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Steve Forbes: How to Prepare for the Pending Inflation Tsunami

Episode #27  |  March 17th, 2021
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In This Episode:

America, we cannot afford this — $1.9 trillion and counting in “stimulus” spending. How will the passing of Biden’s sweeping COVID relief bill affect our futures and those of our children? What will it mean for the national economy and your investments? In a word, inflation. Fed Chair Jerome Powell appears to be in denial about the rising threat of inflationary measures. But even Dems like Harvard economist Larry Summers are sounding the inflation alarm. And trust me, the Fed is just getting started with this cash printing pressSteve Forbes, Chairman and Editor-in-Chief of Forbes Media, tells Trish how the Biden administration’s spending and taxing policies will hinder economic growth in this country. They also discuss the minimum wage debate, the inevitable digitization of money, and the possibility of cryptocurrencies backed by gold. For more from Trish Regan, follow her on Twitter @trish_regan.


Steve Forbes

Chairman and Editor-in-Chief of Forbes Media
Steve Forbes is Chairman and Editor-in-Chief of Forbes Media.


Trish Regan:               We can’t afford this. We cannot afford $1.9 trillion. We don’t have it. So, where is it coming from? How is it going to affect our future and future generations? By the way, let me be clear, $1.9 trillion, they’re just getting started. Hello, everyone. Welcome to American Consequences With Trish Regan. I am Trish. We have a terrific show for you today. My friend, Steve Forbes, chairman and editor in chief of Forbes Media, former presidential candidate, is going to be joining us, to talk all about the stimulus, and all about what it’s going to mean for your future, your investments, our economy, and the rise of all kinds of other things that are happening right now. Including cryptocurrencies that are emerging as people try and deal with some of the inflationary pressures that will be generated out of Washington.

As well, of course, as the high taxation environment that’s expected to come, increasingly, out of Washington. But really, when you think about it, $1.9 trillion, I mean, that’s a lot of money. I don’t know if people entirely can grasp or get their heads around the sum. But to keep it in perspective, you know, President Obama, when he had his giant stimulus to nowhere, and it was a huge amount of money, at the time, it was only $800 billion. But you know what, it didn’t do us any good. I mean, it drove up the stock market a bit, and the Fed drove up the stock market a bit, but we didn’t actually see any real change in our actual economy. And that’s a little bit of a danger. It’s a danger right now because if you have an environment in which asset prices are growing, at a rate that’s out of whack, right, with the fundamentals in our economy, then at some point, that becomes a bubble that bursts.

You know what? Throughout my career, I’ve seen it. I think about the tech bubble in 2000, and I think about what was going on in 2008, which created a massive systemic crisis that was really hard to get over. And now I look at this stimulus effort, so much money that’s being poured into the U.S. economy because Joe Biden says we’re at war with coronavirus. Well, guess what, this is, like, end of the war, right? We’ve got the vaccines – not one, not two, but three vaccines that are out there right now. Our economy is starting to open back up. We’re going into spring and summer. Things are actually looking up.

Don’t tell him, right? Debbie Downer wants you to think things are miserable and, therefore, we need more money, “We need to print more money.” Well, you know what, you can’t just keep printing money. Because when you print money, it leads to inflation, right? And inflation is bad, because all that money you’ve been saving up, it’s suddenly not worth as much, anymore. I mean, good luck, right, when you’re trying to get a cup of coffee and it’s $30 instead of $5 or $6. Which, by the way, is outrageous in and of itself, you know, when I was a kid, I think it was probably about a buck, anyway, or even less. Listen to what Larry Summers – and this isn’t political – this is the guy who ran Clinton’s Treasury Department, this is the guy who was the National Economic Council head under Barack Obama – here is economist Larry Summers on my former employer, Bloomberg, recently.


Larry Summers:          What I’m worried about, when I hear that kind of talk, is not that it isn’t right. He’s right about the base year effects, he’s right about specific sectors, but every great inflation is made by a central bank that dismisses it as due to transient factors. And so, at a certain point, when you start having a transient factor every month, then you’ve maybe got a permanent factor going, overall.


Trish Regan:               Yeah, and then it becomes very, very hard to fix. That’s the reality. You know, Jerome Powell, head of the Federal Reserve, doesn’t quite seem to get that. I’m a little surprised, frankly, because Powell comes from the real world, he’s not one of these academia types like you typically get at the Fed. I mean, he’s a little bit academia but not quite like some of them have been. Anyway, here he is telling a Wall Street Journal reporter that he really doesn’t plan to raise interest rates anytime soon. He’s really not that worried about inflation. Here you go.


Jerome Powell:           Labor market conditions that are consistent with maximum employment, which is, you know, that’s a big thing to get to, and it will take some time to get there, right? Inflation, sustainably, at 2% in inflation on track to run moderately, above 2% for some time. So those are the conditions. When they arrive, we will consider raising interest rates. We will not – you know, we’re not intending to raise interest rates until we see those conditions fulfilled. And so, it’s really going – the timing will depend entirely on the fulfillment of those conditions. And as I said, again, you know, if – I’ve told you that we are – we think we’re likely to see inflation move up during the course of this year, through, really, two things.

