Steve Forbes: The Immorality of Big Government

Jason Hartman is joined on this episode by Steve Forbes, the editor in chief of Forbes Media, to propose and attempt to answer the question: Why does government get bigger and bigger when we know it doesn’t work well? Mr. Forbes states that history proves free markets work for the people, while big and over-reaching government is about meeting its own needs. In his book, Freedom Manifesto: Why Free Markets Are Moral and Big Government Isn’t, coauthored with Elizabeth Ames, the authors delve into historic events and statistics, showing that in every instance, big government promotes favoritism, stifles economic growth, dumbs down education, and creates an atmosphere of “rigidity and scarcity.” At the same time, it opens the door to corruption. Mr. Forbes discusses the benefits of economic freedom, which promotes creativity and growth. Jason and Mr. Forbes also talk about current economic issues, including the bubbles that the Fed continues to create in the bond market and housing. “When government undermines money, bad things happen,” laments Mr. Forbes. “When government says it’s here to help, watch out!” Though we’re in for some tough times, Steve encourages us not to give up faith; that we will get through it. Listen at: www.JasonHartman.com.

Female Voice: Welcome to Creating Wealth with Jason Hartman. During this program Jason is going to tell you some really exciting things that you probably haven’t thought of before and a new slant on investing, fresh new approaches to America’s best investment that will enable you to create more wealth and happiness then you ever thought possible. Jason is a genuine, self made multi-millionaire who not only talks the talk but walks the walk.

He’s been a successful investor for twenty years and currently owns properties in eleven states and seventeen cities. This program will help you follow in Jason’s footsteps on the road to financial freedom. You really can do it. And now, here’s your host, Jason Hartman with the complete solution for real estate investors.

Jason Hartman: Welcome to the Creating Wealth Show. This is your host, Jason Hartman and this is episode number 302. Number 302 and today we’ve got our interview with Steve Forbes, the great Steve Forbes. I really love his thinking and it’s just so clear and concise and I just — I just think he’s really — really got it figured out. So, we’re going to talk with him here in a few minutes, but first one of our investment counselors is on with me and I’ve been trying to get her on the last several episodes, but she’s been just too darn busy and that is Sarah. How are you Sarah?

Sarah: Hey, good Jason. Thanks for having me.

Jason Hartman: Well, my pleasure. So a couple of current events I’d like to talk about before we get into the interview with Steve Forbes, and one of them is the issue of the Socialist Republic of California and how it is doing such a great job of losing high quality residents to other states. And you know, this is always the equalizing factor, one of the things that these taxing authorities, they must realize this and if they don’t realize it, then I guess you just call it an unintended consequence. I don’t know which is true. I guess it’s probably a little bit of both, but there’s an — an investors.com which is Investors Business Daily Article, talking about how Californians move to Texas, Arizona and Nevada and it’s just talking about how people are just leaving the Golden State, and it is such a sad, sad commentary really but it’s interesting Sarah, because you — you posted this on your own Facebook and got some interesting comments about it. What are your thoughts?

Sarah: I did. Well, it’s — it’s — it’s just mind boggling to see — you know this article says that you know, had a net loss of one hundred thousand people just last year and yeah, I posted this on my Facebook and instantly got a ton of response. And my post was something to the effect of I’m — I’m moving — I’m moving out of California. Who’s with me? And you know, it’s interesting to see how many of you know my colleagues have already moved. A lot of them to Arizona, Texas, Colorado, so yeah, I do love it.

Jason Hartman: It’s — it’s really — it’s really amazing when you start looking around the country, you realize California is definitely not the center of the universe. And you know, that — that number one hundred thousand people, the net loss of one hundred thousand people just last year — just last year in one year, that may not seem like that big a deal to a state with almost forty million people but folks this is what you’ve got to realize, and — and it’s interesting because it comes on the heals of the news — just yesterday I read about Detroit on the verge of filing for bankruptcy. Frankly, I’m surprised it hadn’t happened a long time ago with Detroit, but in — in a time where the general population of the United States is growing, you lose one hundred thousand people from its most popular state, a very, very bad commentary.

Now what’s interesting too Sarah, is to look at where they went. Fifty nine thousand people went to Texas. I mean, just — just unbelievable, and this is — this is making up more than one hundred thousand. Well no, this is the net loss number. So yeah, I guess it doesn’t have to add up to one hundred thousand in these other numbers. Another forty nine thousand and change to Arizona and what else do you show there?

