A Monetary Policy for a Free America

0:00I've been very pleased about what's happening in the country in general. I think there's been some definite improvements. I think that over the last several decades that we've seen a tremendous improvement. There have been organizations around, quite a few, the Mises Institute being one of the top organizations that have changed what's happened in the last decade or two, and that is there's been a revival of these ideas. They really have lain dormant for quite a while. I think that we really haven't had a full discussion of the principles of liberty since the Constitutional Convention, or with our revolution, actually with the revolution, where there was the rejection of the king and the nonsense and the courting of troops and the militarism and the violations of civil liberties.

0:50And our founders did have a discussion and came up with some pretty sound answers and and the Constitution. But today I think that's occurring again. I think it's moving quicker and this debate once again will be climatic in a sense in this decade mainly because of what is occurring economically and the problems that we're facing and this is indeed related to the monetary issue. The monetary issue might not be the issue, but it's very symbolic of the big issue and and the big issue is individual liberty and the size of government and the role and purpose of government. I was rather pleased even yesterday with the announcement of Steve Forbes' entry into the Republican race.

1:36I guess maybe because the race so far has been pretty boring. It hasn't been too exciting, you'd think, with 11 or 12 people running. And I wasn't looking for the excitement that Colin Powell might give us. So I was very pleased with the Steve Forbes announcement. Management, mainly because there was an expression of an opinion about the monetary issue. I mean, I've worked with and I'm friends with Pat Buchanan and I like a lot of things he says, but he says quite frankly, I really don't understand the money issue, I don't want to get involved with that, I don't want to address the Federal Reserve and yet I believe he is patriotic enough that he is not sold out to the internationalists because he's already been willing to challenge the internationalists when it comes to, you know, the trade issues and the different things United Nations. So it is in that, but he doesn't have an interest.

2:25Now, while I see this as a very nice opportunity, if somebody is willing to spend 25 million dollars of his own money in saying that he believes in the gold standard, it can't hurt us. You know, it at least allows us some credibility because I know what it's like to be up there talking about the gold standard in Washington and everybody looking at me and saying, hey, what kind of a nut is he? Well, he's one of those nuts that has read the Constitution and believes in it, but that's beside the point. But I think with Forbes running and talking about the gold standard, it could be of a big benefit to us. He happens to be what we call a supply sider. He's probably much closer to Jack Kemp when it comes to the gold standard, which in a way is a pseudo gold standard, and it's not very rigid, and I don't think it mandates the elimination of the Federal Reserve and a few other shortcomings like that but at least it gives the emphasis that money should be related to gold and then we can at least talk about the real gold standard versus the fake gold standard but even a little bit of gold is going to be a lot better than what we have now and the consequence of the paper standard that we've had now since 1971 is very clear the results aren't very good and all we'd have to do is look at

3:46this past week or two on how quickly the value of the dollar can change in relationship to other currencies. I mean, this is some type of a currency market that we've had going on. As a matter of fact, this whole year has been very interesting. We've had a dollar that was worth around a hundred yen, it goes down to eighty for a while, it bops up again to a hundred and five yen and now down to a hundred yen. Those are big moves. Somebody was telling me not too long ago, he said, you're one of those gold nuts. Well, I don't know about that, but I believe in gold. He says, but gold is so unstable. Gold, I says, now listen to me. I says, take a look at what this dollar does. Unfortunately, gold is way too stable for me. It's been between 390 and 400 for a year and a half. So it's been steady.

4:33The gold price in terms of dollars has been relatively stable. Not a good analogy, but for him it was, because the dollar yen and dollar mark ratio, there's nothing stable. Can you imagine calculating international trade transactions with a unit of account that jumps around like that? I sometimes think it must be like a builder that would have to build a house with a yardstick that was 39 inches and 34 inches and 36 inches, depending on the day. I mean, what kind of a house would you have at the end of the day? And that's why we have a hodgepodge economy, is because the unit of account has no definition and is totally unstable. and we end up with some messy type of trade imbalances and debt and a lot of other problems.

