Presidential Money Mismanagement from FDR to Nixon

0:00All right. My topic for today is on monetary inflation. It's slightly different from what is given as a title. What I want to do is concentrate on how economic fascism came to the United States between the Kennedy and Nixon administrations, and how monetary inflation was instrumental in this development. So, I will be talking about the F word, the word that's not used in American political discourse, but that is very, very applicable. What is economic fascism? It's a very strong term, it's emotionally laden, but we can define it so that it can be scientifically useful, so that it can identify a particular structure of policies.

0:53The best definition of economic fascism was given by the great John T. Flynn, the American journalist and essayist of the old right. In his classic work, which I highly recommend as we go marching, which was published in 1944, Flynn enumerated what he called the essential ingredients of fascism. The first was a spending-borrowing government, which borrowed and spent huge sums on welfare programs. The second ingredient was militarism, not in the sense of defense, but in the sense of a huge spending program, an economic institution.

1:38The third ingredient was imperialism, which was the obvious handmaiden of militarism. and finally, rather, the fourth was a planned economy involving direct government interference with prices, wages, rents and interest rates. Now, Flynn referred to these first four ingredients as the prologue to fascism. Today we would refer to the first three of them, leaving aside the planned economy, we'd refer to the first three as the welfare warfare state. and with the four ingredients together including the planned economy we call that economic fascism. Now what Flynn did was to add two other ingredients he said the fifth one was a totalitarian state and the sixth one was what he called the leadership principle, the Fuhrer principle, the Ducci principle in Italy, simply dictatorship. Right, so far so good, but Flynn made a crucial mistake in And further claiming that economic fascism, that is the first four ingredients, could not last very long without being ruthlessly imposed by a totalitarian dictator.

2:45In other words, what Flynn was saying was that there was no middle ground between full totalitarian fascism and the free market. His argument was that as soon as the public was hit with the bill for the welfare warfare State, they would rise up in a glorious tax rebellion and either abolish it or be crushed by a dictator. Now let me just read you Flynn's words here. What he said was, of course, businessmen and individuals will resist such taxes. The free society knows such a device as a tax strike, only in a totalitarian state can Can these oppressive laws be imposed and enforced?

3:32And even in such a state, there is a limit. But the limit in the free society is swiftly reached. It is for this reason, and there are other reasons as well, that I make the statement that this managed public debt-supported autarky must turn to the totalitarian government or abandon its plans. Now would that that were so, okay, but Flynn was actually wrong about this. He was misled. He was misled by an inadequate definition of economic fascism, for he left out, really, its most important ingredient. And that was monetary inflation. There was no talk at all in his book of inflation, only of deficits and large spending. That is the unrestrained creation of fiat money by government.

4:20Because if a democratic government could finance its deficit spending on domestic welfare and military adventurism around the globe, if it could finance it by creating money, then it could effectively hide the true costs from its citizens for years, during which economic fascism could thrive under mass democracy, that is, without a totalitarian dictator. A second problem with Flynn's definition is that it does not provide the causal mechanism by which the huge government deficits and spending programs, that is the welfare warfare state, transform a free market economy eventually into a planned economy, that is into full fascism. Because deficit spending and massive budgets need not result in the abolition of the market as we see today, they need not do that.

5:11What provides the explanation of that transformation? Well, in fact, it's again monetary inflation. Once the consequences of monetary inflation become visible after four or five years or longer, and we begin to have rapidly rising prices, at that point the government may react by seeking to suppress the symptoms by turning to first voluntary wage and price restraints, and then later by imposing mandatory wage and price controls. But when you get mandatory wage and price controls, which you had in Nazi Germany and fascist Italy, it's tantamount to abolishing the market and instituting central planning. Thus, contrary to Flynn, economic fascism will not necessarily give rise almost immediately to dictatorship or be destroyed by political forces such as a tax strike.

6:05Economic fascism will evolve slowly as monetary inflation and its undesirable consequences compel more thorough going interferences into the price system. Now to illustrate this thesis, I will survey the march toward economic fascism in the US from John F. Kennedy's New Economics to Richard M. Nixon's New Economic Policy in which a wage price freeze was imposed. Let me give you a macro view of the march of economic fascism in the 1960s and early 70s. Let's start with the Eisenhower administration. And I have a much greater respect for Eisenhower after having done this paper.