Sarah: Forty thousand to Nevada, thirty eight thousand to Washington and another thirty four thousand to Oregon.

Jason Hartman: Amazing, really, really incredible. So, this — this is what happens when you over tax people and it’s happening on a national basis as well where we’re seeing more and more people leave the country and this is what happens when you increase tax, when you increase government intrusion, when you increase regulation, you get the effect of lessened economic activity, because people find a way to get around it. They spend all their time trying to game the system and — and beat the system or, they just finally give up and leave and they just say, look I’m not going to put up with it anymore. It’ll be interesting too to hear — after this I’m interviewing Jim Rogers. He’s going to be on the show for the second time and it’s not on this episode. We’ve got Steve Forbes this time, but I’m recording the interview with him just in about an hour here, and it’ll be interesting to hear his — his commentary on all of this. But — but any other thoughts on the California out migration issue?

Sarah: Well I mean it’s just really sad that you know, as Californians we’re disincentivized to work harder. I mean, it’s — it’s just — it’s just mind boggling how much money you know, we’re giving away each year. I remember you know, about a year or so ago being in the middle of a you know, an audit and it was for such a small amount, and I just remember how time consuming that was and I’m thinking, gosh you know, for such a small amount and how much they’re paying these, you know IRS people to audit me and all the amount — the energy that’s sucked out of my life, I thought gosh, I could be working harder and creating more revenue for — for us and it just — I — I — it’s so backwards to me.

Jason Hartman: It — it — it is totally backwards. When you put people in the position where they have to spend so much of their mental energy and their time defending themselves against their own government, you have a recipe for disaster.

Now, all of this being said, you know we — we pick on — on the United States quite a bit on this show and you know, rightfully so. There are a lot of — a lot of problems, a lot of issues, a lot of things to pick on. However, all things considered when you look around the globe, America’s still a pretty darn good place. Okay.

Sarah: Absolutely.

Jason Hartman: So, you know and — and — and one of the great things about it is that we can criticize it without too much fear of retribution, although there are some stories about some retribution, but by and large, it’s still pretty good, but yeah, definitely sad about California.

Now another thing that’s interesting, and maybe before we jump into this next event I want to talk a little bit about a — a recent real estate scam. One of the things we always say and you know Sarah, I know that your clients are constantly talking to you about my commandment number three in my ten commandments of successful investing, which as of our last Meet the Masters event at the Hyatt Regency in Irvine, California we introduced the next ten commandments, so now we actually have twenty commandments of successful investing. But number three in the original ten is thou shall maintain control, so you don’t leave yourself susceptible to investing with a crook, you’re not pooling your money, you’re a direct investor, you’re in control of your own money and number two is you might be investing with an idiot, so you don’t want to invest with a crook. You don’t want to invest with an idiot. Number three, assuming they’re honest, assuming they’re competent, they take a huge management fee off the top for managing the deal. And that’s what happens to people who go into pooled money, paper asset type investments.

This is why we don’t like the stock market. This is why we don’t like anything other — you know if you’re going to be in metals, which I — I think gold and silver have huge flaws. The precious metals have giant flaws that we’ve talked about many times, but certainly the only way you invest in those things, if you’re going to do it, is by physical possession, not taking a piece of paper, not having a paper asset. We like hard assets and Sarah, isn’t this a great example of why?

Sarah: Yeah, absolutely. You know, in — in reading this article, it’s — it’s just you know really sad when people think they’re getting in on a — a good deal and promised these high returns. You know, I think they were promised like ten to fifteen percent and they probably didn’t even know what they were getting into. I mean, they had an idea of this great development but, you know never came to be and — and now the guy is behind bars and they’re out a bunch of money.

Jason Hartman: Yeah. So what happened here in this deal is this is a guy named Russell Daniel, okay and Russell Daniel basically got people to invest in his real estate company and his real estate company was in the business of buying, fixing and flipping homes and you know rehabbing these properties and — and guess what? The properties were fictitious and then he created notes on the properties and I think, although the article doesn’t say this, I think he sold the notes to people and the — the notes were fake, the mortgages were fake.

So, it was like a double whammy and he’s got to go to a federal prison for three years and — and pay nearly three million dollars in restitution, but what happens with most of these scam artists, is they spend all the money. They go live some lavish lifestyle. They figure out a way to hide it, move it offshore so they really never really pay the restitution and that’s — that’s usually what happens.