5:19So it is very clear to me and I hope to others that this type of monetary system cannot and will not continue. For that reason, I'm very excited about what's happening in a morbid sense of it, because it's not going to last and something's going to happen. The danger is, of course, is sometimes when a monetary system breaks down, you don't end up with what you need and what you want, and that is more freedom and a better currency. But because the Mises Institute is doing such a good job in educating so many young people, and we have a new generation coming up here that's going to know what to do, we don't have to really worry. We just have to help the Mises Institute a little bit more, make sure we get more kids and young people educated so that we can make this replacement rather painless.

6:06and I don't think it would be that tough if we had the opportunity in spite of a financial crisis which is likely to come. I really do anticipate that we will not gradually get out of the mess that we're in. We have been very much aware of things that have happened since 1971. 1971, as you know, is the date of the complete severance of the paper from gold on August 15th of that date. It wasn't a very good gold standard from World War II up to 1971, but in a way it worked remarkably well in maintaining reasonable prices and taking care of the economy, but even Henry Haslett back in 1945 said it wasn't going to work, this pseudo gold standard, and sure enough in time it broke down. I think I started reading In the early sixties, this would happen. And it was in 1971 that I think I really became convinced.

7:09The predictions made were correct and this fictitious so-called price of gold at $35 an ounce could not be maintained even if it cost us 500 million ounces of gold trying to prove something that was unprovable. In 1971, the economic charts of spending, deficits, decreased standard of living, all these problems have come back to 1971. I think we're really approaching the climax of this.

7:54It's been predicted for quite a few years that we would have major troubles and problems, but it cannot continue. You cannot forever bail out one paper currency with another paper currency. For instance, the Mexican peso was in trouble, and the Mexican economy was in trouble. The New York bankers were in trouble, and the politicians were in trouble. So they stole 50 billion dollars of our money and sent it down there and they said well that's fine and dandy, we didn't have too many people hurt, well fine yeah, a lot of Mexican peasants got hurt and a lot of American citizens got hurt, trouble is we don't know who really got hurt here, 50 billions that drop in the bucket when you divide that up among 250 million people so, but if there is a cost long term whether it's the money we pour overseas, buying goods that we get a free ride on because we purchase

9:18You know, it's pretty amazing how well they hold this together. There's no runaway inflation. Government statistics tell us the inflation rate is low, and prosperity is high, and productivity is high, and unemployment is low, and everything is okay. Then why are so many Americans so furious with their government? I mean, they're annoyed, and I think justifiably so. But what the government won't admit, and what a lot of people don't understand, and what most of the congressmen don't understand, is this disenchantment, this uneasiness that has occurred here in the last several years is related to economics and is related to the dollar. Statistically, it's very clear to show that the standard of living of many Americans has dropped. It hasn't dropped for the high income people.

10:04But if you take the 20 to 25 percent of the individuals in the low income bracket, the low middle class, have a decreasing standard of living. And this is even confirmed by government statistics. They're willing to admit that. And this is related. This is predictable. This is what happens when a currency is debased. Eventually it wipes out the middle class. But we have been getting a free ride on this dollar deal for a good while. We're able to create new dollars. And to our advantage, we've been able to buy foreign products. Everybody complains and screams and hollers how terrible those Japanese are are about buying that we have a negative trade balance with the Japanese, but they're taking our dollars, we're printing them and we're buying their automobiles, and they're hanging on to the dollars. And then they decide, well, the yen is too strong and the dollar is too weak. What they want to do is help the dollar. So what are they doing? They decide they're

11:00trying desperately to inflate their yen in order to make the yen weak. And that's why, of course, the yen went from 80 up to 105, and that was all government action. It was There is all government rigging of the currency system, but on the short run we benefit by this, because we are the reserve currency, we create the money, and they borrow and they take our money and keep it and hold it in reserves, but how long will they do it? How long are they going to do that? I think there will be a limit. Not only do they take our money for their products and we complain about it, but they actually go out of their way to buy up our debt. You know, last year, they bought probably close to four times as much of our government paper as our own Federal Reserve did.

