Binary Intervention: Government Expenditures and the Business Cycle

0:00Okay, before I get into the topics for this talk, let me grab some loose ends that have come up during the week. And some of this stuff, it's going to be questions that came during my talk. I just want to clarify the answer I gave. And then I also want to jump in on the diminishing marginal utility. Before I start, I just want to explain, did you guys hear yesterday we were all supposed to wear our shirts? I just want to explain that. I think it looks like I'm the oddball, but I think everyone else screwed up. Okay, all right. I have a nice dress shirt and tie underneath this. Okay.

0:47So, one thing I want to just remark on is it's interesting if you noticed, and this certainly wasn't, I don't think, I think that it's sincere, The faculty, when we're each doing the chapter that we've been assigned earlier in the week, we've said things like, and this is one of the best chapters in the book, or this is, in my opinion, this is the most important chapter of the book, and it's funny that I said that about the entrepreneurship and change chapter and some of these other guys were talking about their chapter. The material that Peter Klein does, I hate that kind of stuff, and yet he was really into it and exciting, and so what's clearly happening, of course... Exactly, I told you, reading Hayek's Passing the Stone. Of course what's happening is that Rothbard has great insights and is a fantastic writer on everything in here.

1:33And so whatever your specialty is, the stuff that you care about when you read Rothbard on that, it's just like, wow, this is the clearest exposition I've ever said, gee, I never thought of that. He's doing it decades ago and your stuff that you've never even thought of. What's really embarrassing is stuff that I must have read because I wrote the study guide and I'm reading him this time. I never thought of that and well I must have and I just forgot it okay so anyway I just wanted to point that out another thing people were talking about you know some of this issue of you know I'm not sure it comes out in some of these the questions that we that you guys gave before the talk or before the the conference about you know you say things like I'm not sure I can go along with Rothbard on this or I'm not I'm not comfortable with this or it and I mean in

2:17In a sense, yes, we're trying to propagandize and we're trying to proselytize and get you guys to think like we do, but it's this kind of stuff. I mean, with my own personal evolution on these matters, the first time I read Rothbard, I didn't all of a sudden say, wow, I'm an anarchist and I didn't realize it. But no, I thought he was kind of crazy and like, you know, he's a great economist and just the stuff about taxation. I was like, whoa, this guy is for no taxes. You know, I knew I was low tax, but this is kind of, you know, out there. It's good though if you hear that stuff and then what usually will happen is later on for other reasons your views will change and then you'll kind of recall the theoretical reasons. So like in my personal case, I kind of just thought you needed to have the U.S. military, otherwise we'd get taken over by all these countries.

3:00And it was only through coming to the Mises Institute and hearing talks by Professor Reiko and others to show how it's as with any other area, not merely that the government doesn't do a great job defending you, that no, the reason we were so vulnerable to all these outside attacks is because of government prohibiting private defense services and then what the government does with its own military is go provoke people and make them want to come over here and study for five years and try to figure out how to kill as many Americans as possible. So in any event, like I said, and then once you start to think that, oh, actually the government's not doing a good job, then you're more susceptible to the idea that maybe it's It's possible that you could get by in a society without having a formal government the way we mean that term and then a lot of Rothbard stuff, it flips on, it's on its head and you think stuff that might seem crazy to you when you first read it or really flip it like, oh come on, he's dismissing it with one little reductio ad absurdum but this is a serious topic but then later on if you come back and look at it you're like, wow, that's really good. So let me give you an example of that. I think it's, one of you keeps coming back to this diminishing marginal utility and so that also is something

4:07I remember I didn't like that and I even came here, I don't know if Jeff Herbner will remember it, but when I was a fellow here the first day I used to argue, I used to pick fights with people and I'd come in and say, oh this Guido Holtzman is big, let me go critique him and I would try to go around and pick arguments with people and this diminishing marginal utility was one of them. And the neoclassicals, they don't believe in diminishing marginal utility or rather the neoclassicals who actually know what their theory says don't believe in it anymore because yeah, And if there's no such thing as cardinal utility, and those utility functions that they use, if those are just sort of a trick, then it doesn't really mean anything when you say, oh, this bundle of apples and oranges gives 18 utils, a smart neoclassical will know that that doesn't mean anything, that there's no such thing as 18 utils, all that really