First, the base effects I mentioned, but also, just kind of reopening effects where businesses will be potentially hit by a lot of demand, as the economy recovers. Which is a good thing, but you could see bottlenecks, you could see prices moving up. We’re inclined to see those as transient, and, you know, there’s a difference between a one-time surge in prices and ongoing inflation. Ongoing inflation, where prices go up year after year after year, tends to happen when people’s psychology becomes that they believe that’s what will happen, and they have no faith that the central bank, frankly, will prevent that from happening.


Trish Regan:               Okay, so, in other words, Jerome Powell wants you to know he’s not going to let that happen. He’s going to let a little inflation, maybe, happen, but, you know, nothing like what people might worry about. Because sometimes it’s the law of unintended consequences that you really need to worry about.

I am so happy to have with me here today, on American Consequences With Trish Regan, none other than my friend Steve Forbes. He’s the chairman and editor-in-chief of Forbes Media. You know him well – he ran for president. And you know what, this is a man who cares so passionately about making sure our country is set up well for the future, so that future generations have their chance of pursuing the American dream, just as we all have, a real meritocracy. But part of creating, of course, that meritocracy is making sure you have an environment where debt loads are not so constraining, suffocating. And as you look at this $1.9 trillion stimulus, at a time when, actually, we’re coming out of this thing and our economy is starting to look better, well, Steve Forbes has his concerns about what this will mean for our future.

Welcome, Steve. Good to have you here.


Steve Forbes:              Good to meet with you, Trish. Thank you.


Trish Regan:               I’m really excited to talk to you, and I told you, offline, I said, “You know what, I’m really worried about this $1.9 trillion.” I mean, you know what, if they did it a year ago, I’d get it. But this is a lot of money, right now, at a time when, actually, when I look at all the economic data, Steve, I’m seeing some really good signs. It’s showing me that, as the vaccine is disseminated throughout the population, and as people get back to work and economies reopen, we’re actually going to pull through this okay, I believe. So, why spend the money now, and what kind of, perhaps, hangover might that create for our economy? Your thoughts.


Steve Forbes:              Well, I think you’re right, the economy is poised for a huge comeback. It’s done amazingly well during the lockdowns. You can see how much progress was made, and the fact that unemployment went down far lower than the experts thought possible, a year ago. Vaccines came online far quicker than ever before in history. The previous record was four years, creating the mumps vaccine – this was done in a matter of months, a true miracle. So, the economy is ready to go. If the government simply took a vacation for, say, six months – I think people would be glad to pay for it, send them all away for six months – that would be good for the hotel industry, but also, leave the economy alone, you know, let kids go back to school, end the lockdowns, you’d see this economy really booming, and unemployment falling even more rapidly.

The good jobs report over the last month, it looks small in comparison to the job creation in coming months. But unfortunately, what the government is doing is everything possible to put barriers in the way of a full vibrant recovery. This kind of spending, there is over, as you know, well between $1 trillion and $1.5 trillion of unspent money that the Treasury has on deposit at the Federal Reserve, that hasn’t been spent from previous relief measures. This one’s adding nearly $2 trillion more in the most unproductive way possible. And now they’re talking about trillions and trillions of even more spending bills coming down the pike.

Plus, the Biden administration made it very clear they want massive new taxes coming in, not only raising income taxes, capital gains taxes to as high as 44%, business taxes, income taxes, and new taxes like a carbon tax which will essentially raise the cost of energy. All of these things will put a real dampener on the economy at a time when it needs every help it can to get everyone back on their feet. This current bill makes it worthwhile for millions of people not to go back to work for a while. Already, we have 6 million job openings in this economy, and we’ll have more as things start to open up.

And even California is making moves to open up. Nothing like a recall election to get the attention of an incompetent governor to get things moving again. So, things are moving in the right direction. And then, in addition to these barriers of regulation, taxation, waging war on the energy industry, which is one of our great strengths, right now, we’re going to have the problem of future inflation. Where is all this money going to – how is all this spending going to be paid for? It’s going to be paid for, largely, by the Federal Reserve printing money, when they buy these government bonds that are going to be coming out like a tsunami, to finance this.

So, the combination of higher taxes, the Federal Reserve printing globs of money, is going to potentially, if they don’t know what they’re doing, give us a situation like we had in the 1970s where you had rising prices, rapidly rising interest rates, and a stagnant economy at the same time. It takes a lot of mistakes to do it, but this crowd in Washington seems intent on trying to replicate the 1970s, which was a terrible decade, economically.


Trish Regan:               You know, I was just a kid, but I – I remember the bell-bottoms, at least. It was not a good look. No, I mean, I’ve said that because you think back to the Jimmy Carter years and the challenges, and, you know, Volcker’s need to really be aggressive. But, you know, the Fed doesn’t even have that room to be aggressive. I mean, I kind of look at this as worst-case scenario: if you start to have inflation but you don’t actually have real, real solid, and I mean really good economic growth to keep up with that inflation, then you’re running into a problem.