11:53And you talk about internationalizing this currency scam and this financial scam is the central banks really aren't as competitive as they pretend to be. I predict that eventually though the spirit of nationalism will rise up and I've been saying that all along that there will be no smooth rise to a one world currency or a unified currency in Europe and that's also the reason this week that the dollar got quite weak again because the Europeans say hey maybe we don't want to have this currency the politics of the unified currency in Europe now it's very weak compared to what they thought it was going to be a year ago so this is there's there's a lot going on on right now, the spending is continuing and the inflation is continuing. The consequence of our inflation has been delayed. We're not feeling it immediately. This is the reason the bubbles allowed to get much bigger. Now, in Washington, there is a pretense. There's a pretense up there that they need to do something about this. They're going to get their house

12:54in order. But I think the best demonstration of what really is going on in Washington was There's that little debate, so-called debate, where the Democrat Wrangel was arguing with the Republican and was on TV and they were in each other's face yelling and screaming. And even Wrangel at one time took the guy's tie and pulled it. And this is, I mean pretty soon there may be a fist fight going on even in the American Congress. I mean it's getting close to that. Now they claim it's just a technical little problem that they can't quite figure out who and who to cut and who to raise taxes on and they need a little technical adjustment and it's because people, the members of Congress are ingenuous and that they want to hurt one person versus the other. What they don't realize is the country's bankrupt and there's no more money and there is no easy solution to keep this welfare state going and the people sense it, they're unhappy, they might not fully understand it but they know there's something seriously wrong

13:55And here the Congress says, they're up there, they're going to have a train wreck. That's to distract you, I think, and they're going to change the tax code. But the whole thing is, what are they going to do to get this budget resolution passed? Well, that's been coming up every year since I've been following politics. That happens every year. It's just more public right now because the Republicans are running the Congress and the media is on the side of the Democrats and they're making this a little bit more dramatic. I can't remember very many times in the four terms I was there that we really had a budget resolution. We never systematically passed thirteen appropriation bills and sent that off. It was always, seems to me, a continuing resolution. Then they would come up after a month or two and then they would have a, they would have another bill and they would have a budget. And then about six months later they'd come up and they'd say, well, we've

14:48run out of funds here. We have to have a supplemental appropriation. That's all going to happen. And they're not going to have a budget on October 1st, but they will have a continuing resolution. The whole posturing is all political to who gets to blame for this problem. And I think that maybe there's a little bit of blame to go all the way around in our administrations and on both sides of the aisle because they all participate in the spending. It's just that they've been wanting to spend for different reasons. Well, we have the budget coming up October 1st, but then shortly thereafter, there's the expectation and the dramatic confrontation about raising the national debt. The national debt is $4.9 plus trillion, and that means it's very close to approaching the $5 trillion mark, and they have to raise the national debt to make it legal.

15:39I don't know why they worry about that. They don't want to look at anything else. Everything else they do is practically illegal, too. But now they're going to be talking about making it make sure this is legal and if it isn't Do you think it was legal to send 50 billion dollars to Mexico? I mean there was nothing legal about that So there will be contingency funds and they're going to take care of all the weight and the burden and the pressure Will be placed on the on the US dollar, but there will be some some resolution of this the deficit will be increased I remember very clearly in the early 1980s I've been a supporter of Ronald Reagan's in 1976 and 1980. I was hopeful, you know, that something would happen. The first vote that we had in early 1981 came from Reagan and the Republican and the Democrats got together and said we have to raise the national debt.

16:31Ronald Reagan sent his congressional liaison over and he says, I know you guys. I know what we ran on and we know what we're supposed to do and we have to balance the budget. the National Debt by $50 Billion Before I left in 1984, just four years later, they had come in and Reagan asked for, and it was passed, to raise the national debt by $500 billion at one time.