So, it’s really, really a sad story. Be a direct investor. Commandment number three, thou shall maintain control. Good advice, right?

Sarah: Yeah, absolutely. Main — you know maintain control of your investment and I mean there is — there is an amount of you know risk that’s involved with these you know, you can get buying your own you know single family properties but you can really take out a lot of that risk by being a direct investor. Do your own due diligence. You know, asking the right questions and not just turning your cash over to — to someone else that you — you think you can trust. So —

Jason Hartman: This is exactly what happens, folks. Right now we’re in a time where a lot of money has been sitting on the sidelines for the last several years throughout the financial crisis. And that money is really beginning to move off the sidelines and people are feeling the wealth. In fact, I — I think that’s largely fake.

After Obama’s first election, they — they blew up the stock market again by printing a bunch of fake fiat money, creating money out of thin air and so the stock market came back at least in nominal dollars, maybe not real dollars, probably not real dollars, but it — but in nominal terms you know it sort of came back to where it was and now it’s doing even a little better than that, and now they’re blowing up the real estate bubble again and here we go, so people start to get this feeling that things are better than they really are. It’s called the wealth effect, and what happens when the wealth effect is created and these bubbles are created, is you get people that just sort of start to get really stupid with their money and they just throw it around. They don’t pay a lot of attention. They don’t pay attention to details. They think gosh, I’ve got a half million or two million bucks sitting in the bank on the sidelines. I’ve got to put that money to work. That’s a great philosophy. That’s a great thing to think, but that doesn’t mean you should get reckless.

One of the things we said since — since we really started doing the real estate investment business mostly with a lot of my prior clients from many, many years ago in the traditional real estate business in southern California, that’s — that’s where sort of the genius of — of this business model was and I always said to people, don’t take your California mind and start investing in these other markets across the country because everything looks like it’s dirt cheap or free and that is a recipe for disaster just because it costs at the time five hundred thousand dollars to buy the same house in California and it only costs one hundred twenty thousand dollars to buy that property in Dallas, Texas, doesn’t mean you should stop thinking.

Sarah: Well, and — and you know just to magnify that, imagine you know we — we go with some foreign investors too and you know I think that our real estate looks even cheaper to them, you know and so I was just in touch with a foreign investor the other day and you know, we discovered that here he was working with a group who was marking up prices. I mean just flat out — not even taking possession of the property but just marketing U.S. properties and — and marking them up five thousand to ten thousand dollars and — and just taking that sum off the top. So, and — so —

Jason Hartman: And — and — and that’s — that’s the South African group and you know that is so scary folks when people just — they just get in this position where they just get dumb. They just get bilked and we just see it all the time where people are just overpaying for things. They’re — they’re investing in things with ridiculous projections and performers that don’t make any sense. Yeah, I mean speak to that a little more if you would, Sarah. Any more examples are great.

Sarah: I would love to get my hands on one of they’re performers to find out if they’re putting in a vacancy, are they putting in a maintenance, taxes, insurance, you know all the fees that are associated with either make — I — I want to know what they’re cash flow numbers look like next to you know our numbers, because what I find and — and I’m subscribed to a lot of different property providers, articles and things like that and — and what I find is that they’re missing a lot of the — the me, and it’s very hard to see what the bottom line is, which is why I love how we use a third party software to you know, make sure that all the assumptions are in there and — and our clients get those apples to apples production. I think that is so important.

Jason Hartman: Yeah, it really is and — and they’ve nice and conservative. And again as we mentioned on a prior episode, we’re going to do a comparison of the typical scenario that we project, comparison of a competitors scenario which looks better than ours frankly, because they’re not as conservative as we are and a worse case scenario that you know when things go bad, surprisingly people when it comes to income property investing, because it’s a multi-dimensional asset class, people don’t know how to keep score very well and they’ve got to learn how to keep score better and that will help them make decisions in a much more prudent manner. Yeah, good stuff, good stuff.

Sarah: I mean I — it was — and it was in — interesting even that because I had a great call with an investor yesterday who you know, was asking me about doing a 1031 Exchange and we started to get into the details of this property and I’m thinking, why do you want to exchange that property? It was — it was a great property and you know, we — we started talking about just that, about keeping score and you know it turns out it probably would be better for him to you know refinance that property. Maybe stretch off the term of the loan and lower the interest rate a little bit. The — the numbers worked. So you know, you’re — you’re right, people they — they don’t — they often don’t keep score.