Steve Forbes:              Well, and the Federal Reserve has this crazy notion that prosperity causes inflation. No, bad monetary policy causes inflation. What the Fed should do, but probably won’t do, is instead of creating money out of thin air, what the government should be doing is financing this debt by printing up, by issuing bonds, and the Fed not buying those bonds. In other words, tapping savings here and around the world. That would put real pressure on the economy, but it would be far less destructive than the Fed suddenly raising interest rates. Remember, because of these low rates and the very high levels of debt, a 1% increase in interest rates would cost the _____ of the economy $280 billion a year. And 2%, over almost $600 billion.

Those kinds of bills would put real pressure on businesses and real pressure on government finances. So they’ve gotten themselves in a real corner, and I’m not sure the Fed has the capacity, in terms of thinking, to figure out how they navigate these shoals correctly. They just seem to be like the captain of the Titanic: full steam ahead.


Trish Regan:               Well, our friend, Paul Krugman – and I say that sort of jokingly – our friend, the economist at Princeton and at the New York Times, who’s highly political with a lot of his economic thought, has said, “Oh, no big deal, you know what, you know, as soon as inflation starts to kick in, the Fed can manage that.” And I ask you, can the Fed really manage that? Larry Summers made the point quite articulately, in the Washington Post recently, saying that this is a stimulus that’s, like, akin to the kind of stimulus you’d see during a war effort, right, like, during World War II – we haven’t seen anything like this. And his fear is it could result in the greatest inflation that we have seen in a generation. Krugman, of course, saying, “Ah, no, no big deal, again, because the Federal Reserve can fix it.” What’s your sense, Steve, can the Fed fix it once that inflation starts to take off?


Steve Forbes:              Well, they can fix it, but the question is, do they know how to fix it in the least destructive way possible? They have this notion that inflation is sort of like a lightbulb, you can turn it on or off, or a faucet, turn it on or off at your pleasure. And in the real world with hundreds of millions or billions of people, it doesn’t work that way. And so, in terms of the – I think people like Krugman think, “Oh, the Fed will just raise interest rates on bank reserves, so the banks won’t lend the money, then that’ll cool things off.” Well, banks are loaded with reserves, they want to start earning money again, and as rates go up, they’re going to try to put that money to work – and so, you have this real terrible situation.

What should’ve been done under the previous administration, and can be done under this one, and that is, float 100-year bonds. They could’ve done it last year, 2% rate, they could’ve raised hundreds of billions of dollars. Now they’ll probably have to do 3% to 3.5%, since rates are going up, but start to soak up this excess money. But I’m not sure the Fed has got that kind of an intellectual acuity to do what is right.


Trish Regan:               You know, they’ve actually been asked about it, and they’ve kind of dismissed it.


Steve Forbes:              Well, they dismiss it because they think, “Oh, inflation is good.” I once asked Paul Volcker about that, and he just rolled his eyes. To him, any inflation is no good. He had to put the economy through a terrible wringer in the early 1980s, with double-digit unemployment, to wring out the inflation of the 1970s. So he knew that that was a pipe dream of thinking you can easily control it once it starts. But the Fed feels that, “Oh, if it goes up for a while, it’ll taper off as the economy naturally cools off.” Yes, there’ll be a lot of prices going up as people go back to work and people start to move around again, people are allowed to interact with each other again, and so, there will be a real surge.

But the question is, what happens after the surge? And with the prospect of even more spending coming along, you are going to get more pressure to print money and try to artificially keep rates low. Like Argentina’s been doing this for years, and we can see where that leads.


Trish Regan:               Yeah, no, you can see where that leads, and Venezuela just came out with a Bs1 million bolivar, a bill for Bs1 million bolivars. It’s their largest note ever, and guess how much it’s worth: 53 cents – 0.53 U.S. dollars. So, I mean, that really demonstrates how bad it is.


Steve Forbes:              Yeah, this leads to something very interesting, and that is, in Venezuela, they took off price controls, two years ago, and what has happened is, the dollar is now the unofficial currency in Venezuela. You use dollars – you don’t use the bolivar. And if you use the bolivar, it’s priced as if it was a dollar. So if you wanted to buy something that would normally cost $1, you would pay Bs2 million bolivars, and so, you have this unofficial dollarized economy. And why I think this is going to lead to pressure to, as we get troubles here and other developed countries, is the people who create cryptocurrencies are going to finally wake up, that if you want these things to be able to be used for daily transactions and reliable long-term contracts – which you never would do with bitcoin, you never would take out a mortgage with bitcoin, because you’d end up, if you took out a $250,000 mortgage, you could end up owing the bank $10 million.

You know, what they have to do is create something that is stable in value, tie it to something like the dollar or the Swiss franc or something like that, so that it can be used as an everyday currency. And I think that’s what’s going to emerge in places like Argentina, some entrepreneurs will get away from this fallacy of bitcoin, that a successful crypto is one that rises in value. No, you want something that is stable and easy to use. I think that’ll emerge, and as it does, you’re going to see central banks like the Fed flailing around figuring out, “How can we crush this thing?” because it will be, in the marketplace, used as an alternative to a failing dollar.