17:17And so the process goes on. The debate is the same. Economic law is going to bring this to an end, not the politicians in Washington. No matter how determined they seem and what they have preached and have told everybody, it's not going to happen that way. November 15th is probably an important day to look at because there's a record amount of interest due that day. Interest has to be paid. That's not rolling over the debt. They're going to have to raise a lot of money. They need $22 And that problem is going to compound as time goes on, because we have had a very astute politician here from Texas that helped Clinton out for a while on the budgetary matter, and that was Senator Benson, we became Secretary of Treasury, he took all the long-term debt, a bunch of it, changed it to short-term debt, and then drove interest rates down, and it was miraculous, it cut off, you know, 50, 60, 70 billion dollars of interest payments.

18:19I mean, insolvent savings and loans, what's going to happen when the interest rates go up? You have a $5 trillion debt, interest rates go up 1%, $50 billion. And, you know, according to our understanding of economics, long term, at least, we can expect higher interest rates. If the world gets nervous about the dollar and they will reject the dollar, how are we going to finance this deficit? How are we going to sell the bonds? interest rates have to go up. You don't have to have high interest rates because you have a booming economy and everybody needs a lot of money to build new businesses and economic growth reasons. That's one reason why interest rates may go up, the demand for demand for that type of loans. But if you if you have lost confidence in the dollar and nobody will buy the treasury bills, you're going to have interest rates go up and that's going to be uncontrollable and believe me they have not, they do not have that calculated in this miraculous plan

19:14to balance the budget in seven years. Isn't it amazing? Seven years. The only budget counts is one year, but they have this miraculous plan. You know, in the old days, you know, in the old days of Graham Rudman, they used to say they would have four-year plans, even though there were two Graham Rudmans, four-year plans. They at least were a little bit more optimistic than the communists. The communists always had five-year plans. But we had four-year plans to balance the budget, even though one year is the only one that counts. But the four-year plan has now given way to the seven-year plan. The seven-year plan is miraculous in that the first year there is a token little bit of cuts in the proposed increases. The spending's going up, the deficit's going up, and the taxes are going up. Everything's going up, but there's this big, big story about these radical cuts going on.

20:04The second year, nothing. All the cuts, all the real cuts are in the sixth and seventh year. And then they can get on television and then they can brag and say, look, this is the first time in the history of the 20th century that we have voted in a balanced budget program. Nothing could be further from the truth. They don't know what interest rates are going to be. They don't know how bad the recessions will be between now and then and how much the government's going to have to spend. They don't know how much production there's going to be. They won't know the revenues. And there's very little they know. When I refused to sign on and vote for the Reagan budget of 1981, a bit of an embarrassment to them, I guess, because I was the only Republican that didn't, after having supported the President.

20:50All the Republicans had voted against the previous year's budget. It was $38 billion under Carter, and every Republican voted against it. So when Reagan came in, he proposed this budget with $45 billion deficit. And I had gone to school and I had studied hard and I knew a little bit of arithmetic and I knew that 45 was bigger than 38. I really did. And so I went to them. I said, I don't think I can vote for this. And they said, well, this is so much better than if the Democrats were in. I mean, they wanted 50 or 60 and this is, we're saving the nation. And this is the litmus test to be loyal to Ronald Reagan and the revolution. And I don't understand that. I said, I have trouble with that arithmetic. But let me tell you what I think.

21:36I'm not going to vote for it, and I think the deficit is going to be twice that bad. And it turned out that I was way off. It was three times that bad. And I didn't even use the computer. You know, I just used my arithmetic and a little scratch paper. I said it's going to be worse because I think the economy isn't going to be as well, and interest rates will be higher. And that's as close as they can get on the calculations. They are not very good at calculating. But the bubble is growing. There's a very important relationship to the problems in Washington, to money. Now, we talk a lot about taxes and we talk a lot about money. I've been very interested in the monetary issue. Thankful to people like Murray Rothbard and Sandholz and the Mises Institute and the Fee Foundation.

