How I See the World Today: Question and Answer Period

0:00You know, Jimmy, you mentioned what happened in the 20s and the 30s, and of course there was a horrific world war that was also part of this process. The American neoconservatives for a long time have targeted China, they've been like a hate China campaign, they want at least a new Cold War, all the protectionism, currency business and so forth. What do you see happening in those sorts of political developments? Well, unfortunately, it's right. As you all know, there are many people who would love I'd love to bomb somebody, anybody, Iran, China, let's pick somebody, and let's have another war. I am not particularly keen on any wars. I know that nobody's ever won a war, even the people who think they've won wars. And wars are massively destructive of capital and progress and human beings, so they're not a good scene.

0:49Unfortunately, wars have been going around for at least, as long as we know, thousands and thousands of years. For people who will tell you, I have not done the homework, but people will tell you that whenever you've had a shortage of raw materials in the world, it has led to war. And as Gary mentioned before, in my view, we're in a period where shortages of raw materials or commodities are becoming more and more acute. And if those historians are right, then, unfortunately, we will have another war. It makes logical sense that shortages lead to war. And what we do know, even if whether that's right or wrong, we do know that throughout history when you've had a dominant power, especially a stagnant or declining dominant power and a rising power, they've always clashed.

1:41So unfortunately, for whatever reason, I suspect we will have more wars. I just hope that a hundred years from now, the trend is not that way. I see no reason for us to go to war with China, but the guys in Washington think differently from me, as you well know. For what it's worth, China does not have a history of being a terribly aggressive against its neighbors. They really have rarely, if ever, gone to war with their neighbors. They have slaughtered themselves many times. They've had internal silver wars, but they've never really gone to war a lot with other people. In Europe, as you know, European history is essentially just a story of one war after another, where they were fighting each other.

2:33I don't see a reason for a war with China, but they want to bomb somebody. Speaking of things they're not going to be taking your advice about in Washington, do we face a QE2 after the November elections? Well, as I said before, all Mr. Bernanke knows how to do is to print money. That's all the rest of them seem to know is to print money. It's not good for the world to base in your currency. Many countries in history have tried to revive their economy by debasing the currency. It has never worked in the long term. It has never worked in the medium term. Sometimes it works in the short term, but that's all they know. Mr. Bernanke, as I said before, does not understand economics or currencies or anything else.

3:21It's staggering how little he knows. In fact, as you all know, he came out of Princeton, Krugman came out of Princeton. Thank God I didn't go to Princeton. Can you imagine? I went to Yale, which was bad, and Oxford, which was bad enough. Some of the stuff they tried to teach me. Fortunately, it didn't work in my case. No, that's what they're going to do. They're going to print more money. And I would urge you all to learn about putting your money into real assets or in other currencies besides the U.S. dollar. U.S. dollar will not go down dramatically every day, every year or not. I mean, there'll be big rallies in the dollar. But please do learn about protecting yourself because the way to protect yourself throughout history has been either in sound currencies or real assets.

4:08You mentioned one before. There are lots of others. There was a young man who said to you today, should I buy silver? And you said, you're not selling your silver, but you'd advise me to buy rice. Well, I said to the, yeah, I would not buy... By the way, I own some gold, I own some silver, unless you think I'm just talking, that's gold. You want to examine it to confirm? I have some silver in my pocket, you never know when you need a little gold or a little silver. Special, especially when you go back to your fiftieth high school reunion. So I own them both and I've owned them a long time and I buy them periodically. I wouldn't buy gold or silver today, they've been going straight up like rockets.

4:54But if and when they have a correction I would buy more. I told him I'm not selling my silver by any stretch of the imagination, I think you'll will make more money in the foreseeable future in things like rice which are very depressed or even, I mean, even things like sugar, you know, they're serving coffee later, get yourself some sugar and take it home. It's free. Thank you, Lew. I'm taking this home to my daughters. It's part of their next fortune. Any raw material, you will probably do much better in the next 10 or 15 years than you will in most assets, certainly in paper money. You famously said that the Maseratis of the stockbrokers were going to be moving into the hands of the farmers.

5:42So would you also buy farmland? Well I think that farmland is probably one of the best investments a person can make in the next, well in 2010 or in the foreseeable future. I don't know why you picked all of them, but this is a great place to be because this university is going to... All A&M universities are going to do well. When I speak at universities, I tell these kids, I say, you're nuts to get an MBA. You should be getting an A&M degree because the world is shifting away from financial types to people who produce real goods, whether it's farmers or miners or whatever. So yes, I think that if you know how to buy good farmland, you should buy good farmland. It's a much better investment than most other things.