Trish Regan:               Oh, wow, okay, so, you just said some really, really, really fascinating things, and I want to dig in, because – by the way, Maduro, down in Venezuela, has said he’s going to introduce a cryptocurrency to use next year. Because, you know, if you want to take the bus, you actually have to use bolivars, which means you’re carrying around a heck of a lot of bolivars. And you’re right, the rest of the economy is transacting in dollars, but he figures he can solve that through a cryptocurrency. Meanwhile, you know, this cryptocurrency stuff, I mean, I look at it, right now – and you know what, you are the guy on gold, as far as I’m concerned.

I mean, as long as I’ve known you, Steve, you have been advocating for some kind of discipline, right, within the financial system. And one of the things that you’ve talked about is this return to Bretton Woods and, you know, bringing back the gold standard, in the past. Is there a way to do that? Maybe via one of these cryptocurrencies.


Steve Forbes:              It could be done via cryptocurrency, simply because, when you mention gold standard, the way economics has been taught for decades is you might as well say the sun revolves around the Earth, as far as they’re concerned. They have no understanding of it, filled with misconceptions and myths – it’s amazing how fact-free their opinions are on how a gold standard actually works. So, you could do it through a crypto or, as an interim step, you could tie it to the Swiss franc. One of the mistakes these cryptos make is thinking, by restricting the amount of the cryptocurrency that can be created – bitcoin has a strict amount, so do these others – that’s what makes it valuable. In one sense, that’s true, but the real view of use of a currency is not restricting its supply but enabling it to have a stable value, and increase in supply to meet the needs of a growing economy.

You take the Swiss franc, which has been the best-managed currency in terms of maintaining its value for the past 100 years, the supply, if you just look at the supply of the Swiss franc and the size of the Swiss economy, you would conclude that country must be having a hyperinflation. No, the reason people want more and more Swiss francs is they trust that it’s going to maintain its value better than any other currency, so it’s highly desirable around the world, and so the supply is large. So, a good crypto would have that ability to grow to meet the needs of the economy, instead of creating artificial shortages.


Trish Regan:               Right, because it’s got to, fundamentally, be backed by something, right? The integrity –


Steve Forbes:              Well, it’s not so much backing as it is tying it to something, so that it’s like a – you think of gold as you would like a yardstick or a ruler, it’s something that, over time, maintains its intrinsic value better than anything else. And so, 4,000 years of experience have shown when you fix the currency to it, it just means if the currency starts to rise up or fall against gold, you have to make adjustments in your monetary policy, either be more loose or more restrictive.


Trish Regan:               But why is gold always holding its value?


Steve Forbes:              Intrinsic value, because you can only – it’s rare, but not too rare. And every ounce of gold that’s been mined is still in existence today, it grows 1% or 2% a year in supply, and you can’t destroy it, and so you don’t get supply shocks like you would with oil or, you know, wheat, if you have a drought, suddenly that’s going to shoot up. Or you don’t get this kind of roller-coaster that you have with things like bitcoin.


Trish Regan:               So, this is interesting to me, because it sounds like you’re saying there is an opportunity in the technology, right? I mean, and maybe that’s – look, China has already introduced its digital wallet, and they’ve, you know, parachuted it into several communities to just try it out. I know that the Fed is working on a cryptocurrency, a digital dollar, if you would, right now. I would have to think the ease of transaction will – I mean, it’s going to be frustrating as all heck, right, because governments want to be able to see where all the money is going, and I suppose that’s why the U.S. is so keen on trying to get up to speed on a digital dollar. But at some point, one would think, you know, it’s kind of cumbersome to take all these dollars around, or Swiss francs around, or certainly, if you’re in Venezuela, all your bolivars around. Won’t we make that transition?


Steve Forbes:              Well, that’s right. Well, the thing about electronic is you don’t have to, you know, carry a lot of dollar bills or coins around. That was one of the great things that came with the invention of credit cards, very easy to go around the world and not have to worry about always going to the exchange or going to the bank to get cash. But in terms of the government getting involved, since they’ve mismanaged their own paper currencies, they will mismanage digital currencies. I think the Chinese are aware of this more than the Fed is, of that danger, and in China, they are far ahead of us in using digital and electronic money. And, you know, another country that is way ahead of us in digital currencies, whether for transactions with small merchants or banking transactions, you’d never guess, is Kenya.

For some reason, they didn’t like their currency, and so, about a big chunk of the economy is now with these digital currencies. These small merchants will do their banking with a handheld.


Trish Regan:               So what are they backing it with, though, so that their digital currencies are not too volatile like a bitcoin? Is it, like, backed by a Kenyan dollar, the Kenyan currency?


Steve Forbes:              No, they don’t back it, they just look at the value vis-à-vis something like the euro, and it takes care of itself. They don’t trust the local currency. And this is what the cryptos don’t quite grasp, yet, is you need something that’s trustworthy, and the key thing is: can you use this crypto as the basis for a long-term contract? And if you can’t, then it’s – right now you can’t, it’s useless. And even short term, yes, it’s fine for short term: if you’re in Venezuela and need cash from the U.S., you can use the bitcoin to make the transfer, without the prying eyes of government. But it’s still not easy. And you have to make it simple, like cash and credit cards.