4:58means is they pick that bundle over another bundle that plugged into this utility function only gives 13 utils, that's all we mean by that. and you could double the utility function and double all the numbers or square all the numbers or whatever and as long as those ordinal relationships are the same, it's the same utility function because that's all it really means. And so in that context then, yeah, diminishing marginal utility doesn't mean anything because for a neoclassical, marginal utility is the derivative of the utility function or, you know, how much, if the first apple gives me 10 utils and then with two apples I have 20 utils, or sorry, two apples I have 15 utils and the marginal utility of that second apple is 5 because 15 utils minus 10 and so if we think that those overall total utilities from various bundles is meaningless well then the difference in total utility from adding one more unit is also meaningless so a mainstream economist don't believe in diminishing marginal utility that's why Hicks in the I think it was the 1930s had a pretty big book in terms of its impact where he goes through and says yeah this guy Pareto comes up with new techniques and we now realize we don't have to believe in psychic

6:05Cardinal utility, and then we'll shoot, what do we do about the law of demand, and so then Hicks goes through and says, well, with these indifference curves, if we're not looking at an indifference curve to mean a point, a collection of points that yield the same cardinal utility, but instead are bundles that the person's indifferent between, well, then we can just talk about diminishing marginal rate of substitution on that indifference curve, and then we can try to use that to get the law of demand. Okay, so that's where the mainstream is coming from, but let me just go over something with you. And so I think that's where some of you are having trouble, that it looks like, man, if we're talking about diminishing marginal utility, isn't it kind of forcing us to think in cardinal terms? And it does in a sense. That's the way you picture it, that the first apple gives me 100 ounces or units of oomph, and then the second apple gives me fewer and fewer.

6:54But the reason, remember for Austrian that's not what it means and what I like to do is whenever you get into trouble with talking of utility, remember for praxeology, just about always that should be reducible to something you can say about action. And so, if we say, an apple gives John more utility than an orange, that is the same thing as saying, John would choose an apple over an orange. So if somebody says, you know, some outsider says, I don't know what this word utility means, what do economists mean when you say that first phrase or sentence? You could, as a praxeologist, you could say, okay, all I really mean is that John would pick the one over the other. And then you say, well, what about these preference rankings? You could say, well, it's something like that, that the apple is higher.

7:41and by the way I'm not getting into the parentheses because later on with my examples it gets more complicated I was getting all mixed up and so I just I'm not worrying about whether he has the apple or not you get what I'm saying here okay and so they say all right well what about benefits units of the same good okay so what does it mean when the Austrian says the first unit of water gives John more utility than the second unit and you know that obviously we don't mean that the number of utils is higher for the first unit so what does Well, if you wanted to translate it into something about action, you could say, Well, if you had to choose between those two ends, John would choose the end, at which the first unit was devoted. And then here, if you were putting the ends, you know, so we're not putting the units, but the end, you say, OK, the quench thirst is higher on his value scale than having a clean body.

8:28If you would drink the water instead of bathing with the first unit, and then the second unit would be devoted to taking a bath, then that's what it would mean. And so now the issue is, some of you are raising, Well, what about those cases where you need a certain minimum number of units in order to do the thing? And so isn't there a sense in which just before that threshold is reached, the marginal to that unit is less than the marginal utility of the last one. But no, because there's really no way to translate, you know, if you got the spirit of what I was doing with the last two examples, there's really, it's not clear how you would translate that into this type of scenario. so you might say okay well what do we mean if we're going to say the 20th unit of water gives more utility than the 19th and the idea here is that with 20 units of water and these units are big you could fill a swimming pool and so me you know the person drinks the first one and he bathes with the second one that does all kinds of weird stuff in the intermediate ranges but then if you had 20 he would fill his pool and he really wants to go swimming and but you notice that now because it's not really that you're just doing something with that 20th unit

9:35when you get 20 now you're doing something entirely different with the first the full 20 and so you know this statement is not the same thing is saying John would choose the end of which the first 20 units would be devoted over the end of which the 19th would be and I saw in your values you can say swimming in a pool is much more highly ranked than throwing water balloons at the mailman which is maybe what you would do with just the 19th unit of water you got nothing else to do you fill up water balloons but you know So this is fine, there's nothing contradictory about having this arrangement and this might lead you to have that conclusion, but that's not... it doesn't follow, therefore, the marginal utility you give to the 20th unit of water is higher than the 19th. So I don't know if I answered this, but maybe you can let it fester and then when I'm done we can come in the Q&A