Jason Hartman: Yeah, they just don’t know how to keep score and in — in not doing that, they tend to make very, very bad decisions. So it’s very important to know how to keep score, isn’t it?

Sarah: Absolutely.

Jason Hartman: Well hey, let’s go to our interview here with Steve Forbes and we will be back with that in just a moment, but be sure to visit Jasonhartman.com and get involved in our up coming property tour. The tours we have coming up are Memphis and then probably a while after that we’ll probably go to Houston or Dallas. Keep those in mind and you can learn about them at Jasonhartman.com and the blog there — I really want to recommend our blog to people. If you’re only listening to the show, and you’re only taking our content in — on an audio basis, remember there’s a — a text — a whole — whole bunch text on our website and a great Google search bar that’s a fantastic resource. We have thousands and thousands of pages of — of investor content on our website that you can look at. So, check that all out. It — almost all of it is free at Jasonhartman.com and we will be back with Steve Forbes in just a moment.

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Jason Hartman: It’s my pleasure to welcome a name that you are all very familiar with and it is Mr. Steve Forbes who doesn’t really need an introduction but his body of work is so comprehensive as a presidential candidate, the author of numerous books and of course, Forbes Magazine. Steve welcome, how are you?

Steve Forbes: Good to be with you again, thank you.

Jason Hartman: Well, likewise. I’d like to talk to you about your latest work, first maybe the Freedom Manifesto, why free markets are moral and I — I completely agree. The first chapter Steve starts out with the fed ex versus the post office and of course we all just heard that the post office is cutting Saturday delivery. What a mismanaged disaster it is, but tell us about the book.

Steve Forbes: Well, the book was written because of a perplexing question — confusing question as to why government gets bigger and bigger when we know it doesn’t work very well since the 1980s with Milton Freedman and others. We know that it is highly inefficient outside of a certain area and yet it gets bigger. One of the reasons we discovered why it gets bigger is because it occupies the high moral ground. People acknowledge, government may be inefficient but it’s heart is in the right place, it takes care of people in need, it takes care of the kids, it helps deal with free markets when they go off the rails and the like, and so it just gets bigger. And when this book, which I co-authored with Elizabeth Ames, we found out that contrary to myth free markets are actually moral because they meet the needs and wants of people while big government is not moral because it meets its own needs. And you saw that in that Chicago school strike a few months ago, one of the worst school systems in the country and it was all about pay and benefits, not about the kids. You saw it in the GM bankruptcy where the government forced a settlement that favored the unions, political supporters of theirs, tore up a contract log, did things you’d expect in the third world.

So, free markets encourage all the things that we want. It encourages the creativity innovation. Meritocracy, just compare apples to lender and big government is about meeting it’s own needs and that’s what people have got to realize.

Jason Hartman: People do have to realize that government always looks out for itself first, and looks for ways to expand its power and to keep its entrenched alliances and — and motivations and you know, it’s just an issue of pandering. I mean it’s a constant pandering. Is that why government occupies the high moral ground in — in most people’s minds? Of course it’s misleading, but maybe talk a little bit —

Steve Forbes: Yeah, well — well government always takes a crisis and if you oppose a government program you always get hit with, what do you have against helping children? What — what do you have against the elderly, and so you always get — or betrayed if you oppose a government program that’s being heartless, being, you know a cold, calculating accountant. And free markets actually are the ones that enable people to get ahead, enable people to earn more, have more and it is government that holds us back but government gets bigger by taking our resources and then pretending to help us.

Jason Hartman: Well, and — and anybody listening to this has to do is just ask themselves, I mean what is their personal experience with government versus free enterprise? I mean would you rather walk into the department of motor vehicles or the Apple store, the post office or fed ex? Who’s more helpful? It’s obvious.

Steve Forbes: Yes, because government answers to its own political constituencies, its own bureaucracy, whereas in the free markets if you do that you don’t stay in business very long. You must be attentive to your customers. You must be on the cutting edge or the world will pass you by unless you get bailed by government.

One of the interesting things we would account in this book is the story of a British historian, a fellow named Parkinson. You know, in the 1950s he was doing a history of the British navy and noticed after World War 1, when Britain had the largest navy in the world by far, they had won the war so they downsized the navy, mothballed ships, discharged sailors, laid off dock workers and yet the government agency running the navy got bigger as the navy got smaller. And they postulated that organizations, unless it’s in a free market, organizations inevitably get bigger just because they want to get bigger and that the work they have to do has nothing to do with the size of the bureaucracy.

