Forbes

When not touring, you’ll be able to harvest profitable in-

sights from longtime FORBES columnist and highly esteemed

money manager Ken Fisher; Fox TV investing star Elizabeth

MacDonald; one of the world’s most insightful (and spell-

binding) energy and technology experts, Mark Mills; and the

outstanding economist Stephen Moore. I will be sharing post-

election observations. Acting as master of ceremonies will be

the scintillating host of FORBES on Fox, David Asman.

You won’t want to miss this opportunity for relaxation

and fattening up your pocketbook.

and the hyperregulation of banks have deformed

credit markets everywhere. Small and new busi-

nesses are deprived of adequate credit. “When

[the Fed] ‘eases’ or ‘tightens’ credit, it, at best,

distorts where economic resources migrate.”

Tamny deftly explodes a number of other per-

nicious myths. Among them:

ƀLJ(%-LJ'/&.#*&3LJ')(3ź That’s what we’re

taught in school, but it’s nonsense. When some-

one borrows money, that may increase some ar-

bitrary measure of “money supply” like M2. But

that act of borrowing doesn’t increase the real resources of

an economy any more than a landlord “lending” (renting)

an apartment increases the real number of apartments.

ƀLJ
LJ,#-#(!LJ')(3LJ-/**&3LJ#-LJ#(ũ.#)(,3ź By that crite-

rion Switzerland should be experiencing hyperinflation.

Because of consistently sound management of the franc,

Switzerland’s currency is one of the most highly desired in

the world.

ƀLJ
LJ(.,&LJ(%LJ.".LJƆ,.-ƇLJ'),LJ')(3LJ),LJLJ!)0,(-

'(.LJ.".LJ-*(-LJ'),LJ')(3LJ1#&&LJ!(,.LJ*,)-*,#.3ź

By the Fed’s way of thinking, increasing Baltimore’s money

supply would bring better times. No, it would not. Those

resources would quickly find their way out of that anti-

growth, antipolice and regulation-ridden city. In contrast,

even if the Fed were to try to suppress the “money supply”

in Silicon Valley, it would remain disproportionately large.

Tamny has unconventional takes on the future of our suf-

focatingly regulated banks (because big opportunities have

been suppressed, the best talent will migrate away), the

Federal Reserve (the power of that destructive institution

will decline) and Bitcoin (its volatility will be its undoing).

As for the ultimate in unconventional wisdom, Tamny

suggests that perhaps Congress should define the dollar

as a certain weight in gold and then leave the “creation of

actual money to the private sector ... [and] fully legalize

private money.”

12 | FORBES ASIA JULY 2016

FORBES

FACT & COMMENT STEVE FORBES

Too Bad Keynes Couldn’t Have Read This Book

F

John Tamny’s latest effort, ")LJ-LJ."LJ
ƄLJ(Encounter Books, $25.99), with its
seemingly simple but profound insights, will
fundamentally reshape how monetary policy
is viewed and made. It will retain its potency
for years to come because it’s written in such
a jargon-free and entertaining way. No other
treatise on money would use Taylor Swift,
Donald Trump, LeBron James, legendary
football coaches Nick Saban and Jim Har-
baugh, robots and the now-classic film Splash
to skillfully illustrate points of principle.
Today the U.S. and the world are suffering grievously
from a cart-before-the-horse mentality when it comes to
how central banks approach money. Reflecting obsolete
thinking that grew out of a misdiagnosis of what caused
the Great Depression, these institutions and their political
masters believe that money controls the economy. Manip-
ulate interest rates—the price lenders charge borrowers—
and, voilà!, you can steer the economy like a driver does
a car. Regarding this, Keynes and his followers had it ex-
actly backward. Money reflects the real economy, which
is the production of products and services. It no more di-
rects what we buy and sell than scales control a person’s
weight. Money is not wealth; it measures value the way
watches measure time. Money is a claim on services and
products, just as a ticket can be a claim on attendance at
a concert or for a coat checked at a restaurant.
Tamny, Political Economy editor for forbes.com, ham-
mers home the truth that money and credit are not con-
jured up out of thin air by governments and banks. When
you borrow money, you are borrowing real resources cre-
ated by people. Otherwise, Zimbabwe, Argentina and other
chronic debasers of money would be global powerhouses.
This backward way of looking at monetary policy is
a critical cause of the current global economic malaise.
Quantitative easing, zero or now-negative interest rates

Cruisin’ to Wealth

This year is shaping up to be one of the most turbulent
ever. The presidential campaign has completely defied
all predictions and expectations. Europe is in turmoil
because of Britain’s stunning decision to leave the EU.
Global economies are faltering. Interest rates are going
negative. What’s an investor to do?
One wise move would be to sign up for the 26th
Forbes Cruise for Investors: Nov. 29–Dec. 6, sailing from
San Juan, Puerto Rico to New Orleans, with stops at St.
Barts, St. Kitts and Key West, Florida.