Event Recaps | Nov 25, 2019 | Gabelli School of Business
“Trust” in Money for Economic and Social Stability
Trust in money is implicit, but when money is manipulated, trust is lost, leading to economic and social instability and human suffering. Such is the basis of an award-winning PBS documentary, “In Money We Trust?,” which was screened at Fordham’s Gabelli School of Business Lincoln Center campus in a program presented in partnership with the Museum of American Finance on November 11th.
Steve Forbes, chairman and editor-in-chief of Forbes Media, who also appears in the film, and Elizabeth Ames, the film’s writer and co-producer, participated in a conversation with the audience post-screening.
Going for the Gold… Standard
The documentary, which begins in ancient times and takes the audience through present day, explores how, even 2,500 years ago, the invention of money provided a shared measure of value that facilitated trust and trade between strangers. But the changing value of money destroys trust. As Forbes notes in the film, “When you change the value of money, you’re stealing property without due process of law, without a commercial transaction.”
The film also presents the rationale for the gold standard, demonstrating instances throughout history in which, as long as money was tied to the gold standard and the value of money remained stable, prosperity and social stability ensued. Alternatively, every time a government removed its currency from the gold standard and central banks resorted to stimulus and qualitative easing, people have suffered.
Some of the more egregious historical examples of money manipulation resulting in serious losses of trust followed by destructive consequences presented in the film include: the Great Inflation of the 1920s and 1930s in Germany; the Great Depression in the U.S. during the 1930s; the stagnation of the 1970s, which saw commodity prices such as oil rise significantly and the value of the dollar plunge, and more recently, the Great Recession of 2008, and the severe inflation impacting countries like Venezuela and in Africa.
In Money we Trust
During the post-screening discussion, Forbes summarized the film’s take-away, stating that “when money is trustworthy, humanity moves forward but when social trust is lacking and in the absence of a stable government, this lends to monetary troubles.”
In referencing a gold standard, a question was asked: “What if countries like China and Russia tried to corner the gold market?” Forbes replied that China and Russia would meet the same fate as the Hunt Brothers in the 1970s, who attempted to corner the silver market but incurred huge losses (and legal woes) because “they thought there was a lot more silver than they realized.”
When asked how helpful the gold standard would be to developing countries, Forbes stated that “it would be a boom because of its stable capital,” and would “enrichen the human experience.”
Referencing the financial crisis of 2008, one audience member asked, “What would have happened if all the too-big-to-fail companies were allowed to go bankrupt?” Forbes stated, “If we had allowed them to go bankrupt the way the banking system worked, it would have dragged down banks that were solvent. The political repercussions of people losing their money would have been far, far worse than anything that happened after 2008. This would have been a disaster.”
Forbes believes we are destined to a gold standard, commenting, “Over centuries, nothing else has worked. The thing you have to remember is we’re not using gold as money. Instead, it’s a yardstick – a measuring stick of value. That’s all it is.”
The Future of Money
Focusing on the current administration, the question was asked: “The President has called for zero interest rates. What chance do you see of this occurring, and what would be the impact on savings and the economy?” Forbes responded, “This will cause stagnation,” adding, “What I hope the president and the Treasury Department realize is that great countries have great currencies; great countries don’t have weak currencies. Ask Argentina and Brazil, which should be global powers now. The addiction to cheap money, unstable money, can do untold harm to the economic stability of this country.”
What does the future hold? According to Forbes, there will be a move to re-establish trust. The best way to achieve that, as Forbes and the film point out, is through a return to a gold-based monetary system.
This event was presented by the Gabelli Center for Global Security Analysis.