Jason Hartman: Well it reminds me very well looking at Bill Bennett’s book that’s a leading cultural indicator is where he had this very telling graph and it compared teaching staff in public schools versus administrative staff back into I think the ‘60s or ‘70s up to the ‘90s, and the equation Steve, has completely flipped where the — they’re so top heavy with administrators and all the money — I mean it’s just — they constantly complain, oh we need more funding, we need more funding, when they keep getting more funding and they keep misusing that funding.

Steve Forbes: Well, if — if — if you don’t stop them they will get bigger and bigger and more bloated and as you point out, in terms of higher education thanks to government subsidies for tuitions ostensibly to help the kids, what happens is you get more administrative bloat. They look at the number of administrators verses professors and the numbers become completely squid and the kids instead of getting something that catapults them ahead in the world, come out of higher Ed, with a burden with debt sort of a mortgage without a house.

Jason Hartman: Right, yeah, yeah. And that debt by the way is not discourageable in bankruptcy, so they — they are literally indentured servants for life to that student loan debt and — and that is very scary. But what — what it seems to be when you look at the left and the right in the political debate is that the left always appeals to instant gratification. Oh, we’re going to have more government you know loan guarantees for college and all they do is create the basic law of inflations. You have you know a large supply of dollars chasing a limited supply of goods and services. And so of course tuition prices go up. And — and you see these colleges abusing the system.

My mother went too oddly — and this — this is kind of odd, my mother went to Berkley in the ‘60s and got a degree in social welfare. Yet Steve has never voted for a democrat, oddly enough.

Steve Forbes: Remarkable woman.

Jason Hartman: Yeah, yeah, exactly. But –but as a social worker out of — out of college for a couple of years, she just saw that government didn’t work you know at all, and you know she worked her way through school. Back then you could do it but now days I don’t think it’s possible for a kid to go to a — a decent college and — and pay their way through. She didn’t get a student loan. She didn’t have her parents pay for it.

Steve Forbes: Well, you had scholarships and you took jobs to help pay your way through and colleges knew there wasn’t an open enough faucet, an ATM for more and more cash. So, they watched their expenses a little more carefully and you — you — you could get a — a — a good education. And by the way, you didn’t have these things where you have today where you get six years out of — before you get a degree. And I think you’re going to see a huge change thanks to technology, thanks to the web, you can get if it’s just knowledge you’re interested in you can get a virtual university education for one thousand dollars a year, going online.

Jason Hartman: Yeah, yeah. It’s — it’s amazing and you can actually get it for free at the Kahn Academy. I don’t know if you’re familiar with that but the —

Steve Forbes: Yes, we’ve — we’ve written on this and so it’s a huge possibilities out there but if government was in charge, you — you — we — we know as cell phones. If government’s been in charge of cell phones, you know the first one thirty years ago, as big as a show box and costs three thousand nine hundred ninety five dollars, if government had been in charge saying everyone must have a cell phone, I guaranty you there’d be just as big as a brick today and cost nine thousand nine hundred ninety five dollars and the government would be railing against greedy cell phone makers.

Jason Hartman: Yeah, you are so right. Well I don’t want to spend all the time on the Freedom Manifesto which is a fantastic work, but the last chapter — you know, I love the title of it by the way, is entitled the Spirit of Reagan or Obama. Address that for moment if you would.

Steve Forbes: Well, free markets are about optimism. You don’t invest in the future where you’re the last one to be paid off if you didn’t have faith in the future, didn’t have faith that you could put together a team to — to achieve great things and both Reagan and Obama came in times of crisis, came into office in times of crisis. And Reagan acknowledging the spirit of crisis had a basic optimism that the American people would pull through as they’ve always done before. Whereas Obama was sort of a pessimistic, we must put childish things aside, did not convey the faith in the basic uniqueness of America and the American people. And you see it in the way he governs. It’s about conflict, one percent versus the ninety nine percent, the elderly versus the young, labor versus management. All about conflict, class conflict and the like to generate the government power, whereas Reagan was more optimistic in the beguine view of the future because he had faith that for all the flaws of human nature. And free markets are sensible rules of the road, people do great things.