6:51Eisenhower did reverse a great deal of the New Deal legislation. He actually cut real cuts, not just cuts in the rate of spending. He actually cut the government's budget three times during his administration. Nonetheless, by the end of his administration, 1960, government expenditures had risen from $68 billion to $92 billion. In total, that was about a 35% increase in government spending. The percent change was about 4.4% a year. Now, since there was some inflation, that meant that the government grew in real terms, it became bigger by less than 1% per year. Now that's dismaying, okay, but it's not catastrophic. What happened under Kennedy?

7:36Under Kennedy, government spending during his three years arose from 92 billion to 111 billion, okay, which now was about a 20% total increase and a 7% increase per year. What about Johnson? The government spending exploded under Johnson. It went from a total of $111 billion to $178 billion from $63 to $68. That was a total percent increase of about 60 percent, and a 12 percent increase of about 1.5 percent per year. from 1963 to 1968. That was a total percent increase of about 60% and a 12% increase per year.

8:22Real government grew by about 7.5%, a full 2% above what it grew under Kennedy. Total deficits were $42 billion over those years. So that gave us about an $8.4 billion deficit per year. Now, under the Nixon administration, there was a tremendous explosion in government spending, $178 billion to $269 billion, from $69 to $74. Government spending grew about 51%, growing about 8.5% per year. However, since there was tremendous inflation under Nixon, we had the government growing at only, in real terms, about 1%.

9:08Okay, so in general, from 1960 to 1964, we had an increase in government spending from $92 billion to $269 billion. That is, government spending tripled during those years. So we had that component of fascism, a tremendous increase in government spending programs. We also had total deficits during those years of $115 billion. What about militarism? The other components, militarism and imperialism, second and third components or ingredients of fascism. In 1957, the Soviet Union launched Sputnik 1 and then successfully tested ICBMs in August of 1957.

9:55Suddenly, there were claims that there was a missile gap, that the U.S. had to rearm. Those turned out to be a lie in 1961. Factors I'll talk about a little bit later if I have time. Kennedy's new economists were really instrumental in spreading this lie about a missile gap, especially James Tobin. In any case, defense expenditures under Eisenhower fell. They went from 90s to now, again, at the beginning of his regime, There was a Korean war going on, but they fell from almost $100 billion down to $72 billion. So they had fallen tremendously by about 25% in real terms. The military was actually cut under Eisenhower.

10:40I'm sorry, I cursed him all these years. Well, let's jump to the Vietnam War. Okay, we got into a war. The war didn't really heat up until 1965. There were a lot of lies about the cost of the war before, as we were getting more and more involved in 1964. Johnson and McNamara conspired to keep the costs hidden from the American people. They explicitly conspired. You want to look at a book called Deroliction of Duty, and I can't remember the author's name right now, but he's a major at West Point, An historian is very, very good on these lies. It costs in total, budgetary costs are $140 billion.

11:26In 1968 and 1969, the Vietnam War absorbed about 3.2% each year of the US GNP. That was about nine times the value of the North Vietnamese GNP. Just that 3.2% that was absorbed of the U.S., so we spent nine times the value on the war of the whole product produced in North Vietnam. Now, how was the Vietnam War paid for? It was very interesting. Before we get into that, let me just talk a little bit about the inflation situation, which I haven't referred to yet. This is my own ingredient that I get to Flynn's description of economic fascism.

12:14Under Eisenhower, we did have inflation. The monetary inflation I'm referring to now, the increase in the money supply, was about 3.3% per year. Again, that's a dismaying figure. Under gold standard, the money supply would be decreasing by much less than that and prices would actually be falling. Under Kennedy, it jumped up to 8% per year, the increase in the money supply, as measured if you're interested by M2, which is really all our currency, checking account money and savings accounts. Under Johnson, that figure was 7.6% and under Nixon, 8.3% per year. So over those years, the money supply increased by 8.1%, which is unprecedented in peacetime.

13:01This is very important because what has happened was that if you take the total deficits for all of those years, a great part of those deficits were paid for by printing up new money. So let me give you some figures on that. Under Eisenhower, the total deficits were $18 billion. Now, $1 of those deficits were paid for by an increase in the money supply. The increase in the money supply that did occur under Eisenhower didn't come from the Fed buying up, printing up new money and buying up government bonds. It came because the Fed was reducing the reserve requirements. However, things changed.