6:30Should we all move to Singapore? Well, Paige and I did that because we got these little girls. We wanted to be well-educated. As many of you know, American education is not terribly good these days. Of course, kids always come out on top in most international testing. In fact, there was an article, front page of the New York Times, the day we got here, a week or so ago, it was talking about how many American schools are starting to teach Singapore math. And I will tell you, my little girl is in the first grade and I help her with her math, and I'm already having trouble. God knows what's going to happen when she's in the fourth or fifth grade. I have to call some of you up and say, what do we do here?

7:16This is serious stuff. We move there because of the education and because of the, for many reasons, and we want them to grow up speaking Mandarin. Whether you move is a very intensely personal decision, which everybody has to make. We are American citizens. We do pay American taxes. We vote in America. So we haven't totally immigrated. Our forebears left us somewhere and came to America. It must have been terribly wrenching, but when they did it, they were obviously very brave and ambitious people. So I'm not suggesting that anybody leave or immigrate, but if you are looking for a different life, there are fabulous opportunities in Asia these days, As I said, Asia is where the assets are.

8:08Throughout history, you have never heard people say, look at all those debtors over there. Why don't we immigrate to where all those debtors are? Throughout history, people have said, look at all that money. Look at all those assets. And that's where they go. So I will let you all decide that's your question yourself. We have partially voted with our feet. We're rearing our children in Asia, but we're still Americans, et cetera. You know, Pat, if you can start passing the microphones, maybe we'll have some questions from the audience, if Jim would be good enough to take them. Hello, Jim. I want to thank you for coming and congratulate you on your prize. You well deserve it.

8:56You know, I'm 18 and my dad has a trust fund that's set up for me that is managed by Goldman and I don't plan on receiving a dime of it, that's how I'm planning my life. At the same time I don't want all this money that he's saved up for me to be at least significantly diminished in the near future like it was when it was in the real estate market. Goldman Sachs has decided they're going to put 50% of it in government bonds for the next two and a half years and I've been trying to tell him he's crazy that if he would have listened to me three months ago I would have an extra $150 for each gold ounce I told him to buy. My question to you is, how do you think I should approach this in terms of trying to convince him that this is crazy? Can you break the trust when you're 21?

9:45There's a few terms. I have to be 21 and I have to have a college degree, so we're looking three to four years out before I can do that. Well if you have to have a college degree, then yes, you are looking at three or four years. If I were you I would take an accelerated course and try to get out of there. I mean it's hard, it's hard, most people on Wall Street, Gary knows this, many of you know this, you know, conventional wisdom is all they know. And nobody ever gets fired for losing all of your money with conventional wisdom. They get fired if they do something unusual and lose money.

10:34And if they do something unusual and it's right, they don't get many promotions, they just move along. So the best thing that... I don't know how you're going to convince them. I could sit down with them, too, or, you know, Joe DiMaggio or Mother Teresa could sit down with them. They're not going to listen because they've got their own their own way I would just urge you to take some accelerated courses and get your degree and get out of there. Thank you Jim yes, speak speak Don Murray from the Thomasville, Alabama I don't want to start a land boom here in Alabama, but what would you think about buying timberland cropland and the fertile Crestland of Alabama in the black belt Well, Don, as I said before, buying agricultural land, in my view, is one of the best things a person can do, and that includes timberland, there's no question about that.

11:29Look, in the future, in the next 20 or 30 years, states like Alabama are going to be a whole lot better off. If you want to buy yourself a lake house, don't buy it in Massachusetts or New York, you know, don't buy it in the financials. Buy yourself a place in Iowa, I mean those guys are going to be extremely rich in the next 20 or 30 years, now I don't want to go to Iowa either, I assure you, but he's asking about buying land, I'm partial to Alabama, but those of you like Alabama, find yourself some good land and buy it, or if you are looking for something else, look at Asia or South South America, Africa, there are vast amounts of potentially very productive land in the world, whether it's for trees or cotton or anything else.

12:23So yes, Don, no, it's a good thing. Don probably has a lot of land he'll sell you. Kaitlin? Kaitlin Long from Connecticut. In your opinion, is the chance that we have an unwieldy dollar collapse, and what's your Your perspective on why China continues to buy overvalued dollars and how long they'll continue to be willing to do that. Thank you and I would sell my house in Connecticut too. Well there is a little question in my mind and we're certainly going to have a total collapse of U.S. dollar at one point or another because the U.S. is now the largest debtor nation. We're not the largest debtor nation in the world, we're the largest debtor nation in the history of the world.

13:11has ever gotten themselves in this kind of bind before, and they're making it worse, not better. I don't know when that potential collapse will come. I wish I were that smart. The problem is that every other paper money in the world, nearly every other paper money in the world, is also suspect and is also being printed. It may be that there's going to come a time when all of us have to put all of our money into silver or rice or something The Pound sterling, which used to be the world's reserve currency and medium of exchange, went down over 90% from top to bottom over a few decades and there were exchange controls and it was a horrible, horrible mess.