10:24and you want to argue more about this. But that's what I mean, again, just to make sure you understand what I'm saying here, that for Austrians, everything is ultimately about action and so if you're talking, if you're making utility, sentences involving the word utility and you can't even in principle translate that into something that you're saying about a person's action, then that's a warning bell that may be, that it's not really meaningful. Now maybe you can come up with examples where Rothbard does talk about utility and there's no way he could translate and then I'll stay in character. The last loose end is this issue of hoarding, and this one came up during one of my previous talks. So the issue is, okay, yeah, we know if consumers restrict consumption and increase investment, that that lengthens the structure of production, and therefore it makes total sense that now factors are rolling over over in production process for a longer amount of time and things are more physically productive and so yeah you reduce present consumption goods which frees up resources which then are transformed into future consumption goods and so that's not a problem unless you know entrepreneurs don't anticipate it and there's adjustment costs and things but what happens if somebody refrains from consumption spending and then doesn't give it to a bank they don't go themselves out and buy factors they just stick it under their mattress and again even here

11:52So let me just, I think this does lead to exactly what you want, and you'd have to be a little bit more specific about, well, why are people doing that? So let me just give you one example and show why the market would do what you would want it to do in that case. So people, you know, things are uncertain, and just, you know, there's economic malaise, and people really aren't sure about the future. Maybe they don't know what tax policies are going to be coming in the near future, and so people just naturally kind of accumulate some cash balances. And they don't invest it because they're not sure what's coming in the future. And so there, I mean, if you think, okay, well, what would the entrepreneurs, if they correctly diagnosed what was going on, what would happen? So what's happened is the people are spending less on things they normally do. They're going out to eat less, they're watching fewer movies at the theater,

12:38and they're building up their cash balances. And then you say, well, what are they doing for it? Are they all going to go to the Bahamas in three years? And the answer is no. And in fact, the people themselves don't know. I mean, that's, if you're hoarding in this particular scenario, I'm saying, I'm saying if they're building up cash balances because of uncertainty and they just they're really skittish about the future and so then what would the entrepreneurs do well the people who are producers in lines that you know do you think no matter what the people spend their money on they're gonna need more oil or something so the oil companies are still gonna because of you know that the factor prices that have fallen because the consumer goods industries that now see a drop in their demand they're spending less on factor prices and so you know there's workers freed up okay so even though the people the consumers aren't taking that money and going and spending it somewhere I mean

13:24it's doesn't mean now therefore there's unemployment I mean individual relative wages and prices can still adjust so there are people who are getting laid off you know waitresses that are getting let go because not as many people are going out to dinner they got to do something and so their wages rates will fall so they're going to get incorporated into the higher order stages and so my point is just that even in it you know you're trying to rig the examples that the The point of hoarding in this type of scenario is you might have an unexpected expense come up, or people are worried they're going to get laid off, and so on. So what I'm saying is, as long as the entrepreneurs have a general idea of why is it that retail spending has dropped so much, and the banking sector realizes, well, gee, how come we don't have a lot of money? Well, we don't have a lot of money. Because the entrepreneurs have a general idea of why is it that retail spending has dropped

14:11so much and the banking sector realizes, well, gee, how come we don't have more deposits? I don't understand. And people say, oh, it's because consumers are really just fearful about the future relative to two years ago. Then that would set into motion all the things that businesses that, whereas a firm that has a very specialized product, like somebody selling something, a luxury item, they probably You wouldn't expand output thinking, well, yeah, people aren't spending now, but it's because they're all saving them because they want to go out and buy, you know, the latest DVD player for their SUV. That's probably not why they're building up their cash balances. So that type of firm's not going to expand its output. Whereas, like I say, individual firms, what they're producing is a capital good that has a lot of applications, they might expand output because they know that no matter what happens the next three years, So we're going to need more of this stuff, whatever it is, if it's refined gasoline or what have you, okay?

15:06So my recommendation, the general moral there is I think if you are a little bit more specific with these what-if scenarios and try to explain what is causing this stipulated change, then that will help you understand the processes that the market would set in motion. And the last comment on that sort of point is, look, it's, we're trying, you know, and this is good, we're not trying to discourage questions, but, yeah, you guys are smart, and you're going to come up with scenarios where things aren't going to be great, like, what if everyone in society hates some person and they would just as soon see him die? Well, that guy's dead no matter what social system he's in, alright? So, under libertarianism, I think he's got the best chance of survival because we've shown all the mechanisms, whereas in Nazi Germany, There was no way for the person who wasn't as anti-Semitic as the next guy to hire those people because it was against the law, you know, he'd get in trouble himself, whereas at least under libertarianism, the one pariah, if he can find someone who's willing to hire him, if it's going to be a libertarian society, then the other people can't, you know, use force against that other property owner who's letting this guy into his land. So, but again, if everyone in the whole world hates somebody with a passion and wants him dead, he's going to be dead. Or, you know, there's nothing peculiar with land.