13:46Under Kennedy, about 2 billion of the 15 billion dollar deficits were paid for by new money. It's about 14%. By the time we got to Nixon, The Fed printed up over those years about 34 billion new dollars to pay for the deficits of 58 billion. That's about 58 percent. In total, there were $115 billion worth of deficits during this development of fascism in the 60s and 70s. 52 billion were paid for by the Fed buying government securities. That came out to about 45.5 percent. Now, let's look at that with relation to the Vietnam War. The Vietnam War, as I said, the budget costs of the Vietnam War was $140 billion, right? Deficits during those years were $95 billion.

14:34So the Vietnam War was paid for to the tune of about 67 percent, two-thirds of the Vietnam War was not paid for by higher taxes, but by government deficits. And of those deficits, about 50% was paid for by printing up new money, not borrowing from the public. So in total, about 35% of the Vietnam War, a very costly war, was paid for by the printing up of new money. Had Americans gotten the bill much sooner in the form of much higher taxes, Had taxes been raised by the full $140 billion cost, rather than only a third of that, the pipeline would have had to have been paid much earlier.

15:23There would have been much more resistance to the war. So economic fascism is able to fasten itself on a society through monetary inflation. Now, there was a further way in which the government, Johnson and Nixon in particular, hid the costs from the American public. And that was the Bretton Woods system. The American dollar was considered to be as good as gold, so that when Americans printed up new dollars, when the Fed printed up those new dollars, prices in the United States didn't rise that much. We didn't get inflation right away. What happened was, as soon as our products became slightly more costly than foreign products, we began to buy those foreign products. So these dollars flowed out of the United States and they weren't returned, which they could have been, to be converted to gold.

16:14The United States legally was bound to pay out gold to foreign governments and central banks for dollars. But that didn't happen because foreign governments trusted us. They believed the dollar was as good as gold. From 1965, when the Vietnam War began to heat up until 1973, we had total deficits of $50 billion. That is, we sent the foreign governments $50 billion worth of depreciating paper, and they sent us $50 billion worth of goods. So they paid the real cost of the war, remember $140 billion. In real terms, foreigners paid $50 billion, about 40% or so, of the war in real terms. So that further lightened the perceived burden of the war on the American public.

17:05When we were asked later on, of course, now when they send the dollars back and you pay gold, or you have to pay in products, then you see the real burden. But Nixon took care of that by closing the gold window in 1971 and declaring those dollars in convertible, okay? Now, we did begin to get some price inflation. Price inflation was very, very mild from 61 to 65 under President Kennedy. Now, his advisors, the Keynesian New Economists, Paul Samuelson, James Tobin, Arthur Oaken and a few other individuals, Walter Heller in particular, in particular, they were chortling, they were ecstatic that prices really didn't go up.

17:51They had convinced Kennedy to run deficits, to lower the unemployment rate, to move us away from the bad old Eisenhower days, which Kennedy did, and the money supply was increasing, as I said, by about 8%, but yet prices were only going up by 1.3% per year, very, very low rate of inflation. There were two reasons for this, neither of which had to do with the wisdom of the new economists. The first was that our GNP was growing at very, very rapid rates. We were coming out of a recession in 1960. So there's a lot of room for the economy to grow, which meant that a lot of that new money then was spent on these goods and it didn't push up prices. Secondly, the American public saw that prices weren't going up by that much, but they were going up somewhat.

18:39And at the beginning of any inflation what the public tends to do is to hold some of this new money because they believe that prices will go down in the future. So they're going to hold the money until they can spend it at lower prices because it's more beneficial when you buy things at lower prices. So for those two reasons we didn't have much price inflation. All that changed with the relentless inflation going on during the 60s. That began to change in 1966. From 66 to 74 we had about five and a half percent price inflation. Now the administration, Johnson and Nixon, began to get worried. It was in this later period, as I'll show you in a moment, that the U.S. economy took a giant leap towards fascism. Now let me mention that the ideological foundations of fascism were laid in the late 1950s by the Keynesian New Economists.

19:34Liberal Economists, Tobin, Heller, Okin, Samuelson, these names should be named. These were young liberal economists from Eastern establishment universities like Harvard, Yale, MIT, who believed that the Eisenhower administration was a temporary interruption of the permanent New Deal. Anyway, they were there, they were here to restore the New Deal, and they had a lot of influence on Kennedy, as I said, they did influence him to spend tremendous amounts, and not to worry about raising taxes, to spend with deficits, in fact, their first success occurred in 1961 during the Berlin Crisis, when the U.S. mobilized, when the Soviet Union threatened to restrict access to West Berlin, the U.S. mobilized, and Kennedy initially was going to ask for The New Economist worked on him over the weekend and Brow beat him into rescinding that request for a tax increase so that he paid for it simply through deficit spending and they said, look, the economy can still use more stimulation so any spending, even and especially on military defense and so on, is stimulative. So don't worry about it.