And that’s why I think you have to keep your eye on a company like Facebook, which sort of unveiled a crypto called the Libra, a couple years ago, got criticized for it. Now they’re doing a variation of it called the Diem, which will come out this year or next year. And Amazon could do the same thing. And the regulators are going to be watching like hawks, because they’re going to be afraid that this is going to – people will be using this kind of currency rather than the dollar. But the key thing is it has to have a stable value, and even something as untrustworthy as the dollar, it’s still more trustworthy than anything else in the world, except the Swiss franc, right now.


Trish Regan:               OK, but wouldn’t the Facebook currency or a possible Amazon currency, wouldn’t those be tied to the U.S. dollar?


Steve Forbes:              It would be probably tied to a basket of currencies or to a basket of commodities or something like that, I think they’re toying around with that, right now. And the simplest thing would be gold, but why be simple in this complex world? But the key thing is that you can rely that the politicians and the regulators aren’t going to be able to come in and muck around with the value. Which is what happens all the time with currencies, you know, the Federal Reserve says they want to depreciate the dollar 2% a year, with inflation – at least, that’s what they say, so.


Trish Regan:               Well, OK, so let’s bring this full circle, because we’re in an environment where our government is putting all this stimulus into things. We’ve got the Fed effectively printing money, and every indication is they’re going to continue to do so even if they see inflation, because we haven’t had inflation in so long, they say, so, they’re willing to look the other way. At some point, if this gets out of control, if inflation becomes a major issue – and I actually believe it very well could – in the coming years, then, is that the point where people say, “Well, to heck with the U.S. dollar, I can no longer trust it as a stable form of currency. Now I’m going to go find my crypto, my crypto that may be linked to the basket of currencies or commodities or something else, or maybe the Swiss franc”?


Steve Forbes:              Yeah, the bitcoin was invented – it was a high-tech cry for help, 12 or 13 years ago. And you have a lot of cryptos out there today, and people are having great fun with them, but they still haven’t taken that – there are some that have tried to tie to gold, but you have to do it in a way in which it’s easy, ubiquitous, and – then people will start to use it. Gingerly, at first, for some transactions, but like the dollar in Argentina or Venezuela, it just becomes the preferred way to do transactions. And the government is kind of helpless to stop it. They can make you perhaps use it on taking a bus, which the government owns, but in terms of other _____ saying you have to use the crappy currency of the government to pay your taxes.

But the thing is, these entrepreneurs, these crypto entrepreneurs, have got to make that leap and make it ultra-easy to use. And if people start to gain trust in it, it will take time, a crisis will make them say, “Hey, at least for this transaction, let’s use the crypto rather than the U.S. dollar.”


Trish Regan:               Does that make it harder, then, for governments around the world to follow these currencies? Does it make it easier for people to avert certain things?


Steve Forbes:              Yes, it’ll stop – government management of money is always mischievous. The question is how much harm do they do. Because all have the notion that manipulating the currency is a way to goose up your economy or control your economy, which is – crazy. The dollar is supposed to make it easy to buy and sell, any currency to buy and sell, you know, we all know the need for fixed weights and measures in the marketplace. The gallon of gasoline does not change in the volume each day. You buy a pound of cheese, you get 16 ounces, that doesn’t fluctuate each day.

If you say you’ll be somewhere in an hour, the hour doesn’t fluctuate each day, 40 minutes one day, 80 minutes the next. It’s fixed, and money is a way of measuring value. It’s like a claim check at a restaurant: you go to the restaurant, you check your coat, what do you get? A piece of plastic or paper, worthless in and of itself, but a claim on a very real product, same with a ticket. Well, money is just an ultra-claim check or ticket that in the marketplace can buy anything. So, you get paid in these things, you can get it for whatever you’re offering in value like your labor, and you can determine what you get in return, instead of the cumbersome way of doing barter.

So, but they seem to think that manipulating how you measure things – it’s like saying, “Gee, let’s change the number of ounces in a pound from 16 ounces to 32, and that gets rid of the obesity crisis.”


Trish Regan:               So, there you go, right, we’ll just manipulate those numbers. If we could get mirrors, too, that make us, you know, look a little different, then you could really manipulate the obesity crisis.

We’re talking with Steve Forbes, everyone, Steve Forbes, the chairman and editor in chief of Forbes Media, @steveforbesceo – you can follow him on Twitter. I want to ask you, how do you – it’s one thing to say – and I do warn people a lot about inflation and I’m concerned about it. But then it’s, like, well, how do you deal with the reality of it, right? Because at the same time, I actually am worried about this great rotation out of equities and into fixed income, because at some point – you know, I talked to a retiree, the other day, who said, “Ah, my gosh, I can’t wait, I’m hoping there’s inflation so I can actually just put my money in a CD and live off the interest.”

At some point, I suspect that there will be a realignment, because people are going to say, “Why is the market trading at 30 times earnings, you know, if you can actually make a decent return on interest rates in fixed-income products?” So, how do people think about this sort of in the here and now? Because I’m, like, “You know what, if inflation is coming –” I mean, I remember this during the Obama-Biden years, you know, the Fed was sort of the only game in town, besides the $800 billion in stimulus, and what did we see? We saw a market that kept going up, up, up, up, up, despite a stagnant economy.