22:21All these groups have helped me to study this over the years. And in spite of my interest in the money issue, I am the first one to admit the money issue is not the total issue. It is not the most important issue. The most important issue is liberty. Freedom and the role of government and the purpose of government. The purpose of government is to be there to preserve our liberties. It's to be very limited and fortunate that we have a pretty good document to follow if we would. The government would be designed for that. But close to that is the money issue because governments have always had a The tendency not to follow the rules. This is human nature, that you might restore sanity to the government and institute limited government, but there's always the temptation that, you know, the power corrupts and the government gets bigger and liberty is extinguished.

23:12And this has been the temptation. One of the purposes of the gold standard and a sound monetary system is to make sure that those individuals who want bigger government can't do it in a very, very sinister, dishonest, immoral fashion. And that is, spend the money, not even collect the revenues directly and then print it. It's not a whole lot more complicated than that. They just create the money out of thin air to subsidize a big government program. If we had an honest government that was following the rules of the gold standard, yes, it would have a restraint on the growth of government. The 19th century is a pretty good example of that. Far from perfect. It was not a perfect gold standard.

23:58Bi-metalism and they had national banks and they had a civil war and a few other little problems like that that caused them to abuse the rules of the gold standard. Gold Standard. But generally it was believed that they should follow the gold standard, even to the point where after the Civil War they went back to a gold standard without a great deal of difficulty. But, you know, throughout the 19th century, no huge deficits and no huge growth in government. That has occurred in this century. And it came together. Those who believed in big government knew they had to undermine the restraints. One restraint was getting in your wallet directly with a tax. So they had to get an income tax. That was the direct method. They also knew that most Americans weren't all that interested in sharing their wealth with the government that they didn't trust all that well.

24:49So at the same time, they, of course, created this government system of monetary debasement and created the Federal Reserve system in order to undermine the gold standard. But the gold standard could very well restrict the size, is the size of government if we had the individuals there that would obey the gold standard. The notion, the principle of inflation is that, of course, it's immoral in a sense because it's counterfeit, but it is a tax too, and I think if we could get more people to think of inflation as a tax, it might be a better way to handle the problem, especially since The tax falls unfairly on a segment of our society, especially the low-middle-income people.

25:42Now, we're in this mess of trying to pay for a government that doesn't work. And nobody's willing to give up. Everybody's afraid. You know, everybody's unhappy. I don't think there are very many who are totally pleased with what's happening. But I've decided about half the people that are unhappy are sick and tired of paying the bills. and the other half are scared to death their checks won't come and so they're they're very concerned about what's happening but the politicians in Washington I think would like to avoid the real debate and really the real debate is the size of government, the role of government, defending liberty, reducing the size of government which means in the in a very practical fashion what What needs to be done is we have to cut spending immediately and in real terms and yet the great debate right now, what has the debate been these last several months, it's mainly been on tax collecting, how to collect taxes less painfully, let's have a flat tax rate

26:43of 17% or 20% and miraculously everything is going to be okay or let's have a sales And now, you know, when I proposed that we do away with the IRS back in the 1970s, this was looked at with, you know, a little bit of curiosity and this weird guy introducing this. Now, I can have to say that I'm very pleased that even our chairman of Ways and Means Committee and others, Lugar and others, have said, let's get rid of the income tax. That means we have popularized the idea and a lot of Americans are responding to that, and they're not really quite leading. I think they're doing a little bit following and trying to put their ear to the wind and find out what the American people might want them to say, but at least it's more popular to talk about getting rid of the income tax.

27:28But what are they saying? Well, let's have a sales tax. You know, what kind of sales tax do you think we might need if we paid for all our bills? It might be 38. I've seen all kinds of estimates. 38, 40 percent sales tax. In a way, it would be okay, though. I think it would sort of be getting rid of the principle of withholding. You know, you walk into the store and you buy that loaf of bread. It used to cost you a dollar and say it's a dollar forty and forty is going to the federal government. People start, really, you know, I don't think I'm getting my money's worth anymore from the federal government. This is a good idea, you know. So I would, I lean toward that. I would go for the sales tax over the income tax because I haven't been much of a friend of the IRS. And I don't like the IRS. I never talk about taxes without continuously emphasizing that learning to tax us less painfully is not the problem. The problem is spending. Cut spending, cut spending, cut spending. Then maybe think about raising a lot less money some other way. If we had 90% of our government removed and probably 8 or 90% we could, collecting the revenues for the rest wouldn't be too difficult.