20:53Don't worry about raising taxes. Don't raise taxes. And in fact, he didn't. That was their first important victory and the first step towards economic fascism. Now, I don't want to get into too much detail, but in 1958, James Tobin, who was on the CEA, the Council of Economic Advisers for Kennedy, for Kennedy wrote an article called dollars and defense and claimed that the Eisenhower administration was irresponsibly allowing a missile gap to develop and that in fact all the arguments that greater spending on military budgets would bring about deficits and so on were ridiculous because look if the government issued debt as Tobin said it was all in If we had inflation, he said, well, inflation is bad, but there are the worst things, juvenile delinquency, a lack of medical care, the usual list that the liberals will give you.

21:53And he said, in any way, we have the highest and most frivolous, this is 1958, I don't remember living that high off the hog in 1958, but he said we have the highest and most frivolous standard of living ever. And the spending on consumer goods is really pure waste at this point. Much of it is pure waste. So in some sense we could almost buy more military defense without having any, without really losing any product. This is from a tenured, highly compensated Yale professor. Professor. By 1962, Kennedy, one other point I want to make very quickly about the new economists. They also came up with an odd theory of inflation and that was that inflation not only occurred when the Fed increased the money supply and when we had too much spending in the economy, but it also occurred when unions and big business greedily pushed up ... up their wages and prices, because when that happened, you began to have higher costs in the economy and therefore higher prices.

23:03They never asked themselves if people, without any more money, if people had to spend to pay higher prices for certain products, they would have less money for other products. So inflation couldn't occur. Some prices would go up, other prices would go down.

23:26But they needed this explanation of inflation to explain what had happened in the late 1950s. In the late 1950s, we had a higher unemployment rate, we went into a recession in the late 1950s, and we had higher inflation. But that contradicts Keynes. McCain said, you have higher inflation if there's too much spending. If there's too little spending, you have higher unemployment. Now we had both together. They couldn't explain that. So they came up with this crazy, absurd, cost-push inflation explanation. That is that it's greedy businesses and unions pushing up their wages and prices and causing unemployment as well as higher prices.

24:17Now why do I bring that in? Because they came up with a solution to that. They said that the real problem with inflation now and in the foreseeable future will be the cost push variety. So we don't have to worry about the Fed increasing the money supply. In fact, the Fed should increase the money supply and keep interest rates low so businesses could borrow more and produce. What we do have to worry about is cost push. So what we need is an incomes policy, which is a very gentle term for wage and price controls. But they realized that the American public wouldn't swallow wage and price controls, especially after the bad experiences with them during wartime. So they talked about voluntary wage price guideposts. So this, of course, is the final ingredient in economic fascism, right?

25:04This is the takeover of the economy, the interference with specific wage and pricing decisions by the central government. So, the first time that this was tested out was the steel confrontation in 1962 that Kennedy had with the steel industry. These guideposts had called for wage increases of only 3.2%, no more than that, because labor productivity was increasing in the economy by 3.2%, 3.2%, which meant that if wages went up by 3.2%, costs wouldn't go up, because labor was more productive to that extent. And they went on to say that prices in industries where you have an above average increase in productivity, where even more was being produced per laborer, they should lower their prices. That was the guidepost. And in the slow productivity growth industries, they could raise their prices. Remember now, the money supply is raging at at 8% per year.

26:07Of course, prices are going to be going up. But of course, focusing only on cost push inflation, the Keynesian economists claim that no, no, no, prices should be falling in some industries and going up slightly in other industries. What happened? In September 1961, Kennedy, at the urging of Walter Heller and the CEA, sent letters to 12 major steel firms, prodding them to hold the line on prices. The CEA, Council of Economic Advisers, by reading, believe it or not, Popular Mechanics, believe that they knew enough about the steel industry to lecture the steel executives. They told them that with the new technology they were instituting, a description of which they got from Popular Mechanics, that they should be earning seven to nine percent profit during that year without raising their prices and that certainly was sufficient.

