) around the corner from Wall Street on September 3rd. Forbes:
Look at it this way. In the 40 years that we have been off a gold standard our average growth rate is less than it was the previous 180 years when we were on a gold standard. … If we had maintained gold standard growth rates do you realize the American economy today would be 50% larger than it is now? Ponder that: $8 trillion bigger. Life would be a lot better. … There’s a reason why people feel we are not moving ahead. And society turns on itself when it feels that mobility and opportunity is being corrupted. And they don’t understand why. So we have to tell people why this is happening and what we can do about it. … And, by the way, that 50% … larger? If we’d had growth rates throughout our history that we have had since we went off the gold standard in 1971 our economy today would be one-fourth the size it is now. Imagine taking a 75% cut in the standard of living.
A “lower tax rates plus high integrity dollar” policy formula, called the Mundell-Laffer Hypothesis by Jude Wanniski, created “Morning in America” under President Reagan. Mostly preserved and embellished by President Clinton, with prompting from a Republican House, it led to an economic zenith in America. America created around 16 million jobs under Reagan and around 22 million under Clinton.
By comparison, Bush saw the creation of little more than 1 million, Obama little more than 4 million, net new jobs. Bush and Obama, notwithstanding special pleading by their respective apologists, have nothing to be proud of on the score of job creation, nor in breaking the curse of wage stagnation which began in earnest under Nixon, nor in the creation of a climate of equitable prosperity.
Washington is missing in action. Enter FixTheDollar.com. It aspires to move into a critical policy vacuum … in much the same way as did MoveOn.org (with its demand the Congress censure Clinton and move on, and then for a non-militaristic response to 9/11).
Mass movements all have this in common: when the political elites abdicate on an important issue it makes room for populist agitators, like Lonegan, to rally the grass roots to action.
From FixTheDollar.com, “How You and I Can Restore American Prosperity, A message from Steve Lonegan”
After World War II, America, and the developed world, prospered … and prospered equitably. Working people regularly got good raises and big promotions. One earner could support a family. Opportunity abounded.
We remember this as a Golden Age.
Equitable prosperity happened even though America had piled on massive debt to fight the Second World War and the lives and careers of millions of people were disrupted by the war. Equitable prosperity continued solidly through the 50s and the 60s.
Equitable prosperity began to sputter, and die, in the 70s. We have had extended periods under Presidents Reagan and Clinton with sizzling job growth. But on average, the past 40 or so years have been an era of wage stagnation and rising prices with regular working families treading water and struggling to break even. …
What changed in the 1970s? We can point to the very day on which the American Dream died: August 15, 1971.
On that night, President Richard Nixon addressed the nation announcing that he was closing the gold window — the mechanism that made the dollar as good as gold. It, together with other, shorter-lived measures, was called “the Nixon Shock.”
You can see his speech here.
Those four minutes contained the death knell of the American Dream.
America is resilient. By grasping why and what went wrong, together you and I can resurrect equitable prosperity.
FixTheDollar does not stand for End the Fed. FixTheDollar stands for Mend the Fed.
The Federal Reserve System was invented to work within the classical gold standard. What, then, is to be done? If the Fed follows “the golden rule” — a better version of the Great Moderation that led to the great job growth under Presidents Reagan and Clinton — we can restore the American Dream.
With your participation, America will enter a new Golden Age and lead the world into unprecedented peace and prosperity.
Steve Forbes, at the rally:
Money measures value. … just as clocks measure time, scales measure weight, and rulers measure length. So money in and of itself isn’t wealth… It’s a claim on products and services. Like a coat check at a restaurant like this. So the idea that if you print up a lot of money out of thin air you create prosperity is like a restaurant saying if we do a lot of coat checks we’ll stimulate the production of a lot of coats.
Will September 3rd be remembered as the “July 4th” of the Money Revolt? It will if the voices of the two Steves, Forbes and Lonegan, are heard and taken to heart.
Fix the dollar.
Republished with permission from Forbes.com