This is a partial transcript from "Your World with Neil Cavuto," July 20, 2004, that was edited for clarity.

NEIL CAVUTO, HOST: What if I told you this election year we shouldn’t be focusing on George Bush, or John Kerry, but Alan Greenspan? Why does the Fed head matter so much? With us now is Steve Forbes. Steve is the president and the CEO of Forbes.

Steve, always good to have you.

STEVE FORBES, PRESIDENT & CEO, FORBES, INC: Good to be with you, Neil.

CAVUTO: Alan Greenspan still yammering on Capitol Hill. A lot of people swear by what he says, a lot of people swear at him, too. But where do you stand?

FORBES: Well, sometimes I do the swearing at him. But you’re right, he is a critical figure this year. As you know, over half the American people have a stake in the stock market. What Alan Greenspan says has an enormous impact on the financial markets.

I think in the last couple of years he has been slow to realize that inflation was beginning to brew in this economy. He overshot the mark.  I’m glad today, at least in his testimony so far, he’s indicated that he’s aware of inflation, which is why I think the markets took a little bit of a bounce.

But he’s got to realize he is riding a super tanker. And if you want to change course, you have to do it well in advance. And commodity prices, like gold, will tell you in advance, but he seems to ignore those signals.

CAVUTO: All right. So if you had your druthers, this guy would be hiking rates more?

FORBES: I think he would be tightening money more. And if he announced that he was doing that, rates may go up a little bit on the short end, but the long end I think would stabilize because they’d realize inflation wasn’t going to be with us. It wouldn’t be a problem next year.

CAVUTO: But, Steve, there are a lot of people who worry about the pace of this recovery, saying that at least in the June data, as you have expertly reported, things are slowing a little bit from the blistering pace. He is speaking to the Senate right now; this is a live shot of him. But, Steve, do you think he worries about that?

FORBES: Well, I think he does, and I think that’s one of his problems, is that the Federal Reserve can’t fine-tune this economy. What it can do is keep the dollar stable, which would mean lower interest rates, and then other things would affect the economy, like tax rates, trade issues and things like that.

But the Federal Reserve shouldn’t be in the business of trying to slow the economy or make it go faster. That’s out of his hands. Stable money, low rates, that’s what he should focus on.

CAVUTO: But the traditional black and white argument — and pardon me for my simplistic view of this — is that if you’re not quite sure about the pace of the recovery, and if there is some second doubts about whether it is going to be as robust as people earlier thought, why raise rates at all?

FORBES: Well, because if you have inflation, if you are brewing inflation, which he was certainly late last year, early this year, then you’re going to have a real economic problem next year.

CAVUTO: But Steve, let’s say you raise rates. How is that going to affect higher energy prices?

FORBES: Well, in terms of energy prices, I think a big part of it, when it went over $40 per barrel, was speculation. People saw inflation rising up, they saw it in steel prices, shipping rates, oil prices, gas prices, so there is a lot of speculation. If people know that this federal central bank knows how to fight inflation and is going to do so in a timely manner, I think you would see oil prices go down another $3 or $4 a barrel.

CAVUTO: That’s interesting. Let me ask you about this obsession, though, with Alan Greenspan. My own view, Steve, is that it’s like a "Weekend At Bernie’s" kind of thing for the markets. They don’t want to see the guy leave, but eventually he’s going to have to leave.

What is likely on the replacement front? I guess it depends on the administration that is in power.

FORBES: Yes. And that is where I’d really worry about if Senator Kerry was in the White House. I think he’d appoint a true inflationist. At least Alan Greenspan goes at a slow pace, you know, a quarter point here, a half a point there.

If you get somebody else in there, they may really overshoot the mark in a major way and do real major harm. So, if President Bush is in the White House in 2006, and Mr. Greenspan must by law step down, I think there is a chance we might get somebody sensible in that post.

CAVUTO: All right. Steve Forbes, are you up for the job or no?

FORBES: I think you are probably ahead of the line than I am right now.

CAVUTO: I seriously doubt that. Thank you, Steve, very much.

FORBES: Thank you.

CAVUTO: Steve Forbes, the man behind the Forbes empire.

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