And so, my advice would be, well, you want to be in equities, you want to be in assets that are going to inflate, you want to probably be in commodities, you probably want to be in real estate – I mean, these things will see inflationary pressures. But you’ve got to watch it carefully, because there’s going to be a transition. How do you think about it, Steve?


Steve Forbes:              Well, in terms of interest rates and the like, eventually, the economy will, if they mismanage things, will force a rise, Fed’s not very happy with the 10-year Treasury, going up to 1.6%, 1.5% from 0.8%. Which _____ has my eyes rolling _____, just a few years ago, 3% was considered very low, 4% would be normal, or five. But anyway, in terms of repositioning yourself, two things. One is, if you’re not near retirement, you should just leave your retirement money alone. Keep putting it in each year, matching funds, or whatever, whether it’s annually, quarterly, monthly, whatever, paycheck, and keep doing that. And if you’re non – because over time, indexing and the like, you’ll do fine.

But for your other portfolio, I would have some goal, just as – not as an investment, but as a hedge, as insurance, like house insurance, you buy insurance not as an investment but covering in case something goes very bad. So, and good to have dividend-yielding stocks, as well, which a nice thing to get cash, ’cause then you can decide how you want to treat it. And even though it’s rising rates now, you’re – because a lot of these dividends do pay 2%, 3%, 4% a year. And the key, of course, is finding stocks that, over time, have a history of rising dividends, so even if you get a bad economic environment like we had in 2008, severe recession, the dividend cuts are not nearly as severe as the cut in equity values. And they always come back.

So, just take care, be very careful of the equities that you pick. And one thing, since money is shrouded in mystery and jargon and the like, one thing people might do is just look at a documentary I helped produce called In Money We Trust. We did it for public television, Maryland Public Television, it’s been shown around the country on public TV, in the last year or so, over 1,500 times. And you can find it, it’s free, just go to it, click it on, and it’s a little under an hour, jargon-free, and it gives a history and gives you a better understanding of money.


Trish Regan:               That’s a great point. I’ve actually seen it, I caught it, one night, on TV, and was watching. And I think people really should look at it, and it’s available online pretty much anywhere, right, you can find it, if you miss it on PBS. But –


Steve Forbes:              Yeah, the easiest is just go on, and it takes you right there.


Trish Regan:               It is a fascinating thing, and, you know, it’s kind of a philosophical thing and a very interesting topic, I think, money in general. Let me turn to – we’ve been talking about inflation, and I know that, you know, you’re such a free market guy, I know you don’t like setting prices on anything. And I want to get your thoughts on the minimum wage, but before we do that, I want you to hear Steve Rattner talking on Morning Joe, complaining that, you know what?  Minimum wage hasn’t been indexed for inflation. Here we go.


Steve Rattner:             Minimum wage goes back to 1938, but if you simply go back to the early ’60s, you can see that the minimum wage was substantially above the federal poverty line, for a family of two with one child, of $8.58 an hour. But you can see that it was comfortably above that, and then you can see, in the early ’80s, we started to let it drift down. And we’ve raised it a few times, but it has been pretty consistently, since then, below the federal poverty line. And now, at $7.25, well below it.


Trish Regan:               What’s your thought on that? Only because, you know, I know you want the best for everyone, and you want people to succeed and be prosperous, but I don’t know is, like, setting a wage is going to do that. Go ahead.


Steve Forbes:              Yeah, no, if you could raise wages by just passing a law, we would’ve been all billionaires centuries ago. And in terms of minimum wage, you have to really let the states and cities set their own rates. Because you have different costs of living, different economies, and so, what might be survivable maybe in a city like Seattle would be a disaster in the Midwest, in Tennessee and Kentucky and Mississippi. And so, you have to let it be done locally. A lot of states have raised the minimum wage, I think it’s about 24, last I looked, and – so, it’s a floor, but was never meant to be giving you a big fat salary. It was just meant to make sure the sweatshops couldn’t operate legally.

And in terms of the wage, research shows, one, people who start on the minimum wage are earning above that within a year, as they get more job skills. When you substantially raise it, as the Rattners of the world want to do, you put people out of the workforce. The $15 minimum wage, the Congressional Budget Office calculates, would cost about almost 1.5 million jobs, and that’s probably a low estimate, because you price people with no skills, that are young, out of the labor market. And that’s not good… they need the work experience. So, stop trying to manipulate the economy through setting wages and the like.

When you have a booming economy, the minimum wage rises automatically. Several years ago in New Jersey, before COVID, year or two before COVID, you couldn’t hire somebody at a supermarket on a weekend under $13 an hour, just, the labor was not there. So, the best way to raise wages, as we saw before COVID hit, is a booming economy. We saw that lower income workers’ wages were rising faster than any other category, and that’s the kind of economy you want, where it’s done naturally, not by government fiat, which ends up distorting the economy and hurting most the very people with the least.


Trish Regan:               You know, I said something, a year ago, that was considered very, very controversial, at the time. I think it’s sort of improved now. But I pointed out that COVID had been used for political purpose. And it was a hard argument for people to hear, at the time, because so many people were dying, and it turned out to be just horrible, horrible, horrible for our nation, in so many massive ways. But I stand by my view that it was highly politicized, over politicized, and now I look at the political environment with the Left in charge and the desire to have this $1.9 trillion in stimulus, the desire they’re not going to get in on the minimum wage.

