Forbes to Moneynews: Stable Dollar, Flat Tax Are Keys to Dow 25,000

Monday, 29 Jul 2013 04:42 PM

By Dan Weil and John Bachman

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A stable dollar and a flat-rate income tax would provide the antidote to America's economic woes, asserts Forbes magazine editor and former presidential candidate Steve Forbes.

"A key thing is having a dollar that is stable in value again, a dollar as good as gold," he tells Newsmax TV in an exclusive interview.  "This undermining-the-dollar policy started under the Bush administration and has continued on steroids in the Obama administration."

Forbes is president and CEO of Forbes Inc. He ran for the Republican presidential nomination in 1996 and 2000, urging the adoption of a flat income tax with a single tax rate. His latest book is "Freedom Manifesto: Why Free Markets Are Moral and Big Government Isn't."

Watch our exclusive video. Story continues below.



Failure to buoy the dollar hurts working people the hardest, Forbes says. "And that's what we're seeing unfolding today," he said.

"So a stable dollar, a new simplified tax code, starting over on Obamacare, and you’d see this economy roar back very quickly just as it did in the 1980s when we made fundamental
reforms."

Editor’s Note: Put the World’s Top Financial Minds to Work for You

In a wide-ranging interview, Forbes also discussed:

• Stocks. "You have to remember on equities that even though nominally they are high, in real terms, they're lower than they were in the late 1990s," Forbes said. "So for 15 years, we've been treading water. And until we get some of these economic fundamentals in place, . . . the market isn't going reach many new highs." Once more, a stable dollar and flat tax, along with patient-controlled healthcare, are crucial, Forbes says. "You do those things, and you'll see the market [Dow Jones Industrial Average] go to 20,000 or 25,000 within in 24 months." The Dow closed Monday at 15,521.97.

• The next Federal Reserve chairman. Forbes isn't impressed with either of the front-runners for the job – former White House economic adviser Lawrence Summers and Fed Vice Chairwoman Janet Yellen. "This is the equivalent of people running to be chief astronomer who still believe that the sun revolves around the earth -- pre-Copernican economics," Forbes said. "Neither understands that money comes from people doing things with each other: transactions with each other, being innovative, entrepreneurial. They still think it's just printing pieces of paper." Forbes would prefer "somebody like David Malpass, who understands what money is, understands central banking, understands the need for a stable dollar, normal credit markets." The economist served in the Reagan and George H.W. Bush administrations.

• Bank lending. "The way you get capital flowing again is to have a real price for capital instead of the price controls the Federal Reserve has clamped on interest rates," Forbes said. "The Fed has destroyed the credit markets for small and medium-sized businesses or certainly warped it in a very major way." Real prices (interest rates) for money would make "credit flow more freely," Forbes said.

• Unemployment. Forbes' policy ideas would push the jobless rate down quickly, he says. "You'd see companies starting to educate people who need skills. You will get a vibrant economy when you get those reforms in place, and then you're going to have a labor shortage."

Editor’s Note: Put the World’s Top Financial Minds to Work for You

• Housing market.
"Homebuilding has come back, but you have to remember that is from almost depression levels," Forbes said. "In a normal economy, you get 1.5 million housing starts a year." The rate was only 836,000 in June. "So we're a long, ways from that," he said. "Again, on these specific industries, the way they get cured is by having a vibrant economy."

Editor's Note: See more from the exclusive Newsmax TV interview:


• Forbes: Yellen, Summers Both 'Pretty Sorry Choice' for Fed Chief

• Fed Has Destroyed Credit Markets


• Forbes: Obama in a 'Bubble' as US 'Crumbles' Under Obamacare

• Forbes: Obama Waging War on New Energy

• Forbes: Reforms to Corporate Tax Codes Means Billions in 'Free Money'






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