13:58I would tell you all those of you who are students of history that in 1918 the richest The world's most powerful country in the world was the United Kingdom. You look at a map and the whole world was red, and they owned everything in 1918. Within one generation, the UK was a total basket case, there were exchange controls. It was horrific. And then when three generations, the UK went bankrupt and had to be bailed out by the IML. I mean, these are simple things, you can look them up. But this is the country which was the richest, most powerful country in the world, and within And three generations were bankrupt being bailed out by the IMF. Again, I don't like saying it, but we're going the same way. And you've always had currency. When I was at Oxford, we were always talking about the currency problem of the pound sterling.

14:49And it came true that there was an eventual total collapse of the pound sterling, and they were bailed out by the IMF. Why does China keep buying? I will tell you, from my perspective, you go in to see these, like I went to the Bank of Japan. If you went to the Japanese, say, 10 years ago and say, why do you keep buying United States government bonds? They keep printing them as fast as they can. And the bureaucrats would say, well, it's policy. You all know how I feel about bureaucracy and bureaucrats, especially in the United of States, these guys said, well, it's policy to buy government bonds, and that's the only reason they had to do it.

15:35I think it's, I know what happened with the Chinese, you know, they started getting all this money 15 years ago or so, and they bought government bonds, because that's what Goldman Sachs told them to do, and everybody else told them to do, and they just kept doing it. The next thing you knew, they had two trillion. They have started changing, started worrying about their government bonds. It just happened so fast and there was so much that accumulated. They're worried about it, I'm worried about it, all of us are worried about it. I suggest to both the Japanese and the Chinese that if I were you, I would not be buying U.S. dollar bonds. The government is printing them as fast as they can. If I were you, I would be putting my money into things like oil or zinc or cotton or rice.

16:21First of all, I think you're going to make a lot of money if you invest in real assets. Second, even if I'm wrong and something happens, you'll have strategic reserves. I mean, if the Straits of Hormuz close or the Straits of Malacca close or something, for whatever reason, hurricanes, earthquakes, war, you'll have a strategic reserve. And if I'm right, you're going to make a lot of money. But I do know that both the Chinese and the Koreans and some of the others are starting to cut back on their purchases of U.S. dollar bonds and U.S. dollars, and I would urge you to think about putting some of your money into rice or something else, not Connecticut real estate, as much as I like Connecticut.

17:10We talked this afternoon, you were the gentleman that told me at Jim Blanchard's seminar at

17:46If you really want to make a lot of money, put your money in lead, not gold. And he reminded me today how wrong I was by buying gold instead of buying lead. But that's not my question. My question to you tonight... Well, I'm delighted you remember. Well, you told me you won today. Sometimes I get it right, you know. I like to be reminded. My question is, you go to many, many audiences. You talk to a lot, a lot of people in a lot, a lot of places. You're in a very special place tonight because you're not only home, but you're a libertarian, and you're with libertarians, and you're with people that probably appreciate you as much or more than anybody you'll speak to in the next ten years.

18:40What advice would you give this audience on what they should do, what they can do, and how they should do it to try to spread the word about the Austrian School of Economics, being a student of Austrian Economics, the Von Mises Institute? How do you spread the word because, you know, we got the truth, but nobody knows anything about it except us? Well, it's a very good question, and if I had the answer, everybody would be a libertarian, wouldn't they?

19:26My advice is for everybody to continue to do what they do best, if it happens to be making money or teaching school, do whatever you do best, and continue to improve your

20:06for the Advisors to the Prime Minister. I said, how did you get it so wrong? He walked across the room and wouldn't talk to me. Now they listen to me, because I'm a little more successful than I was, you know, in those days. So I've just suggested everybody continue to thine own self be true, and people will listen to us more and more as the crude ones of the world are discredited. I wish I had a better answer. I wouldn't buy lead today, by the way. If that's what you're getting at, today I don't think I would buy rice, but I still own lead and I own all the others as well.

20:51Who's got the mic? Saag, you have the mic. Hi, thanks for coming and thanks to Lew Rockwell and the Mises Institute for this event. My question is, if someone was going to learn Mandarin and move to Northeast China, what would be the most efficient way that they could go about doing that? Well, Northeast China is where I would go because that's where they speak the purest Mandarin. It's a little bit like, if you wanted to learn English, I don't think you'd start in Demopolis, Alabama, which is where I learned English. As you can see, I still don't have a good command of the English language. But no, I would go to North, the Dahlia and the cities, the fabulous cities up there, and I would just immerse myself.