But, you know, for this to be the down payment and they’re saying, “Well, we’re at war,” and I just question whether, once again, this is being used, this is being politicized. And not to take anything away from – and I’ve had people very close to me, very close to me, that I’ve lost in this horrible year, and I know everybody has been touched by this in some way, shape, or form, Steve, and you’ve probably known people, as well. But are they trying to create – I mean, when I see Joe Biden kind of downplay the jobs report and say, “Oh, you know, this is no good, and it’s going to take us 10 years, at this rate, to get back to full employment,” they’re making this case that we need this money? And I don’t know as we really do.


Steve Forbes:              They want to continue or even accelerate wartime spending when the war is winding down, which is the opposite of what you should be doing. Doing these relief measures when the government shut the economy down for public health reasons, not because of any mistakes businesses made or people made, having massive relief measures was the proper thing to do. But now, they want to use the pandemic as an excuse for these massive spending programs, to pay off their constituencies. They allowed cities and states that have mismanaged themselves for years, and other objectives – that $1.9 trillion, at the most liberal way of looking at it, only about a third has anything to do, really, with COVID. The rest is just political pork.

And they have measures in there that hurt employment, and so that’s going to hurt the labor market. So, this, again, they want to use – they want to do what they always wanted to do, more government control, and they use it, say, “Well, the pandemic, pandemic.” Well, the pandemic, thankfully, is winding down. The vaccines, which came on miraculously, are working, and more are coming our way, and so we should be largely have this behind us, within a matter of weeks. And you look at the difference, yeah, you look at the difference between states that were draconian in regulations, like New York, California, Illinois, New Jersey, and compare them to states that did a more realistic approach to the crisis, like Florida and others, you can see the stark difference in economic performance.

And Florida’s death rate is lower than that of New York’s, and Texas is better than that of California, so, they overdid the draconian lockdowns, crazy things in Michigan and elsewhere. So, it wasn’t that we didn’t have a severe crisis… it was how do you deal with it in a way in which you don’t end up needlessly hurting people. And we all know the closing of the schools were absolutely unnecessary and ridiculous, and have hurt families, have hurt kids, and private schools, they’re open, there hasn’t been a big outbreak of COVID. So, this is just politics, and they say, “Oh, follow the science.” No, if you want to see what they really do, follow the politics.


Trish Regan:               They need $159 billion, I believe the number is, to reopen schools, they say. That’s part of the $1.9 trillion. But yet, Steve, they’re only using $9 billion of it to reopen schools in 2021, and the rest is spaced out over the next seven years. So I’m, like, “What? What are you guys talking about?”


Steve Forbes:              No, that’s just paying off the unions.


Trish Regan:               You have been outspoken on one of Senator Elizabeth Warren’s pet projects, and that’s this idea of introducing a millionaire tax and a billionaire tax. So, if you have anything above $50 million, she would levy a 2% annual tax on that net wealth above $50 million, and then an additional 1% above $1 billion. What’s wrong with this?


Steve Forbes:              Well, it destroys savings, it destroys capital. She and her acolytes have this cartoonish notion that wealth is simply piles of money. Remember the Disney character Scrooge McDuck and his money bin, and just sitting on piles of coins and dollar bills and jewelry? That’s the notion they have of wealth. Wealth actually is assets, and if you start taxing assets, one, that puts downward pressure on the prices, it destroys capital, which is absolutely necessary investable money to get this economy going. And while 2% sounds, “Oh, that’s so low,” that’s each year –


Trish Regan:               She calls it “two cents,” two cents, she –


Steve Forbes:              Yeah, but it just happens to raise, over 10 years, she calculates, almost $4 trillion. That’s a little more than two cents, by my arithmetic. You know, so, if it was $0.02, that would be fine, but it’s $4 trillion in the hands of Washington politicians, out of the hands of producers, savers, people who are creating jobs, and, you know, they’re going to go after, eventually the middle class. They always say, “Oh, it starts with the rich,” but suddenly it starts to seep down. You look at the history of the income tax, that started out with a high rate of 7% with incomes that by today’s dollars would be in the millions of dollars. In a short time, it was over 70%.

Even today, it’s almost 40% on the federal level, and when you put in the state and local taxes, it’s higher. And now Joe Biden and his Left wing want to do it even more.


Trish Regan:               Oh, no, you know, look, I know that Donald Trump was not everybody’s cup of tea, from a personality point of view, I know that people have very polarized opinions on him. But if you strip all that away and you look at the policy itself: low taxes, less regulation, kind of an appreciation, I think, for the individual. And what did we get, pre-COVID? We had the lowest unemployment rate in history, for blacks, for women, for Hispanics, for all groups of minorities, right? And you had one of the lowest unemployment records in history.

The other interesting thing, Steve, and I know you’ve noted this, before, is that tax revenue, when he said, “OK, we’re going to slash corporate taxes and individual tax rates,” guess what, they had record tax revenues. They got more money. Explain that.