Jason Hartman: There is no question about that and history has borne that out so many times. There’s just no example in the world or at any time when a larger government has created more freedom. You know and of course I’d say that if there’s a lot of detail to that. We don’t want to live in Somalia. I remember when I saw you speak at the Nixon library several years ago for a young entrepreneur’s organization event, you — you said — I think you said something to the effect of, look we need government because we’re not all angels, okay. You know, we — we need — we need some rule of law of course, anarchy’s no fun but where on that continuum in that billion shades of gray, does one come down?

Steven Forbes: Well, I — I — I think Madison more than two hundred years ago made that famous observation. He said if we were angels we would not need law, we’d not need governments, but manifestly we are not angels so we do need laws, we do need government. But he also pointed out that this is why the founders put in divided government checks and balances because they feared that a government that was strong enough to provide law and order and protect us from invaders could also end up suppressing people inside the country and so they wanted divided powers. So government has certain functions, our safety, dealing with the media disasters and basic things like that, enforcing contracts, but when it goes beyond that in trying to run an economy like the government’s trying to do with health care and the financial industry and the energy industry. And I wish if it weren’t for Europe, not to mention the Soviet Union, those things are linked to less freedom, less opportunity, tyranny and a more miserable life.

Jason Hartman: No question about that. On your Twitter feed there were two interesting tweets just yesterday that I — that I wanted to ask you about. One of them — since most of our listeners by the way are real estate investors or certainly investors to say the least, but what about asset inflation, how it leads to “the wealth elusion”, and how the government is just blowing along with the Fed of course is blowing up bubble after bubble whether it be the stock market, the housing market and it seems like, here we go again on — on both counts. And — and then also there was another tweet that explaining the housing boom in the last 30 years. I just wanted to get your perspective on those.

Steve Forbes: Well, when government undermines the value of the dollar, you get misdirected investment and then we saw this in the ‘70s. Oil went from three to forty dollars a barrel. Reagan comes in, the inflation stops, oil crashes to ten dollars and then averages a little over twenty dollars a barrel from the mid 1980s to the early part of the last decade. So when the dollar is undermined, people go for hard assets to protect what they have instead of investing for the future. Farm land has doubled in recent years. There’s another bubble. The Fed has created now yet another bubble in the barn market and so it’s — it’s like changing the minutes in an hour. Imagine what life would be like if you didn’t have sixty minutes and hour but it changed each day. It would be — would be — would be a lot more confusing and a lot less opportunity to get a higher standard of living. So, when government undermines money, bad things happen and we’re seeing that today. Government gets all the money it wants, deficit without tears. Well, small businesses, unincorporated businesses, their credit lines are drying up. They’re getting less credit today than they did two years ago. And on housing, government always does these programs ostensibly to help us in housing. The community reinvestment act saying put the standards aside for lower income people and Fannie and Freddie got bigger and bigger and bigger. FHA, federal housing administration getting more bloated. It’s going to need to bail out soon and ends up just blowing up the housing market and we have less homeownership percentage of the population than do a dozen other countries. So, when government says it’s here to help, watch out.

Jason Hartman: Very well put as — as — Reagan used to often say. So, your — your prediction of the future — I mean, we’ve got sixteen trillion dollars hanging over our head plus another entitlement time bomb of anywhere between sixty and one hundred twenty trillion dollars, inflationary for the future?

Steve Forbes: It means trouble and when — when government undermines currency, you can’t predict what kind of disaster you’re going to get, but you know, on — toward bad things are going to happen and we had that at 2008, 2009. We never would have had that economic crisis. We never would have had the housing bubble the federal reserve hadn’t printed so much money. The government made such catastrophic errors in regulation.

So in the future, it is — you know you now are paying the government debt. Right now it is deficit without tears, but you start to get real interest rates again that’s going to cost the government hundreds of billions of dollars and where is that money going to come from? So, I can’t tell you exactly the bad thing that’s going to happen, but the patient had better watch out. As they say on the airplane, tighten the seat belts, turbulence ahead.

Jason Hartman: No question about it. So, what are your other thoughts on — if we didn’t cover them, on the economy and you know any tips for investors that you might have?

Steve Forbes: Well, the investors are in a tough place right now because you know that the Fed is mucking around with the dollar, so you do need some hard assets like gold, as an insurance policy, but you don’t want to go too far into it because these things burst. We saw it with housing, a sure thing, and then it exploded. We saw in the ‘70s, oil crashes seventy percent when the — the inflation ended.