16:26Everybody, all the people under libertarianism who own water decide they don't like this guy over here, we're not going to sell him water, well, he's going to die of thirst, and, you know, you say, well, how's, but again, in the grand scheme of things, what's more like, are people going to die from water distribution problems under libertarianism or under any alternative system? I think they're going to be, the best is going to be under libertarianism. So, again, that's a, to do this stuff fairly, you always want to do a comparative analysis, and we're not saying libertarianism is bulletproof and nothing could ever conceivably go wrong with it. We're just saying in our minds, from a rights point of view, yet libertarianism is always superior in terms of its abstract justice and then in terms of pragmatics, I have not come up with an argument or example where I would say, yep, if we had a course of monopoly doing this thing, that would probably be better than if we had competing voluntary firms providing it. Okay, again, I've got two huge topics here.

17:26here, so let me just talk a little, let me, I'm going to focus on the business cycle stuff because that's what I've been doing most of my work on it, obviously, if you guys want to ask questions in the Q&A about the later chapter, we can do that too. So I alluded to earlier in the week that I used to work in a financial firm and there, there was a lot of, you know, good economists there and they did not see any of this housing bubble stuff coming in and again it wasn't because they were blind it was because they had a bad business cycle theory and you know you look at you look at tax policy trade policy all sorts of they mean you know we kid about all these Republicans are terrible and yeah they spent a lot of money but I mean compared to governments around the world even compared to previous episodes in US history what the Bush administration had done wasn't that bad I mean they did cut taxes they didn't cut them in the way

18:23that would have been best for economic efficiency but they cut taxes and they did things like that and they were privatizing things or at least you know moving in the right direction on certain areas and even on monetary policy now this is what's really interesting is you talk to monetarists and they say yeah the Fed you know if you look just at money supply figures and I don't have that that particular figure in front of me to show you but yeah after the dot There was rates of certain monetary aggregates, their yearly growth, or however you want to measure it, were higher than average. You could say that would be a cause for concern. But then the Fed did bring it under control, relative to historical trends. And years had gone by since the irresponsible part. So that's why I say talking to supply-side economists, the guys you'd see on CNBC and things like that, 18 months ago even they were weren't too fearful of the future because they said

19:18look at the feds got stuff under control oh yeah they got a little ahead of themselves a few years ago but we got through that and now everything's fine look at prices are you look at the bond market that's not anticipating inflation beyond you know anything moderate and so what's the problem and so what they're missing there is is the time lag and really you that's that's why it's crucial I was going over before when I was showing you those structural production diagrams that if you're not thinking of it like that if you're thinking you know of course in a simple crude Keynesian model but even in a more sophisticated mainstream model that's got different capital sectors and things like that they don't really have a structure of production in there I mean they there is as some of you know an arrow to brew general equilibrium framework where you have t equals zero to t equals you know infinity and you've got it different for different time periods you've got an array of goods at

20:09They get very general results for that. They don't have a day-to-day, how do I think about the business cycle and think of it in terms of a structure of production that might be ten stages long and how, yeah, if interest rates are too low, there could be malinvestment and that might set into motion a chain of events that three years from now is really going to hit. Okay, so that's why, like I say, they thought people were going to be able to do that. They had gotten through the worst of it. And also the other thing is if you're a monetarist and you think the Fed is pumping too much money into the economy, the reason that's bad is because prices are gonna go up and that causes uncertainty. It's hard for business people to plan because prices are rising and the value of their money and it's uncertain.

20:56So that's really the main sin of high money, excessive money growth for a monetarist is that prices get out of whack and it sort of dilutes the function of prices giving signals to people. But it's not that it sets into motion the business cycle. That's not the way monetarists think of things. And so, as I say, I had this sort of view and then once I finally left the firm and I started looking at stuff with fresh eyes, this graph in particular is what really sort of terrified me and made me lose my complacent view. Okay, so I don't know if you can, so this is coming from an article I wrote for Mises.org.