Steve Forbes:              Yes, and the problem is not a revenue problem, it’s a spending problem, and it has been for decades. So, again, they believe that if you raise the tax, you automatically raise the money, and people won’t change their behavior. Newsflash: they do. So, the Elizabeth Warrens of the world, you know, having that wealth tax, for example, means a huge invasion of privacy, the IRS will have – that’s why she wants a massive increase in the IRS, double its enforcement budget, because she wants everyone that she doesn’t like to be audited, each year, or every three years. And the IRS would have the right to even go into your home, to make sure you’re not hiding assets, paintings, and the like.

So, this thing is a frightening expansion of power, and countries – most countries that try the wealth tax eventually abandon it or scale it back, because the administrative cost of it becomes huge, and people find ways of hiding assets. And one thing about the whole cryptocurrency thing is that it has developed something that goes way beyond currency, and that is the blockchain. And people are going to find ways to hide wealth using blockchain.


Trish Regan:               I was thinking that, yeah.


Steve Forbes:              When you tax people, you get consequences.


Trish Regan:               Yeah, no, that law of unintended consequences, for sure. So, let me just ask you, what’s your sense of the future, right now? Because I look at the environment we’re in, and it feels so woke, and a little bit crazy, and you have to be so careful what you say, and everybody wants to tax everybody, and, you know, wealth is bad. And then you see things like the Dr. Seuss ordeal, right, and 33 out of the top 50 books now on Amazon are all Dr. Seuss, and people are scooping up the books as fast as they can. And what it tells me is that the country is not as Left and extreme as Elizabeth Warren and AOC and Bernie Sanders would like it to be. So, what does that mean for 2022, and what does it mean for 2024, in your view, Steve?


Steve Forbes:              Well, that’s why they are pushing to do as much as possible, and sticking in their leftist programs in bills like this near $2 trillion so-called stimulus bill. They’re going to try it in the Senate, they’re going to put intense pressure on Joe Manchin, the senator from West Virginia, to cave on scaling back or getting rid of the filibuster, so they can ram this stuff through. Because they know it’s not popular, and that’s why you’re going to get a reaction, especially when, after the initial euphoria, when people, you know, get checks, who doesn’t want to get a check, money like that. But when the euphoria wears off and people realize what is happening, then there’s going to be a political reckoning, and you’re going to see it and that’s why they desperately want to pass this voting bill, H.R. 1, which passed the house and they’re trying to get it through the Senate, hopefully we can block it.

But that would rig elections and make it even harder for Republicans to win. So they’re going all out.


Trish Regan:               What’s your biggest concern with that H.R. 1?


Steve Forbes:              H.R. 1 is a bill – it would rig elections by taking all the problems we had in the past election and institutionalizing them. Such as mail-in ballots, such as not verifying signatures on absentee ballots, what they call harvesting where party officials can go and collect absentee ballots – you don’t know whether they did that honestly or not. In most states it’s illegal, but they want to make it legal so it’s easier to manipulate voting. And states won’t be able to draw their congressional lines, they’ll have to use these so-called commissions, which always seem to end up favoring the Democrats, as we saw in California and my home state of New Jersey.

So, they’re trying to – what they’re trying to do is rig the rules so they can create votes and not have – you know, no voter ID, it would be illegal to have voter ID. Whereas, anything else you do in this economy today, you need to show ID, but not for the most sacred part of a democracy, the right to vote. And all of these restrictions that try to prevent fraud would be made illegal, and that’s bad stuff. They’re trying to federalize elections, which in the constitution says is supposed to be a local matter.


Trish Regan:               Very scary stuff. You know what, I hope you run for president again. We need a voice of reason, out there, Steve, I really do. Steve Forbes – you can watch his documentary In Money We Trust. Steve Forbes, head of Forbes Media – so good to talk to you. Thank you.


Steve Forbes:              Good to talk with you, and keep up the good fight. Thank you. Thank you, Trish.

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Trish Regan:               Again, my thanks to Steve Forbes, who really does believe in economic freedom. And economic freedom is something that’s so intrinsic to every single one of us, and that we need to keep fighting for, because we need to make sure that we have a prosperous economic environment that we can give to future generations. And you don’t do that by leveling all kinds of taxes and creating all kinds of regulations. So it’s important that America refocus, recenter itself, and that’s part of what we’re committed to, I’m certainly committed to, right here on American Consequences. Make sure that you keep downloading the podcast, every single week.

You can also find me at, where some of my longer form writing is, and you can find me, of course, at, every day, where, also, you’ll get a little dose of what I’m thinking, every single day, on the Trish Intel podcast. Anyway, thank you, again, for listening, and make sure you keep coming back, because this is an important time.

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Male:                          Thank you for listening to this episode of American Consequences. Want more Trish? Read her weekly articles, Thursdays in our magazine, at, and subscribe for free to get all of our daily articles and the monthly magazine. We’d love to hear from you, too. Send Trish a note: [email protected]

This broadcast is for entertainment purposes only and should not be considered personalized investment advice. Trading stocks and all other financial instruments involves risk. You should not make any investment decision based solely on what you hear.

Trish Regan’s American Consequences is produced by Stansberry Research and American Consequences, and is copyrighted by the Stansberry Radio Network.


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