27:05Well, the steel industry gave in for the moment, but they did something real neat. The Kennedy administration got involved in negotiations in 1962 between the steel industry and the unions And they put pressure on the unions to take a wage increase that was within their so-called guidelines. What happened? Two weeks after the conclusion of negotiations, U.S. Steel heroically announced a price increase of $6 per ton. Of course, it's greatly embarrassed the Kennedy administration, and their reaction was swift and vicious. Kennedy reportedly declared to his advisors, quote, My father told me that all businessmen were SOBs, well, actually he said sons of bitches, but I never believed it until now.

27:54Kennedy later claimed in an interview he said steelmen. After all, he said, my father was a businessman too. Well, I guess that's so if you can count liquor bootleggers as businessmen. The next day, he gave a demagogic talk to the nation bashing the steel industries. and basically he went on to say there's a serious hour in our nation's history when we are confronted with grave crises in Berlin and Southeast Asia, when we are devoting our energies to economic recovery and stability, when we are asking reservists to leave their homes and families for months on end and servicemen to risk their lives and asking union members to hold down their wage requests at a time when restraint and sacrifice are being asked of every citizen.

28:41The American people will find it hard, as I do, to accept the situation in which a tiny handful of steal executives whose pursuit of private power and profit exceeds their sense of public responsibility can show such utter contempt for the interests of 185 million Americans. A few gigantic corporations have decided to increase prices in utter disregard of their public responsibilities. Responsibilities. Responsibilities to whom? Not to embarrass an inflationist, proto-fascist regime, maybe. Now, it wasn't just words. The Kennedy administration in the next 72 hours followed up with the following actions. They jawboned or pressured a number of the smaller steel companies not to increase prices so as to undercut the steel price increase.

29:30Attorney General Robert Kennedy subpoenaed U.S. Steel and other companies to produce records for grand jury. The FBI began to look into rumors that the Bethlehem Steel president had previously issued a statement against a price increase and then suspiciously changed his mind. Senator Estes Kiefalver agreed to conduct an antitrust investigation of the steel industry and the FTC suddenly decided to open an investigation of the industry's compliance with an agreement not to collude in 1951. Also, McNamara announced that the Defense Department had ordered defense contractors to transfer steel purchases to companies that had not raised prices. Within three days, U.S. Steel and Bethlehem Steel rescinded the announced price increases.

30:18So this was the first small step towards a planned economy. What happened was, and I'll skip skipping ahead here, was that the Vietnam War heated up, okay? In 1964, President Johnson and McNamara deliberately understated the budgetary costs and refused to ask for a tax increase. Johnson wanted to avoid the stigma of imposing a war tax, he used those terms, on the American people before the election of 1964, okay? So the war was to be paid for in great part, as I pointed out before, by deficits and money creation. After he was re-elected, Johnson and McNamara widened the war and deepened the American involvement in it while continuing to lie about its costs.

31:05Johnson now wanted to avoid a tax increase because he was fearful it would interfere with his domestic rate society programs. Now, Johnson described his dilemma a number of years later in the following interesting terms. He said, I knew from the start that I was bound to be crucified either way I moved. If I left the woman I loved, the great society, in order to get involved with that bitch of a war on the other side of the world, then I would lose everything at home. All my programs, all my hopes to feed the hungry and shelter the homeless, all my dreams to provide education and medical care to the browns and the blacks and the lame and the poor.

31:52But if I left that war and let the communists take over South Vietnam, then I would be seen as a coward and my nation would be seen as an appeaser, and we would both find it impossible to accomplish anything for anybody anywhere on the globe. Here we have it, the foul-mouthed, corn-pwned, corrupt, machine politician as frustrated global messiah who would feed the poor and heal the lame with counterfeited money. Johnson, having been caught on this dilemma, prices began to rapidly rise as money creation continued and he, Johnson, also resorted to the same tactic that Kennedy did, okay, that is draw boning, threatening the aluminum and copper industries if they raised prices, but eventually price increases became stratospheric, or at least by that standards then and so the wage price controls went by the wayside, the voluntary guideposts.

32:58Let me get to Nixon. Now, after Nixon took office, a recession occurred in 1969-70. The Fed began to aggressively increase the money supply in 1970. But prices continued to rise in 1970. Unemployment began to rise. In other words, we began to have stagflation raising its ugly head. Even though we were recovering from the recession by 1971, unemployment increased by 1% from about 5% to 6%. Very, very high level of unemployment. At the same time, the rate of inflation was very, very high during this time. Now, the conservative, quote-unquote, Arthur Burns, took over the Fed in 1970 and began clamoring for mandatory wage and price controls.