21:41It's called the worst business cycle, or the worst recession in 25 years, or some title that Jeff Tucker gave it to really make people say, holy cow, I mean look at this article. Let's see, it's, so what this is, this line down here is the real Fed funds rate, and then this line up here is real GDP growth, and so I'm not going to, we're getting short nd the time anyway so I won't belabor the point but the idea here is right let's see this is this has got to be going to the left one and then this is going to the right one okay so it's the real do you mean so you see they know people say well you guys just spin stuff off in your head at this point I was kind of doing this just to be honest you just see do I even believe in the Austrian and Business Cycle Theory.

22:32Because the theory can be true, but maybe there's other things going on. So just to give you a quick example, the 82 recession, Arthur Laffer has an explanation of that. And he says that he thinks it's because of the Reagan tax cuts, ironically, because what they did, and these guys are just idiots, they passed Reagan's big 25% reductions, but they phased it in over time. so they passed them early and then they phased them in and so what happened is if you were you know if you had a business deal going down it was supposed to go down to 81 you might push it back a year because you're going to get a tax to the lower rate in 82 and the story is the Laffer went to Reagan like after everything got passed and they they phased it in because of concerns about the deficit all right that they were saying well no we if we if we give the tax cut too soon then it's gonna we're gonna lose all that

23:22money up front so why don't we phase in the pain to the Treasury so the people I'll go along with it, didn't believe in the Laffer curve, obviously. As the Laffer tells the story, he went to Reagan and said, once it went through, that, he said, well, I don't like this phasing. He said, why? He said, because, he said, well, imagine that your favorite store, you found out that next week, they're going to have a really big sale. Are you going to make a big ticket purchase this week? And he said that, you know, Reagan got it. Just went, oh, how bad is it going to be? So, I mean, that was interesting that Reagan got what he was saying. but anyway the point is you don't need to I don't think it's correct to try to look at every recession in US history and say how did the Fed cause that necessarily some stuff can be tax policy or in the 90s with you know Bush's

24:04seniors tax raise you might say that could it but anyway the point is here no I mean it does look like what you would expect that the two move inversely so that when the when the Fed cuts rates by pumping money in the economy typically Real GDP Grows, and vice versa, and so that kind of fits the general story, but lots of schools of thought might agree with that, but yeah, it's stimulated, and then when you restrict it, it contracts. But like I said, what really worried me here is the real federal funds right here was the lowest it had been since the late 1970s. and so if you believed in Austrian business cycle theory you know this was certainly something that made you sit up and take notice that wow that the Fed you know in the mid 2000s there early 2000s it said interest rates very low and what I'm doing there by real Fed funds rate is adjusting for price inflation to try to get a sense of you know here nominal interest rates that the

25:01Fed was setting for short-term loans were higher than they were later on but inflation price inflation was really high and so you want to say well how and how much were you getting back on your loans. Okay, so again, here, you know, when I saw this, this was before the credit crunch hit and all that stuff. And so this looked like we had sown the seeds and I admit to you, I wasn't sure, I said, but gee, if the Austrian business cycle theory means anything, then it looks like there's really serious trouble coming and that's not what a lot of people were saying. And then obviously, that is what happened. This is what happened. Like, shortly after I constructed this thing, then I saw that there was the, you know, the credit crisis hit and so on. And incidentally, if some of you try to bust me and come and go look this thing up and say, wait a minute, your article came out after everyone knew there was, you know, stuff going on.

25:49I knew it before, and then I waited until the article came out, okay? So there was a lag. So anyway, like I say, this really did, in a sense, give me... I saw some of this, a lot of stuff coming before a lot of other sharp economists did precisely because I had heard of the Austrian Business Cycle Theory. Let me see, let me talk about objections to the Austrian Business Cycle Theory. And then I'll, yes, I'll go over this and then I'll, we can open it up for more spontaneous Question and Answer. I think there's a lot of work to be done in taking the canonical Austrian business cycle theory and updating it and putting it into dealing with modern institutions and things that have changed and it's the biggest single objection and I'm sure in the Q&A Dr. Block is going to jump into on this because he's written a lot in response. The single biggest objection that mainstream economists will give is the rational expectations objection. So there is some

26:57Fairness in that criticism, if you read earlier expositions, things by Mises and Hayek, they do make it sound like the entrepreneurs sometimes just mechanically respond and when the government lowers interest rates, entrepreneurs think that there's a higher supply of saving and so they go out and invest and it is true that you might say, well, they could have been fooled the first three times but why do the entrepreneurs keep falling for the trick? Okay, so that's what the objection is. There's two main responses. So, one that Walter Block has done, and maybe he has other responses too, but one that I know he has mentioned, is that there's a, it's not, it's not merely, I'm trying to figure out a way to describe it, you, even if everyone knows it's happening, you can't stop it, okay, so the way I would tell my students is, look, if the government printed up a trillion dollars in cash, and put it out in some swamp area, you know, there's, there's snakes and things, and there's all kinds of deadly berries around it, so you gotta be careful.