21:40There are very few people who speak English up there. It is extremely cheap, extremely cheap to go to school or even live there. And if you could get a job up there, I mean, in Dahlia, for instance, they have one of the major commodities exchanges in China. Go to Dahlia and see if you can get a job in the commodities exchange, sweeping the the floor, if nothing else, anything you can do, just listen and go drink beer with them, do whatever you got to do in order to learn Mandarin. I'm not very good with that. I'll tell you, my little girls who speak perfect Mandarin, in fact they're so good at it, Singapore uses them on TV to encourage people to speak Mandarin, but I'll say, I'll speak to my little girls, I'll say blah blah, and they say, what'd you say? I said blah blah. They say, what language are you speaking? They say, I'm speaking Mandarin. They say, daddy, please don't speak To leave North America and seek opportunity elsewhere, which countries, in your opinion,

22:59and Have the Greatest Respect for Private Property. That's a brilliant question. I will tell you that Singapore is obviously one of those. If you look at all the studies that people do fairly frequently these days, the people that have the most economic freedom or the most respect for private property, Singapore, Hong Kong, these are countries, they are Asian countries, but where, you know, the Asians Capitalism and entrepreneurship are deeply ingrained in their brains and in their genes and they have been for centuries. Hong Kong and Singapore are the ones who always come out on top in something like that. I cannot really think of another one.

23:46Most of the European countries, as you know, are being very corrupted and corroded by history of what's been going on. I cannot think of one in South America. Switzerland does have a fairly high regard for private property, but, I mean, it's Asia. It's facts are facts. I don't particularly like saying them, because I grew up here like all the rest of you, and I pay taxes here like the rest of you. But it's Asia's where the world is changing. Yes, who's got the mic? USA and Europe are in very tenuous condition, and if they slip further, is China and Asia In general, what's their risk of overcapacity? In other words, how global can this get?

24:31Well, look, America's the largest economy in the world. The EU, as an entity, is even bigger than the US. The Chinese economy is one-tenth the size of the European and American economies combined. China's been doing wonderful things, but look, if it's 10% of our economies, They throw in Japan and it's, I don't know, six percent. It's nothing. India is a third of the science of the Chinese economy. So if India and China boom, so what if the West runs into problems? If America and the West and Europe continue to run into problems, it's going to affect everybody. Now, I had rather be with the creditors in a case like that than the debtors, but everybody will suffer.

25:24In the 1920s and the 30s, America was the rising star on the block. We were the big creditor. The Depression came, partly caused by us with the Smoot-Hawley Act, but who cares what caused it? We had it. And America had a horrible, horrible experience in the Depression. So everybody suffers if the rich people get into trouble. China will too. Don't think I'm so naive that I don't understand that. I would remind you that in the US in the 19th century, we had 15 depressions with a D. We had a horrible civil war. We had very few human rights. We had very little rule of law.

26:10We had massacres in the streets with some regularity. You could buy and sell congressmen. You can still buy and sell congressmen, but in those days they were cheap. You could buy By three or four in those days for the price of one now. But America, as recently as 1907, the US went bankrupt, the whole system went bankrupt. We came out of that and did a brilliant job in the 20th century. That's going to happen to China too. All of those things are going to happen to China or anybody that's rising, whether it's a family or an individual or a company or a country, there are always setbacks. China will have them too. I don't think I don't understand that, and everybody will have troubles in the world you prophesize. Who's got the mic?

26:59You mentioned your interest in education, and as a father of a young child, and I've been studying Montessori theories, also unschooling and homeschooling ideas. I'd be curious to get your thoughts on education. Well, education is extraordinarily important to me. I would still be in the backwoods of Alabama if it hadn't been for education. I got this scholarship to go to Yale. I still can't quite understand how I got it, but I got it and I went off to Yale and then to Oxford and that changed everything. I'm sure I would be a lawyer in Marengo County right now if it hadn't been for that or a doctor or something down there. So I'm very keen on it. We, Paige and I looked around the world, as you can see, we went around the world looking for a good school in the end.

27:49We decided on Asia, if you go to Asian schools, you will be astounded, before I told you I was having trouble with homework, when I was in the first grade, we didn't have homework. My little girl comes home with homework every day and serious tests, she's already learning to learn how to multiply and divide. She's in the first grade. I didn't learn to multiply and divide until I was in the fourth or fifth grade. It is staggering how demanding and rigorous they are in Asia now, which is why they went all the other kids come out on top. If your child can deal with a rigorous and demanding education, the Asian way is certainly a viable one. It's really up to your children. I know enough about children now to know that.

28:36Not every child is built to be in a pressure cooker or lots of demands. Our children today, we're putting them in the most demanding and rigorous schools we can find. You can ask me in 30 years whether I did it right or not. Remember, I've never been a parent before, so I don't quite know how to do it. And the problem is you read all the books. One book says this, the other book says exactly the opposite. So, I don't know, we're going for the rigorous oriental way, but as I say, you can ask me in 30 years. I do, no matter what you do, how you educate your children, in their lifetime, they must know a second language.

