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NEW YORK (
TheStreet ) -- Steve Forbes, chairman and editor-in-chief of Forbes Media, was one of those disappointed when Texas governor Rick Perry dropped out of the 2012 presidential race.
Forbes endorsed Perry in October 2011 and was a big proponent of his 20% flat tax. Forbes hasn't endorsed another Republican candidate, but did say that he would support whomever the nominee turned out to be. "It's a very low bar compared to the incumbent," says Forbes.
Forbes is hoping that the 2012 election will turn into a mandate if Republicans take control of the White House and the Senate. Forbes points out that there are 33 Senate seats up for grabs in November and 23 are held by Democrats. Republicans only need to win 4 seats to control the Senate and keep its stronghold on the House to dominate Congress.
Forbes says the government can do three things to fix the economy: end President Obama's health care refomrs, simplify the tax code and return to a sound money policy -- in this case fixing the gold price and pegging interest rates to the gold price.
Forbes advocates setting the U.S. dollar to a fixed rate in gold, say $1,500, when the price rises above that level the
Federal Reserve must raise rates and when it falls below the Fed can loosen monetary policy. "If you can read a speedometer, you can do the gold standard." Forbes said it would take a few months for the economy to transition but it would create "a steady measure of value for the dollar."
Forbes says citizens should be free to carry gold and silver around in their pocket, pay for goods and/or exchange their dollars for gold with the Federal Reserve, but that such drastic actions wouldn't be necessary just knowing the dollar price was fixed in a small price range would be all that is needed.
In addition to stabilizing the dollar, Forbes says the Federal Reserve should fire themselves for "gross incompetence." Forbes argues that the Fed should not be in the business of setting interest rates but should devote their time and policy to a stable and sound dollar. "That would go a long way in resolving the crisis if people could start trusting the currency again and [if the Fed would] stop manipulating interest rates," argues Forbes. "It hurts savers, it hurts small businesses, it distorts the market."
The debate is heating up within the Fed about whether or not to implement another round of quantitative easing, or QE3. Whether to pump more money into the system by buying mortgage backed securities to free up money in banks and spur lending thereby stabilizing the housing market.
Forbes disagrees, "what does the Fed know about housing, other than they live in them?" Forbes believes that a free market will ultimately fix and heal the housing market and that it was government interference that created the housing bubble in the first place.
Written by Alix Steel in New York.
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