Forbes urges Hamilton approach to economic woes
We are part of history. That was one of the many observations given by chairman and chief executive officer of Forbes Media — and former presidential candidate — Steve Forbes at a keynote speech to the Northern Virginia Technology Council this morning.
The passing remark was in reference to the hard times many of us are now facing in our personal lives, and that many of the businesses for which we work are facing in the marketplace. Forbes, who holds a degree in history from Princeton University, gave a presentation resplendent for its detail in U.S. economics. It was noticeably bipartisan, in that blame and credit for the nation’s economic woes or successes was distributed about equally among the U.S. presidents holding office over the past 50 years.
If the Barack Obama administration wants to get the nation back on its feet, the surest way to do that is to take “the Alexander Hamilton approach,” Forbes said. To get the new nation up on its economic feet, the first secretary of the treasury turned liabilities into assets. For example, he converted junk bonds into currency backed by gold. The result: a strong dollar.
The best advice that Forbes has for Obama and his cabinet: Establish a credible policy that results in a strong, stable U.S. dollar. “It’s not a partisan issue,” Forbes said. Among the recent presidents that understood this were Ronald Reagan and Bill Clinton, he said. Those that didn’t include Jimmy Carter and George W. Bush.
While the nation is slowly recovering economically, it still has a long way to go. Large companies are now repaying debt, reconciling their balance sheets and issuing stock. For the large companies, “the system is starting to function again,” he said.
Yet the nation is far from a full recovery. Consumers and small- and medium-sized businesses are still having trouble getting credit. And uncertainties and fear remain about complex issues such as health care that the nation has dragged through the years like a ball and chain.
Forbes put forth some impressive numbers that illustrate the strength of the U.S. economy. Even in the downturn economy, for example, American households have cumulative assets of $50 trillion after personal debt is subtracted. If the nation can, as Hamilton did, transform some of its liabilities into assets, then the economy will snap back like it did in the 1980s, Forbes said.
“It wouldn’t take much to turn the bloody thing around,” he said. “If so, this [recession] will become a distant memory.”
Posted by William Welsh on Sep 15, 2009 at 9:53 AM