29:23They must know at least one second language, because if the U.S. is going the way that that the UK went. You know what happened to the UK. The kids who can speak and understand another language are going to have an edge on the people who do not. The fact that my children speak fluent Mandarin will not make them successful. But if they wind up working in Chinese restaurants, they're going to be the maitre d' instead of the dishwasher. So I would urge, no matter what you do with education, be sure they learn a second or third language in the 21st century. Who else has a mic? Jim, similar question to a couple of others that have been asked at a little deeper level.

30:13How difficult is it to move to Singapore to get a work permit, A, from the US, B, if you're to obtain a work permit, B, could you tell me your thoughts on the implications of giving up one's citizenship to move to Singapore or even Hong Kong for a work and life there, including how protected assets might be there over the next 40 years or so? Well, Singapore is a country of five million people. They are trying to encourage people to move to Singapore. There are many countries which are anti-immigrant, anti, but Singapore has a demographic problem, many countries have demographic problems. They are encouraging people with brains and skills and success to come to Singapore. It's not as easy as it was two or three years ago because a lot of people have started coming. But if you're looking for a, that's one of the few countries in the world which encourages immigrants, 香港, not quite as much because Hong Kong's got all those massive, they're a billion, 300 million Chinese, so they can have pretty much whoever they want as far as an immigrant is concerned.

31:25Singapore does not discriminate against whites or blacks or yellows or Indians or anybody else. They're keen to have, they have a very multiracial and multi-religious society and they want to keep it that way. What was the rest of your question today? Oh, giving up your citizenship. Well, Paige and I are American citizens and our children, too. I'm not here to urge you all to leave America and give up your citizenship.

32:14But I will say to you, and this is anecdotal, because a lot of expats talk about it these days, there is now a seven-month waiting list at the London Embassy. You have to go to an embassy to give up your citizenship. There's a 7-month waiting list to get to the embassy to give up your citizenship in London. In Geneva, there's a 14-month waiting list. I mean, if you called up in Geneva and said, I want to give up my citizenship, and said, you have to go down and do it, they'd say, come in, what is that, February of 2012, before they could even see you, because so many people apparently are doing it, for many reasons. They changed the law recently in theory to make it more expensive to give up your citizenship.

33:05That's backfired on them a little bit, but more and more people are worried apparently about what's going on. It can be done. It's a simple process, just go fill out the form and you have to have another passport. They won't let you give up your American citizenship unless you have another citizenship. But if you do it, then you don't ever have to pay taxes again, anywhere. If you plan it right, and apparently there are a lot of people doing it, but you have to have another passport first. But you should really, if you're thinking about something like that, I mean, I'm not doing it, I'm not a lawyer, I'm not an accountant, I'm not anything, so ask somebody. But I do know that a lot of expats, because you know, Americans are the only people in the world that have to pay taxes wherever they live. If you live If you live in Zimbabwe, you have to pay American taxes, even if you never go to America, don't

34:02earn a penny in America or anything else. You have to pay American taxes. We're one of only three or four countries in the world that require that. If you are French and you live in Australia, you don't have to pay taxes anywhere if you get it right. That's true Nearly every nation, nearly every nationality in the world, it's only the U.S. and two or three others which require you to pay taxes wherever you live. But again, I'm not here to encourage you all to leave America. You can come see us in Singapore if you want to educate your kids in Singapore, but we are Americans and pay taxes and vote here. John? I recommend commodities. Some of the commodities I read about now are called rare earth commodities and that China possesses 97% of those and that they are beginning to put quotas on the export of that and that all of those are essential to the development of technology and so forth.

35:04How do you see that effect in the development in the West and do you see that as a threat? So for those of you who don't know, you should be sure to listen to what John said. There are these things called rare earths, which are basically trace metals, lithium is one for instance. There are 17 or 18 of them, but nearly every electronic device, mobile phones, TVs, weapons, cars require rare earths. China does have 97% of them, at least as far as anybody can determine, and China is booming, and so China is cutting back on the exports of rare earths, which I guess anybody would do if they were booming and they could see that there's limited supply.

35:54America used to have some, America has started trying to figure out, the Pentagon is starting to try to figure out how to reopen or find or develop rare earths, but unfortunately It takes 10 or 15 years to open a mine in America these days, as you all know. So if you can figure out a viable way to invest in rare earths, you will probably make a fortune. I would urge you to be careful because you and I are not the only people who know it and a lot of charlatans are getting into the rare earths business. So be very careful if you do it. But it is a glaring problem that America and Japan, everybody, Germany, everybody is facing in this problem because all of the known, most of the known developed sources of rare earths are in China.

