Fixing inflation by bringing back the Gold standard 
By Steve Forbes, Nathan Lewis, Elizabeth Ames
Augmented by Walter Sorochan  Emeritus Professor San Diego State University

Posted: May 9, 2022.

Inflation today is the number one economic-social-political problem of United States and the world. Politicians must give inflation the highest public and government priority above all other problems. This is a must read article for all peeople.

The contents and ideas herein are from the article and book Inflation by Steve Forbes, Nathan Lewis and Elizabeth Ames. Walter Sorochan simplified the summary of the book for easier reading. 

Wall Street is on edge. Central banks are hiking interest rates to try to rein in inflation. Interest rates are the Federal Reserve's primary tool to control inflation, which is currently hovering at 8.5% — the highest it's been since the early 1980's. Morrow: What is a recession 2022

On May 4, 2022, Federal Reserve Chairman Jerome Powell, in an attempt to get inflation under control, raised the Federal Reserve benchmark interest rate by half a percentage point, the most aggressive step yet in its fight against a 40-year high in inflation.  Cox: Fed Reserve raises rate by half percent 2022 The stock market reacted negatively.

Kramer lists three ways governments try to fix inflation:  Kramer: How governments reduce inflation 2022

None of these three ways have fixed the cause of inflation. Self professed economic experts are confused about inflation, its cause and how to fix it.

Most people think of inflation as "price increases." But higher prices are the effect of inflation and are not the cause. This is a more correct way to think about inflation.

Steve Forbes, Nathan Lewis and Elizabeth Ames, in their just published Amazon book, Inflation, reveal what is causing inflation and how to fix it. The content herein is but a trite summary of what their book reveals about why inflation happens and why inflation is bad for the economy and society. Politicians in Washington lack the understanding of inflation; hence they fumble with insignificant public issues and are unable to focus on fixing inflation.

Economic events have been playing out since 1971 when President Nixon attempted to fix inflation with wage and price controls, tariffs by abandoning gold as the fixed standard to the American dollar. Doing so destabilized the dollar and made it lose its purchasing value amidst an unstable dollar and emerging inflation. This has caused confusion about inflation. From the fall of Rome to the housing bust and the global financial crisis of 2008, the misunderstanding of money has led to countless disasters that have disordered lives and societies. Much of the economic and social destruction could have been avoided if more people had understood the causes and consequences of inflation. 

Social media companies and 'group thought' have long blocked consideration of the most powerful solution to inflation: a return to a sound dollar whose worth is defined by a fixed value of gold.

Adam Smith, 'The father of capitalism and economics', observed centuries ago that true wealth is created by people meeting each other's needs in the marketplace by buying, selling and innovating. Wealth is created by technological advances that create jobs, increase productivity, giving rise to still more innovation and wealth creation; companies like cell phones, computers and Amazon.

To end inflation: In chapter 4 of the book, Forbes and his co-authors point out that "inflation can be stopped surprisingly quickly if properly understood. The problem with inflation-fighting approaches like price controls is that they focus on symptoms and not the cause. Price controls cause a decline in the value of currency. Mathan Lewis, the world's leading authority on money, refers to such decline as "The Magic Formula." This magic is stable money and lower taxes. The best way to end today's inflation is to return to the gold-based money."

Homes and price distortion: People may think that their home's price value has appreciated more than it actually has. That is because of what is known as "Money Illusion." This is a tendency to misinterpret inflation's distorted prices as reflecting 'real world' values, instead of what these really are, the consequences of inflation and an ever-shrinking dollar. We assume that the value of the dollar is stable, even when it is not.

The dollar's steady, inflationary decline is one reason that young people, just starting out today, often wonder why they can barely make the rent when, years ago, their parents, who made far less money, could afford to buy a house. The primary reason is inflation. Yes, parents may have earned fewer dollars, but those dollars were worth much more than dollars are today.

Inflation is the distortion of prices that result from the debasement of money that loses value.

Forbes and his co-authors point out that the best way to stabilize today's inflation is to return to the gold-based money that would stabilize the dollar without requiring that the country maintain a gigantic supply of gold.

