$35-a-Barrel Oil Next Year? Forbes Thinks So… New York, NY October 20, 2005 /PRNewswire - Contrary to what many "experts" say… oil may well plummet to $35 a barrel in 2006, says Steve Forbes, editor and publisher of Forbes magazine. In an interview with Steve Forbes this week, Dr. Mark Skousen, chairman of Investment U, a free educational financial e-letter http://www.investmentu.com, asked his opinion on the bull market in oil and gold, the Fed's reckless monetary policy, and why he's pushing for a 17% flat income tax to replace the current hodgepodge tax code. Here's what Steve Forbes had to say… Skousen: At the Las Vegas Gold Show last month, I brought up your idea that oil prices would fall to $35 a barrel next year. All the panelists pooh-poohed any kind of a fall in oil prices. So you're definitely in a minority position there. Do you still think that's going to happen in the next year? Forbes: Yes, assuming the one caveat, the Fed. It continues to be expansionary, despite its interest rate policy. Skousen: So you think the Fed raising rates is nothing compared to expanding the money supply, that they are still too inflationary? Forbes: They're fighting a fire with gasoline. They're creating a milder version of what happened in the '70s, which was to let rates go up, but inject too much money into the economy. It's not enough to raise interest rates. Raising the nominal price of money is not going to do it. Only soaking up excess liquidity will control inflation. Skousen: Do you think gold is going to go up to $500 an ounce? Forbes: Well, if it does, it means we're going to have a recession. Skousen: So you don't predict it, you just use that as a monitor? Forbes: I use that as a barometer. Skousen: I've been critical of your gold monetary policy - using gold as a monitor - because it's so volatile. What's your response? Forbes: I don't agree. Gold is volatile because monetary policy is volatile. Markets react to that. So if gold shoots up, it's not volatility, it's the market saying that the Fed is overshooting. Gold is a constant. It's like the North Star. It fluctuates based on what people perceive, the value of the dollar and monetary policy. When gold collapsed in the late 1990s, it meant that the Fed was deflating, and that helped bring about the recession. When you have deflation, it hurts commodities, hurts commodity producers, and hurts manufacturing. Skousen: Now what about an inverted yield curve, where short-term interests exceed long-term rates? Do you think that's a possibility? Forbes: It's a very real possibility. Again, it means that the Fed has blundered. * * * To read why Steve Forbes is pushing for a 17% flat income tax, click here: http://investmentu.com/IUEL/2005/20051013.html Dr. Mark Skousen is an economist who has taught finance and economics at Columbia Business School, Barnard College at Columbia University, and Rollins College in Winter Park, FL. He is editor in chief of Forecasts & Strategies - an award-winning investment newsletter - and three trading services. He recently was nominated as the chairman of Investment U, a free educational financial e-letter with more than 275,000 subscribers. For more information about our editors, or to set up an interview, please contact Juan Muñoz at 410.223.2693 or jmunoz@oxfordclub.com, or visit http://www.investmentu.com. | 