28:41I'm sort of fascinated with this idea that two important members of Congress, both from Texas, are advocating two diametrically opposed methods of revenue collection, and that is the sales tax versus the income tax, and I'm suspicious at times about how things operate up there, and I think it sort of distracts you from the real issue, and that is cut spending, cut spending, cut spending, but I think it's one important point about what they're doing with taxes and that is that even those who are saying if we go to a sales tax I want to get rid of the IRS I don't want any more IRS but they never bring up one subject and that is the worst of the income tax and I don't call it Social Security tax I call it a regressive income tax which is a great burden to us and it's the worst kind because it's on everybody on the Social Security Tax So they're likely to raise that. The odds of them raising that most regressive income tax is very good.

30:18So whether you have the flat tax or the sales tax, you're always going to have the Social Security tax. So the problem is much greater than just dealing with which way we're going to collect this revenue. It has to do with they have too much revenue and we have to figure out some way to cut down the size of government. My theory is that the reason that it was a total failure in the 1980s, my enthusiasm that lasted a month or two under the Reagan administration, came to an end, and I think I've been proven more correct than the other side, that there wasn't much done. The national debt tripled under Reagan. It was less than a trillion dollars when Reagan came into office. It's five trillion dollars now. Nothing has changed.

31:05I don't believe everybody that is in Washington is deliberately doing this to us. I think many of them go very sincerely thinking that they can tinker on the edges and come up with a compromise and cut back, and I don't think that's true. I think what has happened for even the good conservatives who went with good intentions have made sincere efforts to do this. The reason they have lost and they will continue to lose is they're fighting this on an accounting

32:05The government has the moral authority to initiate this power and force to come with a gun and take from you to give it to somebody else. And I think you have to go and tell them they have no authority to do that. They do not have the right to do it. They don't have the constitutional authority to do it. And besides that, if you want a more practical reason, it's been a fiasco. It absolutely doesn't work, hasn't worked and won't work. 5 trillion dollars in the war on poverty, more poverty than ever, more homeless than ever, education worse than ever. So even from the very practical humanitarian argument, we win. We win all those arguments, yet we're not winning the fight in Washington yet. And I think it's because we concede to them the moral argument at the beginning that they're allowed to do it.

32:54And I think somebody has to get up there and say, you do not have this authority and it must stop. That's why I'm interested in that piece of legislation you could, if that is a good vehicle to say, look, you show me. And I'm sure, like I said, even those who claim they would vote for that piece of legislation, they probably have never even thought about the money issue. So you could go and say, show me where you can justify the Federal Reserve system under the Constitution, and why don't we do more to improve this. Today versus a gold standard. I've mentioned the gold standard restrains government power, it is a check on government spending, it keeps the government from spending more than it has in the monetized debt.

33:40Probably the number one reason, at least close to the top, of why we end up with a paper monetary system is that those who control the money, the control of money, are the most powerful. Money conveys a lot of power to those who control the money. Even when we used metals for currencies, we've always had the stamp of the king on the money. The king always controlled the money. And if he didn't have enough, he debased the metals. And it's just a little more sophisticated today. They just pull a computer switch and create $10 billion, whatever they need. So it's the same thing. It's power. It's power. Those who control it, now it's sophisticated, and those who are behind the scenes controlling it can benefit in many, many ways.

34:27So, I think power by those who delight in political power are greatly motivated. Probably a close second to the desire to hold power and the way to hold power, of course, would be to control the military. But controlling military and control the money just about makes it impossible for individuals who believe in liberty, The Gold Coin Standard is so important compared to a pseudo-gold standard and a gold exchange standard. Another major reason why you have a paper standard is for the purpose of monetizing debt. If they spend the money, they can and will monetize the debt and manipulate the whole monetary system this way.