33:47This was the same Arthur Burns, who in the mid-60s attacked the Keynesian New Economists for their voluntary wage-of-price guideposts. I guess you get a clearer view of things when you sit on high in the seat of power. Now, Burns promised Nixon he would gun the money supply and rapidly reduce unemployment if Nixon would institute controls. With presidential election a little more than a year away, Nixon needed lower inflation and lower unemployment in order to get re-elected. Burns was as good as his word. The money supply exploded by 13.5% per year in 1971. That hadn't happened since World War II, that rate. And also by 13% in 1972, the year of the election.

34:35Now, in return, of course, Nixon then, on August... Do I have two more minutes on this? Because I have a... Oh, good, seven more minutes. How many more minutes? Six, okay. I'll only take five. On August 15th, 1971, we had the real day of infamy in the U.S. This was when full economic fascism came to the U.S. during peacetime, not during a war. FDR had the excuse of the war, of a total war in bringing economic fascism.

35:23The interesting thing is that no one uttered a peep, except for one courageous exception. The business, and especially big business, were all for the price controls, the wage price freeze, because it promised to effectively hold down wage increases. They bought into the Keynesian nonsense about inflation being caused by cost push inflation. Of course, the Keynesian new economists loved these mandatory controls because it vindicated their own position. It vindicated their failed wage price guideposts. They said the only problem with our program was that it was voluntary, but just as a Republican president can get away with going to China, whereas a Democrat never could get away with it, so a Republican president could also get away with imposing mandatory controls, something we would have liked to have done but weren't able to.

36:21Big labor did balk at first because Nixon hadn't put any controls on profits and dividends. But they said they were willing to cooperate with this as long as profits and dividends were brought in. And by the way, free market economists were strangely silent. Milton Friedman mildly criticized the controls as inefficient. And 16 Chicago school economists wrote an open letter against it. Only Murray Rothbard spoke out passionately against the controls, as inefficient and unjust, and fearlessly used the f-word, fascism, which isn't used in polite political discourse. In fact, Murray had predicted the move to Nixonite fascism seven months in advance.

37:09And what I want to end with is just some of the stirring writing on this that Murray did. A full seven months before we had the controls imposed, Murray already saw the tendency towards fascism in the Nixon regime. He said, well, we've had two years of Nixonism, and what we are undergoing is a super great society. In fact, what we are seeing is the greatest single thrust towards socialism since the days of Franklin Roosevelt. It is not Marxian Socialism, to be sure, but neither was FDR's. It is a big business socialism or state corporatism. That was the name for Mussolini's program. But that is cold comfort indeed, right?

37:55And then he goes on to say, not only is it impossible for direct controls to work, now he's forecasting that we're going to have these, their position adds the final link in the forging of a totalitarian economy, of an American Fascism. What is it for totalitarian to outlaw any sort of voluntary exchange, any voluntary sale of a product or hiring of a labor? Then when the controls were actually implemented, Murray reacted with the following. He said, there is only one word for this new economic policy. That was the name that Nixon gave it. A word that is at first glance harsh is harsh and exaggerated, but is in fact precisely appropriate. That word is fascism, a system of permanent price and wage controls administered by a central government bureaucracy, probably headed by some form of tripartite board, including big business, big labor and big government.

38:49This is precisely what fascism is, precisely the economic system of Mussolini's Italy and Hitler's Germany. This is the economy of the corporate state, administered by dictation from the Top, controlled and monopolized by big business and big union interests, with the individual and the consumer the person who suffers. In short, the mass of American public will suffer from this system of corporate statism, from the death of the free-price system, from the invasion of individual rights, from the hampering of growth, efficiency and productivity that the system will entail. Now, Murray did see, like Flynn saw, that After a while, the operation of the system would include a leader, a dictator. And so, I'll close with this. He said, there's also the Caesarism involved in the freeze by presidential edict.

39:37If the president can simply go on TV and unilaterally declare an immediate freeze, then all of our liberties, moral, political and constitutional, are truly gone. If the President can do this, then he is truly another Caesar, another Mussolini, another Hitler. His power is then absolute. Is our Constitution completely forgotten? Are we going to put up passively with a slide into absolute presidential dictatorship? And by what stretch of constitutional finagling can the President freeze local rents? What gives him the power to freeze rents in Peoria? Where is interstate commerce here? Are there to be no restraints on the President's absolute power? I'll close there. Thank you.