Gold as stable indicator of the economy:

Forbes, Lewis and Ames point out, with examples, that gold has been historically an economic stabilizer for thousands of years. Since the founding of America in 1779, the value of the dollar had been linked to gold until 1971. During this time, United States rarely had a problem with inflation. It became the most economically successful country in the world. 

Gold is a vital barometer of the worth of the dollar and the prospects of inflation. When more dollars are needed to buy an ounce of gold, and the trend persists of months or even years, that signals that the dollar is failing in value. Gold price is especially a critical indicator because the economy is a complex ecosystem. But a drop in currency value can take time to work its way through the markets. There will be no over-night solution to inflation.

This summary article is the tip of the iceberg. For more information, you need to read the first chapter of the book on Amazon:  Forbes: Inflation 2022 Or better, get and read the book Inflation. To learn more about money, how the economy works, how inflation is linked to International Monetary Fund, Money Cartel, decline in USA dollar, Federal Reserve and Modern Monetary Fund, go to informative articles in the references.

Meanwhile, like his predecessors, President Joe Biden and the federal reserve have continued with policies of ignoring run-away prices, printing fiat money[money without collateral to back it up], continuing reckless spending and have been unable to control inflation. The current government approach to fixing inflation is not working. 

Inflation is the most important problem facing all of us.  It requires your immediate attention. Bring this to the attention of your political representatives.

References

Cox Jeff, "Fed raises rates by half a percentage point = the biggest hike in two decades - to fight inflation," CNBC, May 4, 20022.  Cox: Fed Reserve raises rate by half percent 2022

Dubay Eric, "Federal Reserve Bank," The Federal Reserve Bank, August 29, 2008.  Dubay: Fed Res Bank1

Forbes Steve, Nathan Lewis, Elizabeth Ames, "How the best inflation cure was 'cancelled by Washington," Fox News, May 4. 22022.  Forbes: Fixing inflation cancelled by Washington

Forbes Steve, Nathan Lewis, Elizabeth Ames, Book: Inflation,: What it is, why it's bad and how to fix it ;Amazon, 2022.  Forbes: Inflation 2022

Kramer Leslie, "How Do Governments Reduce Inflation?," Investopedia, January 12, 2022.  Kramer: How governments reduce inflation 2022

Morrow Allison, "What is a recession, and how scared should we be?" CNN Business, May 6, 2022.  Morrow: What is a recession 2022

Sorochan Walter, " Currency Market, The Money Cartel & World Economy," freegrab.net, November 15, 2021.  Sorochan: Money cartel 2021

Sorochan Walter, "Decline in USA Dollar, Inflation & Stock Market Manipulation," Freegrab.net, November 14, 2021.  Sorochan: Decline in USA dollar 2021

Sorochan Walter, "IMF New Currencies & World Economy," Freegrab.net, November 15, 2021.  Sorochan International Monetary Fund 2021

Sorochan Walter, "Inflation," freegrab.com, December 14, 2021.  Sorochan: Inflation 2021

Sorochan Walter, " Understanding Modern Monetary Theory [MMT]," freegrab.net, October 2921.  Sorochan: Modern Monetary Fund 2021

Author background:

Steve Forbes is chairman of Forbes Media, the foremost name in business information. A widely respected economic prognosticator and regular broadcast commentator, he hosts the acclaimed webcast “What’s Ahead.” He is the author and co-author of several books, including Money, the bestselling How Capitalism Will Save Us, and Flat Tax Revolution. He helped create the award-winning documentary In Money We Trust? In 1996 and 2000 he campaigned vigorously for the Republican nomination for the presidency.

Nathan Lewis is among the world’s leading authorities on monetary policy and economic history. He is the author of The Magic Formula: The Timeless Secret to Economic Health and Prosperity; Gold: The Once and Future Money; Gold: The Monetary Polaris; and Gold: The Final Standard. A Discovery Institute Fellow, his writing has appeared in Forbes, the Financial Times, and elsewhere. He publishes The Polaris Letter, a monthly investment newsletter available at NewWorldEconomics.com.

Elizabeth Ames is a noted commentator and author. She has collaborated with Steve Forbes on several books, including Money. Her articles have appeared in Foxnews.com, The Daily Caller, the American Spectator, and other outlets. She is co-producer and writer of the award-winning, public television documentary In Money We Trust?, which has aired nationwide and can be viewed at InMoneyWeTrust.org.