35:16I believe that there were very knowledgeable people who fought for the Federal Reserve system in 1913 that knew exactly what they were doing. It wasn't too long after that that they were able to use the monetary system to finance the World War I and, of course, the Depression and everything else that came down the road. The Keynesians use the paper monetary system and I give them a little bit of intellectual credit for this or at least intellectual honesty. They honestly believe and been taught in school that the people in the Federal Reserve are a lot smarter than the marketplace and you need smart people managing the money so that we don't have any recessions or depressions.

36:07They were banking crisis in the 19th century and they didn't understand how they came about. So therefore they said, we must make sure we don't have depressions and what not. So therefore they have to have smarter people running the money supply than the marketplace, such as with gold and silver. Others would be very sophisticated in wanting to transfer wealth. And like I mentioned before, there is a transfer of wealth that occurs under the paper monetary system. is the wealthy can get wealthier, the poor get poorer, the middle class get wiped out. And who are the beneficiaries of all this? You know, the corporations, the big banks, governments, the politicians, the bureaucrats, they have direct benefits from this type of system.

36:54One other area I think that, and I think it may have been already discussed at the conference, I think that now we do live in a much more international age. This is not just the Federal Reserve system. We are now talking about the Bank of International Settlements being very much involved. We are now a member of the BIS for the first time, and this occurred just last year. They would like to have one world currency, but I don't think the one world currency is as much threat today as it is the manipulation that goes behind the scenes.

37:59The gold standard to work, I think you have to have a little bit of trust in government. This is why, going back to the gold standard after the Civil War period, there was trust in government. They said, we're not going to spend more money than we take in. We're not going to run up deficits. We're going to withdraw some greenbacks. And they weren't promoting the welfare state. And they weren't in a mood for another war. And the people believed them. And the final conversion date after a three-year transition period was a non-event. That is not likely to happen today. There's too much pressure to spend, too many special interests. Eventually, though, if there is a collapse, we should have something available. I don't think it should be all that complicated. We could, as a guide, go to the Constitution and just look and see what we're supposed to do. And it says something about making only gold and silver legal tender. We might improve on that. I certainly think if we had

38:56Gold and Silver is legal tender. We shouldn't have any fixed exchange rate between gold and silver. We shouldn't have a fixed bimetallic standard that they had in the 19th century, which was a shortcoming. But we could use gold. We could use silver. Silver was the unit of account originally. And this would restrain government. But overall, the most important thing, of course, is to restrain the government as government grows and its power. I am not all that optimistic, you know, like I say, about what is happening in Washington that they're going to come up with a balanced budget and we are moving toward a crisis. But I am optimistic in many other ways. I do believe this country has come a long way into developing a new generation of people who understand what is happening.

39:42I think we've seen the early stages of what's happening with the last Congress. But we have some there that are weak enough or not well informed enough to know exactly what to do to stand up to the resistance of the leadership. It wasn't Clinton who built up Mexico. It wasn't Clinton. The Congress had to be a collaborator, and believe me, there was a major meeting. It occurred at the White House, and the leadership on the Republican side of the House and on the Senate attended it, and they gave the approval of that, and there was some token votes after that to try to criticize it. I don't want to criticize it but the approval is there to continue this and we will continue with that but I don't anticipate that we're going to see that real soon so in the meantime I think that we can anticipate that we will continue with our educational process and have more people available to make these changes and I think there's reason to believe if we face up to a major economic

40:45and the economic crisis, that if we do the right thing, that we don't have to suffer. If we give up, if we don't have enough people to present these views, if we don't have a sound currency and we don't have a concept about the morality of the proper role of government, I think we're going to lose and things are going to get a lot worse. But if we do the right things, even if the bubble bursts and we suffer as the lower 25% of the people suffer, if we all suffer and lose half our wealth or three quarters of our wealth, Clinton has his way. He's going to consume our pension funds and everything else. They're going to be taxed away. We are not building wealth. We're not building strength in our currency. This country is getting poorer. But if we get very much poorer and do the right things, I don't think it would take very long. I think within a short period of time we would be back on our feet again

41:32and doing all the things necessary and building great wealth again. Our problem is we've concentrated too much on the wealth. Our country is so determined for the materialism of the world and forgetting about the standards that are necessary, the type of government we need. They have given up on that. And now a corporation spends more money probably on their lobbying efforts in Washington than they do on their research. And it's probably a short-term wise decision. In the short run, I have one little question for you.

