Steve Forbes Speaks Out On Gold, Inflation, And Central Bankers

Mike Gleason: It is my great privilege now to be joined by Steve Forbes, Editor-in-Chief of Forbes Magazine, CEO of Forbes Media, and author of many fabulous books, including Flat Tax Revolution, How Capitalism Will Save Us, and Money: How the Destruction of the Dollar Threatens the Global Economy and What We Can Do About It. He's also a two-time presidential candidate, having run in the Republican primaries in both 1996 and in the year 2000.

Mr. Forbes, I really want to thank you for your time today and for joining us again. It's a tremendous honor to have you back on, welcome.

Steve Forbes: Good to be with you. Thank you.

Mike Gleason: Well, let's start with one of the big topics on Wall Street these days, that being tariffs and trade. The president has been working to rewrite trade deals and reduce the trade deficit. Recently, the dispute with China escalated and tariffs were increased to 25%. There has been some volatility in the equity markets, but so far, at least, investors seem to be optimistic that a deal will be reached, or perhaps trade tensions don't matter as much as they should, because the Federal Reserve is already signaling they will ride to the rescue.

Do you think the tariffs will be effective, and we wonder if America's hand is as strong as the president thinks it is, or are people really prepared for much higher prices as the extra costs associated with tariffs get passed along? What are your thoughts there?

Steve Forbes: Well, so far the tariffs have been more of a border skirmish than a real all-out trade war, and the markets are assuming that some sort of agreement will be reached, as you saw in the case of Mexico, you saw in the case of, related to that obviously, NAFTA. If the markets really thought we were going to have a full-scale trade war, you would see it clipped 10, 20% pretty quickly. The thing to keep in mind about tariffs, tariff is another word for sales tax, and so when you put tariffs on, you're taxing American consumers and American businesses.

In the case of China, there are very real trade abuses, and we should hold them to account for it. We really haven't done so consistently in the past, and I think that by going after specific companies as we now did with the CFO of Huawei, or specific abusers, we almost could have taken a company called ZTE, a major Chinese telecom company, we could've knocked them out, if we'd denied them parts from Qualcomm. President Trump chose not to cut them off, even though they once before had engaged in abusive practices. He got no credit for it, but if you knock a company like that out, or take a bank that does anything overseas, this so-called SWIFT system of international payments, you would decapitate that bank.

So I think going after specific abusers, and if we have to update the WTO, World Trade Organization, so we get these things resolved far more quickly and not have the loopholes we have now, that countries like China take advantage of, I think we can move forward. But one of the things we should do vis-a-vis China is unite with our European allies and Japan and Canada and Mexico and others, because they suffer the same thing in China. If you present a united front, the Chinese would hate that, but they would respond very, very quickly.

Mike Gleason: A lot of gold has been flowing from West to East in recent years. That trend seems to have accelerated lately. The U.S. has certainly been more and more aggressive at using the dollar and the U.S. financial system as sort of a weapon. Nations that don't toe the line are threatened with loss of access. This has even included strong allies like Europe. We wonder if this movement of gold to the East another side of nations working to end the U.S. dollar hegemony in trade. What do you make of the growing central bank gold reserves, particularly in the East?

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