36:40There are rare earths other places, it's just it takes a while and an expense to develop them, but obviously if China does cut back exports, the price is going to go through the roof and then it will be more economic to develop them and you will see them, but then it takes a long time. But if you find some, John, you let us all know, okay? Don't spread it around on TV, you call us first, okay? If you have the mic, speak. I wanted to ask, a lot of us young people, we've all had our unique ways of finding Austrian economics. I was interested in how you found your way to Austrian economics. Well, I didn't really. I went to Yale and I went to Oxford and I heard all this gibberish, which a little bit like one of the kids on the screen before.

37:30She said she couldn't believe what they were saying because it didn't make sense. That's what happened to me. I just figured out in my own mind what I thought should work and was the right thing to do. And then I found out it was called Austrian Economics. I didn't know. I never read, you know, I wasn't smart enough to come down here and learn from Lou. I just sort of, then there it was. You've got to remember, places like Yale and Oxford, they couldn't spell von Mises. They didn't care. It was, it was totally shunned. It's, you cannot imagine what it was like in the 60s when I was studying economics. They just totally shunned it.

38:16I don't even know if anybody remembered, you know, they did give a Nobel Prize and some of these guys were recognized in some circles, but now it's much better. There are places like, you know, what Lew is down here doing and there are other places. People know what Austrian economics is now. In the Ivy League, they shun it and still badmouth it, but when I was in the Ivy League, they never, they didn't know about it, they didn't pay any attention. So there is progress which is being made. And I guess the best way to learn about Austrian economics is to come down here and study with Lew. Oh, that's right. Who's got a mic? I love watching you on TV, everything you say. I find myself at home literally at static, almost screaming when I hear you talk to someone like Maria Bartiromo and let her know what's going on, but I have a question in regards to what it is currently that you might be

39:17reading if there's a book or any book that you would recommend to all of us that you like? Well, let me cut you off if I could. I came to fatherhood late. I told you before what I thought of being a parent, how I shunned it. We read a lot in my house, but we read Children's Books and How to Be a Parent. So I'm afraid you're not really interested in Strange George, I don't think, but we read a whole lot of stuff. I will tell you one thing, you asked about education before, I forget where you are, but I don't know how many of you remember the McGuffey's readers, none of you do because they were out of print, but in America in the late 19th century and early 20th century, All American kids learn to read with something called MacGuffey's Readers.

40:14And so I got a set of MacGuffey's Readers and started teaching my little girl to read with a MacGuffey's Reader. And I will tell you, it is remarkable how good they are, if you ask me. It also gives you a whole, since they were written in the late 19th century, gives you a whole different view of the world because there are no cars, no telephones, no TVs and anything. It's a really, really very rigorous and interesting way to teach children to read, and that's how my first little girl learned to read. She's now reading at the level of third grade, and she's in the first grade, and we're going to teach the other little girl the same way. We now have two sets of McGuffey's readers. They were first published in 1879, and the generations which made America rich and great all grew up reading McGuffey's readers.

41:05Now, I don't know if it's going to work or not, as I said. You can ask me in 30 years, but that's how I'm teaching my children. And these are remarkable stories. They don't teach self-esteem, they teach you discipline and honor and integrity, for the most part, and hard work. In your comments about Brazil, relative to the other larger emerging economies, and particularly in light of your comments about farmland. Well, I'm an advisor to a company which is actually buying farmland in Brazil, buying land in Brazil and rehabilitating it or fixing it up, turning it into farmland. I'm optimistic about Brazil. The only, as you all know, maybe you don't, but the Brazilians say, the Brazilians say Brazil is the next great country in the world. Always has been and always will be.

42:02That's what they say. They also say, it's one of the Brazilians saying, you know, Brazil is God's given country. This is God's country. The only problem is he then sent Brazilians and messed it up. That's what the Brazilians said. Brazil has got vast natural resources, a huge population, a huge frontier area. And throughout history, when commodities have have done well. Brazil has done well. The only, well, historically, Brazil has done extremely well when there's a, when their commodity bull market, and then when the commodity bull market has ended, they lapse back into military coups and inflation and all the rest of it. They say it's different this time, that they're going to come out of, when this commodity bull market ends, Brazil has learned its lessons and will continue to do good things.

42:59I would remind you all that perhaps the most dangerous words in the investment language are, it's different this time, because it ain't ever different. The world doesn't change that much. But I'm optimistic about Brazil. I see great possibilities. It's a wonderfully fun place, lots of stuff to see and do. It's a terrific place and it's got the wind at its back, at least for the next decade or two. It's not working, is it? Is it working? Okay. You've got to put it to your mouth. Why did you avoid Brazil on your trip? Because I look at your route and you totally avoided going through Brazil. Well, we went into Brazil down here and here and we went to Iguazu Falls. The problem, not the problem, we either had to go this way or this way and this way is more interesting to see and there are roads. A lot of this The US doesn't have roads, but we did go into Brazil, as you can see, to some extent, twice,

44:07but then we wanted to go up the west coast because more sites, more roads, et cetera. Eastern Brazil was never, eastern South America, coastal anyway, was never developed very well. It's becoming, but if you're going to do it, you should do the west coast first. Maybe the next time Paige and I go, you can come with us and we'll go up the East Coast of Brazil. No, it's a wonderful, yeah, I couldn't disagree at all. I keep saying to my little girls, we're teaching them Spanish and Mandarin that they should learn Portuguese instead, but you can't tell seven-year-olds much these days. Who's got a mic? I'm Scott. I'm from Lisbon, Portugal.