42:36I would suggest that we do one thing to the tax code to help a little bit, to give us a little bit of time. I would remove all taxes on capital gains. I would remove all taxes on interest earns from savings. And I'd usually remove all taxes on dividends. And then I think this would give us another year or two or three. This would be tremendous if we didn't have a tax code. I would suggest that we do one thing to the tax code to help a little bit. And I think this would give us another year or two or three. This would be tremendous to help the economy. And yet I don't think they're likely to do that. That would just create a lot of demagoguing again. And they'll lose the argument. The demagogues will beat up on the semi-demagogues, and the semi-demagogues will lose.

43:23But we lose. We haven't been successful enough, I think, for major reasons. We have been able to present the merits of the free market and show how it creates prosperity, but we really haven't shown how liberty is beneficial in a humanitarian sense. We come up short by looking like we're supporting only the rich, and yet in a free society, in a sound monetary system, in a limited government system, it's really the only humanitarian approach to government. And our country has proven this. We did have great prosperity, we had a huge middle class, we were the leaders of the world and now we're getting poorer. We have a currency that's reaching its last legs and we have not presented this case well.

44:10So not only do we need to know the soundness of the economics, but we also need to be able to present this in a very positive way so that the people understand it and will accept our ideas for a very positive way. Now, there is a famous quote that I like to use from Mises to sort of make this point, since he was such a great leader and the champion of the free market and one that influenced me a whole lot. Mises said, the flowering of a human society depends on two factors, the intellectual power of outstanding men to conceive sound social and economic theories and the ability of these or other men to make these ideologies palatable to the majority.

44:57So we can have sound theories, but if we don't make them acceptable and palatable and understandable and why people should be for them, we can't win this fight. We have to do that. This is in contrast to many of my friends who believe, like I do, about most of these issues, but they come down on the side and say, Ron, you're wasting your time. Don't go into politics, politics is the worst thing to do, it's corruption and it's not the way you bring about change, you only bring about change through economic education. I happen to not accept that notion, I am a political activist even though I recognize the superiority of economic education.

45:43I think that's number one, education and beliefs are important, but can you imagine if our Our founders of this country were as aware of what should have been done and they didn't do it. They said, well, I'm not a political activist. This will live with the king for a while longer and maybe we can persuade them. Well, there was a point where they said, no, we are done trying to persuade and they became political activists. I think that we should become political activists. I do not believe that we should pack our bags and leave the country. I don't think that we should give up. I think this is a good place to fight the battle. I think it can be a lot of fun. I think that coming together with people like this, like you, that we have similar beliefs and convictions, we should not look at it on a negative thing that tomorrow the world's coming to an end or the economy's going to collapse.

46:27If we have problems, take advantage of it to present our views and maybe our views would be more listened to. The fact that now a candidate is talking about the gold standard makes us all more credible because we've been talking about the gold standard for a long time and therefore we We should not be at a point where we say, you know, give up and say everything is going to and because we don't know what will come. We don't know the consequence of our actions and miraculous things can happen. So in that sense, I'm optimistic, optimistic in many ways on what I do, not because of me myself, because I know my shortcomings, But where I am optimistic, where I have become convinced, is that the ideas of liberty, the principles that we know about, that have been part of the American system, I am convinced they are the right ones.

47:16That I am firmly convinced. But I'm also firmly convinced that every one of us has an obligation to do whatever he or she can do to promote these ideas. I think if you know these things are true, believe they are true, and then all you do is accumulate more funds and put them in a Swiss bank account and forget about education and political action, I don't think that's the right way to do it. I would have a personal criticism of that and think that we should reinvest a little bit of our time and energy in trying to preserve the very important concept and the principles of liberty that are so dear to all of us. And I thank you very much.