27:57for what you eat and it's, you know, it's really dangerous and there's quicksand and everything. It would be better for society in a sense if we all could just agree, okay, let's nobody go out and try to get that trillion dollars of cash sitting there, okay? If we just ignore it, everything will go on. It'll be as if it doesn't exist. But yet, you know, that's kind of irresistible. And so people are going to go out there and a hundred people are going to die from, you know, getting bitten by snakes and things like that. and then the few that do get through and come back are going to then have all this money and spend it and that's not going to be a social improvement because it's not gold, it's just, you know, pieces of green paper sitting out there and they're going to raise prices and cause hyperinflation and all that stuff, okay? So you can see the sense in which if we could all just agree, let's ignore that free money that the government printed up and sitting there,

28:40we'd all be better off, but we just can't, all right? And it's certainly, if the government did do that and print up tons of money and then cause all these problems and we had to send out rescue teams to get people out of the bog and so forth that were trying to get the money and an economist said well you know the government should stop doing that it would be silly for someone to say well if people had rational expectations they would realize that that's just gonna you know be a zero-sum game and a negative-sum game and so you guys are crazy that you would say expectations have nothing to do with it how can people ignore that's the incentives it's a prisoner's dilemma type situation so that's that's one response that in a sense when the government enters the credit markets with fiduciary Media, then you've got the bank over here and they've got backed notes, backed by gold or whatever and say, here, we'll lend you this at 5% and the government's saying, okay,

29:29well, we'll give you an identical piece of paper at 4% and how are the entrepreneurs going to, you know, it would have to be like a code of honor among all the central, all the banks that are in the Federal Reserve system to say, no, we're not taking any government funding and so I mean, even if they wanted to, I'm not even sure that they would be able And then clearly, the average person running a major bank doesn't care about that kind of stuff, they're just going to say, well, hey, I'm going to take it because that's the way the system is, I'll vote for Ron Paul, but as it is, the system's like this, I'm taking the money. Okay, so that's one answer. And then the other, even if you want to try to deal with it on its own terms, I don't like it when a mainstream economist makes it sound like all the people would have to do is just build in expectations and say,

30:25Yeah, so all people have to do is they look at the money supply figures and then they say, Okay, well what is the real interest, you know, the correct market interest rate and then what is the messed up distorted interest rate and then you just try to weed those effects out that that's sort of overlooking the whole role of prices coordinating economic behavior all right that if you think people could just automatically net out the effects of government distortions well then that kind of makes it sound they wouldn't have needed the original market prices in the first place because they kind of can figure those out just looking at the fundamentals all right but that that's not true obviously market prices really do help coordinate activity and so if with the government messes with those prices, you can't just adjust the prices to un-mess it up, okay? And I think entrepreneurs do try to adjust for it, like people aren't completely complacent and they do,

31:17you know, there are Fed watching people and they write newspaper columns and things or newsletters for their clients. And it is true that like a lot of what, if you've been following this closely in the U.S. this last year, A lot of what the Fed has been trying to do hasn't really taken. I mean, the Fed has engaged in unprecedented activities, things that they haven't done since the 30s or even now with Bernanke talking up the dollar and things like that. I mean, they're doing stuff that they normally don't do and it's just allowing the economy to limp by. That might give a boost in stock prices for a couple days and then another bank's report comes out and then the stock market tanks again. I mean, what trick do we need to pull out now? So my point is that the market is discounting a lot of what the Fed has done whereas if the Fed had done these types of things back in 1953 maybe there would have been a much

32:07bigger impact because the market wouldn't have been as savvy and they just wouldn't have seen what the Fed was capable of and realized this as much. So it's sort of like an arms race I think that where the Fed keeps doing more and more interventions and the market keeps trying to sidestep it and it doesn't always quite work. and keep pushing the envelope until it gets the outcome that it wants, alright, so that's what I would say there and I, for those of you afterwards who want to talk about it, I mean I have a model that I wrote up that's being, you know, the first journal I said I didn't like it, but where you do a purely rational expectations model and I can show you, I can generate business cycles and things when the government messes up with the, messes with the interest rate.