44:52Ah, he speaks Portuguese. Ah, he speaks Portuguese! But in 2004 I heard you a discussion with Mark Faber, and I forget the other guy's name, and you were very critical of the European Union, with both of them, and I'm wondering what do you think of it now, especially for the southern European countries like Portugal, Spain and Italy, and what is their outlook for the next three, four years? Is it... well, let me know. Let me know. Well, as you know, the European Union, many of those countries are essentially bankrupt now. At the time, Mark and I, I forget his name too, the other guy. My view of the European Union is a wonderful thing, especially if they really do make it a free market, I mean an inner market, a free trade zone, if they continue to do that, a free movement of capital and people and goods, that would be good for the world.

45:55Now the problem of course is then you have a trade barrier around Europe, which is not good, but any free trade zone the world can get is better than none. Unfortunately, I'm afraid that the euro, which is the currency, will not survive in 15 or 20, 10 or 15. I own the euro right now, but I'm afraid it's become a political currency rather than an economic currency, and I'm afraid it will disintegrate sometime in the next 15 years, because politicians will blame their problems on the euro. It's already happening in some countries. The Greeks, for instance, some Portuguese are blaming The World Needs Something to Compete with the U.S. Dollar The World Desperately Needs Something to Compete with the U.S. Dollar It's a terribly flawed currency, as I've said before.

46:50The Euro on paper would be perfect, huge population, huge economy, not a big debtor entity like the U.S. is. They're internal debts, but not, I mean, internal debtor nations. I'm afraid it won't survive, and if the Euro does disintegrate in 10 or 15 years, it will probably be at the same time that the U.S. is having horrendous currency problems, or it may be caused by the U.S.'s problems. May I suggest you learn about silver? May I urge you to learn about rice and real goods, because the world's getting itself into a very I was in a very precarious situation and I don't remember a time in the world where there was no currency that we could all look to, even if it was gold, once upon a time there was a Spanish currency, once upon a time there was a Dutch currency, once upon a time there was a UK currency.

47:46Now if you look around for a currency, I anyway cannot find a currency that I would want to own except the renminbi, the Chinese renminbi, but you can't just buy and sell the renminbi. It's not legally. You can buy it legally, but you can't just pick up the phone and say, buy me some euros or buy me some renminbi because you cannot do it. So the world's in a serious, serious situation. What's the most user-friendly way that you can recommend for an ordinary person to invest in commodities right now? And if that's through indexes or ETFs, are there dangers of not owning physical goods somewhat like the problem with gold ETFs right now? Well, I'm a simple person too.

48:32I grew up in Demopolis, Alabama, and I grew up in a very small town, and I've tried to learn a little bit about how the world works. You can learn about the world as well. Physical commodities are very good in many ways, but you do have to worry about storing them, transporting, et cetera. Futures, if you really know commodities, futures are probably the best way because you can get enormous leverage and you don't have to worry too much about default because the exchanges ETS are another way you could do it.

49:27For most people, you should invest in an index rather than specific commodities unless you know what you're doing. Many studies have demonstrated repeatedly that investing in indexes is better than active management 70 or 80 percent of the time, year after year after year. It's a bad comment on the investing community, but it happens to be true. So you can pick out indexes. Another way is to invest in commodity companies. I mean, if you know a company which is going to discover natural gas in Berlin, I would I would urge you to buy all you can, and then you call me, okay? But the problem is there are 500, who knows how many, hundreds of natural gas companies in the world. I would remind you that Enron was a natural gas company.

50:16Well, the price of natural gas had tripled, but Enron went to zero, because for a variety of reasons. So if you invest in the stocks, you have to be very good at them. Studies have shown you would be 300% better off investing in commodities themselves rather than commodity stocks. You could also invest in countries. Canada is a natural resource-based economy. It will do better than the US, whether you're in the retail business, the restaurant business, the currency or anything else, you'll do better there than in the US. You'll do better in Australia than in, say, Belgium. That's another way to do it. Congratulations on the award.

51:17I have a question based on what I've read in the last few weeks, that the Chinese government is encouraging the Chinese people to buy silver and buy gold because ultimately their strategy is to back the renminbi or the yuan with gold and silver. Now is this a long-term strategy viewing that the dollar and the euro will crash and that this will turn out to be the next reserve currency in the latter part of the 21st century? Well the only currency I can see on the horizon which could replace the dollar, given my view The most important part of what you said, not the most important, but another, yes, the Chinese are.