So, you got to be just very careful. And for your retirement fund, unless you’re about to do it, the advice there is don’t let the motions be your enemy. If you can contribute, whether it’s monthly, quarterly, weekly, whatever you do, small amount, do it consistently because even though the markets are turbulent today, in real terms they’re still lower than they were fourteen years ago, twelve years ago. The thing to keep in mind is America always comes back. And if you keep putting in steadily, you’ll do just fine. Trying to tighten the market, you will get killed.

And early 2009 when things looked especially bleak, a lot of people pulled out of the market and since then the market has doubled. So, stay in it, ride the storms, don’t let your emotions get in the way and you’ll do just fine.

Jason Hartman: What do you say to someone who thinks this recovery is real? I — I think it’s fake. I think it’s just an inflation induced recovery so it’s maybe — maybe you’d call it a nominal dollar recover rather than a real dollar recovery. The problem is with this stuff is there are always time lags. The government creates a bunch of money out of thin air, and everybody feels prosperous for a little while and then suddenly they realize, oh, everything just got more expensive. So, maybe I’m not as prosperous as I thought and these constant cycles of — of catch up and — I mean — I mean, certainly you don’t think this is a real recovery?

Steve Forbes: Well, it’s — it’s a very weak recovery and what is astonishing is after every sharp downturn in the past, we’ve always had a sharp upturn and then the question became, could you sustain it? Well, you always got that sharp snap back. We didn’t get that sharp snap back this time. So, like the car on the super highway, we should be going seventy — seventy five miles an hour today. Now we’ve gotten it from twenty to thirty, but we’re going to go back to ten to fifteen miles and hour, so you know, this is not Nascar time, sadly.

Jason Hartman: Yeah, it’s — it’s just a slow plotting recovery, if a recovery at all maybe.

Steve Forbes: Right, yeah.

Jason Hartman: Steve, what’s going on at Forbes Magazine?

Steve Forbes: Well, Forbes Magazine actually for the first part of this year is doing rather well in advertising. Circulation paid is holding up. Our real excitement is on Forbes.com or — in January, we had over forty five million unique visitors, so we’re adjusting to the new age and knock on wood, so far so good.

Jason Hartman: And — and you’ve been adjusting to the new age for a long time. I mean I think you were one of the first big publishers to really recognize the power of the internet, while everybody was trying to figure out what to do. I mean I remember when I met you, you know about twelve years ago, in — on the investor cruise in Russia and Scandinavia, I was talking with some of your people at the dinner table about how Forbes is publishing for the web and it’s — it’s a different business, isn’t it?

Steve Forbes: It very much is both on the content creation side — we now have almost one thousand contracted contributors for Forbes.com., making one or two submissions every week — every month or so and on the marketing side, we’re doing things very differently than we were doing five or ten years ago. So yeah, the world is changing. What you have to keep in mind is what Peter Drucker the great management guru once said, he said businesses should remind themselves what is their — what is — what is their purpose? What are they trying to do? And if you do that, then you don’t get quite as hung up on the means to achieve what you’re trying to do and you’re better able to adjust to changing times and circumstances.

Jason Hartman: Yeah, fantastic advice. I think he also said the one constant is change. I may not be attributing that correctly but I think it was Drucker.

Steve Forbes: Yes.

Jason Hartman: And — and — and we need to get used to a lot of change especially in the future. So as you said, fasten your seat belts. Well anything else you’d like people to know in closing?

Steve Forbes: Just even though we’ve in for some very stormy weather, don’t lose faith in the future. Ronald Regan never did. We will find a way out of this. We always do. Don’t despair.

Jason Hartman: Fantastic. Well Steve Forbes, thank you so much for joining us today.

Steve Forbes: Thank you.

Female Voice: Want to know what you’ve missed in the creating wealth series, well, here’s your opportunity with Jason’s five book set. That’s shows one through one hundred through digital download. You save two hundred eighty eight by getting this five book set. Learn all of the advanced strategies for wealth creation. For more details, go to Jasonhartman.com.

Female Voice: This show is produced by the Hartman Media Company. All rights reserved. For distribution or publication rights and media interviews, please visit www.HartmanMedia.com or email [email protected]. Nothing on this show should be considered to specific personal or professional advice. Please consult an appropriate tax, legal, real estate or business professional for individualized advice. Opinions of guests are their own and the host is acting on behalf of Empowered Investor, LLC., exclusively. (Top image: Flickr | U.S. Embassy Jakarta, Indonesia)

Transcribed by Debra

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