52:21The Chinese government now is encouraging the Chinese to buy gold and silver for the first time in several decades. There are active campaigns from the government, supported by the government, to encourage Chinese citizens to buy gold and silver. It's going to be a fabulous growth market. If you know a way to sell gold or silver to the Chinese, you're going to be extremely successful. They'll change the name to whatever you want it, if you'll make so much money, and it's happening. It's another reason that gold and silver are going up. The Chinese produce a lot of gold, but now they want their citizens to buy it, for whatever reason.

53:07You say it's because they're going to back the renminbi with gold. Maybe. That's it. How are you? I was thinking that Mr. Bernanke is not a great Federal Reserve Chairman, but he's probably an even worse helicopter pilot. So that being the case, what are the specific mechanisms by which the new money that's going to be created is going to get it actually into the economy. Well, Mr. Bernanke is going to do the only thing he knows to do, and that's to buy government bonds. He's going to monetize the government debt, and you and I and the rest of us are going to pay the price.

53:56By the way, speaking of Mr. Bernanke, some of you know that I would have abolished the Federal Reserve if I had anything to do with it. This is something I've written about. I wrote about it in my first book, which was published in 1994. But I don't think we have to worry too much, because as you know, the first two central banks in America disappeared. And this was going to disappear too, because given Alan Greenspan and Mr. Bernanke, they're destroying it from within. Now, it's not good for any Many of us, it's not good for the world that the U.S. Central Bank is going to fail. Three years ago, the U.S. Central Bank had assets of about $800 billion and they were all in government bonds.

54:49Now it's got well over $2 trillion and it's all in garbage. We don't know what the garbage is because they won't have an audit. They won't tell us what it is, as you know, but no, it's going to self-destruct. I would also point out to you, I talked before that we're in a period of great change. One of the great changes that will happen is, for the past 30 or 40 years, central banks and central bankers have been considered sort of gods, like they knew, but remember, these guys were just bureaucrats who couldn't get a real job, and that's why they were working for the government. But somehow, in the press, they've become these all knowledgeable people. Ben Bernanke was some wimpy Ivy League professor eight years ago and now all of a sudden people think he knows everything.

55:37Just like Alan Greenspan, Alan Greenspan failed on Wall Street repeatedly and he kept getting government jobs because he failed and then the press came to think he was a very smart guy. They are self-destructing from within. Again, that's not good for any of us, but it's going to happen, but that's also going to lead to, once again, 40 years ago, if I'd said to any of you, who's the head of the central bank? You know what you would have said? What's the central bank, much less who's the head of it? Now we all know Mr. Greenspan, Mr. Bernanke, but that's a recent phenomenon. That's not the way the world has ever worked. Nobody in the UK could have named the central bank head 50 years ago. Now everybody knows his name, likewise in Europe.

56:24But that era will change too, we will go away from being, as we all know, the heads of central banks and central banks will go into disrepute because they're ruining so many currencies and so many economies. I do have to say one more thing before I stop because I've been talking about gold. One of the other things I wrote in one of my books is that we really should have an And that's an audit of the, of Fort Knox. Now, I wrote this in, I think it was Adventure Cat. You see, you all should go out there and buy my books and you can tell me, you can tell me which book I wrote it in. I think it was six or seven years ago. But there has not been an audit of Fort Knox, a real audit, since at least the early 1950s. You might I think that's strange since everything is audited. The Mises Institute, Auburn University, the Catholic Church, the hospital, everything is audited except Fort Knox and the Federal

57:28Reserve. But even that audit, if you go back and look at it, the U.S. government has been stating for decades that we have whatever it is, several hundred tons of gold in Fort Ford Knox. Now, nobody knows them, but even if you go back and look at the audit, I think it was 1953, you'll see they didn't really do a very good audit. They went in there and they didn't sample the stuff. And remember, most of the gold that's in Ford, a lot of the gold that's in Ford Knox is when Roosevelt confiscated everybody's gold in the 1930s. But much of the gold which was confiscated in the 1930s was not 99% gold. was a lot of was garbage gold and so even if those tons are in Fort Knox I'm afraid that we're going to find it's not the purity that you have to have if you're going to have golden in the in the free market so I'm afraid that may be one reasons they do not want to audit the gold because it may not be there but

58:33let's suppose it is there I'm afraid we're going to find out it's not very Good Gold, and it would not be a big reserve for us on the open market. I don't think the Chinese would take it, for instance. I don't think anybody would take it. I don't think the exchange, the commodities exchange would take it. So we have more hidden problems in the U.S. than they let on. Maybe that's why they don't let them on. Is that the end of the story? Okay. Thank you. Thank you.

59:07Thank you very much.