My Exchanges with Fed Chairmen

0:00Great to have everybody here, and it's my great honor to introduce the man of the hour, the man of the year, the man of the decade. Back in the 1970s when I had the great honor of working for Dr. Paul in his congressional office, and yes, I once worked for the government. I sense it went straight of course, but he was doing a little book called Gold Peace and Prosperity in defense of the gold standard and he said, I wonder if Henry Hazlitt would think about writing an introduction for this book and he said well probably, you know, probably he wouldn't so I called Hazlitt and of course Hazlitt was thrilled and he was especially thrilled that he, because he It turned out, I guess, no surprise to be a huge fan of Ron Paul's, and rightly so.

0:57So were Murray Rothbard and many of the other giants. Ron has been in Congress for 10 years, author of many books which were honored to sell at the Mises Institute, candidate for president. I was just remembering back at the Dearborn debate in Michigan, we were trying to remember what month this was, March or April of 2007, when all the Republican candidates were saying, hey, economy's great, everything's fine, no trouble, only those horrible naysayers, doomsayers, Cassandras would be saying that there might be a problem, and of course Ron John Paul told the truth, as is his want, and it seems to be a very different situation these days if it hadn't been the man who told us the economic fundamentals are all exactly right, if he weren't the Republican nominee, if we had a truth teller.

1:57But let's get to the man. I'm just going to mention that the Mises Institute is presenting to Dr. Paul our first Henry Hazlitt Award in honor of his 36 years of principal dedication to the cause of liberty, principal teaching of the cause of liberty, and I might not, not being a political kind of guy, I especially appreciate what he's done with the bully pulpit of Congressional office, all his campaigns, most recently in his presidential campaign, to teach the ideas of the Austrian School as they've never been taught before to millions of new people, millions Thank you. Thank you very much. I appreciate that. Like I say, I don't usually get that type of an and applause in Washington D.C.

3:06So it's nice to be out of D.C. and among friends and where the real heart of America is and should be. But it is a delight to be here and it's good to see Lou and it's good to see Bert here today and everybody else, all the Friends of Liberty. So it's been really a fantastic past two years for me personally and hopefully for others the Federal Reserve, fiat money, fractional reserve banking, Human Action, Man Economy and State, The Theory of Money and Credit

3:59Hopefully, it will never get to the point where it'll be said that I'm here from Goldman Sachs and I'm here to help you. But it certainly has been an interesting two years and lots of things, of course, has happened. Yesterday or the day before, right before I was leaving here, I had an interesting phone call from a member of Congress. He's a friend, and he's a conservative Republican, but we've never done anything legislatively together. In other words, he's not hardcore, but he called and put out a message that he needed to talk to me. He was getting ready to make a trip, but he wanted to talk to me before he made this trip, and I thought it might have been one of the, like so many of the members now are calling because they get into a little bit of political trouble.

4:47You know, the leadership of the party, they don't have anything to do with me, but the The individual congressman, as soon as they get into trouble, will you give me some money? Will you send out an email? Will you endorse me? Because all of a sudden, they know our views are spreading. I thought, maybe that's what he was calling me about. But that wasn't it. He called and said that he and his wife had been sitting down and thinking about their investments. And he wanted to know, how do you buy gold? So I said, call Bert Blomert. He'll tell you how to buy a car. So maybe that's a sign of a changing time that people are starting to think that way. But I think this conference that you've had here, Lou, today, this couple of days, has been just fantastic on an issue that, of course, has attracted my attention for many, many years.

5:39I would say it was the issue of money that was the precipitating factor that got me involved in politics in the 1970s, with recognition the Austrian economists were right. I'd been studying and reading Austrian economics in the 60s and in 1971 I remember it very clearly on August 15th that the Bretton Woods was predicted to be to break down matter of fact it was Henry Haslett that very early on when Bretton Woods was set up said it wouldn't work and lo and behold it failed and that sort of confirmed you know the theory. You know sometimes I wonder why we still talk about the the Austrian Theory of the Business Cycle. And we always call it the theory. Why don't we call it the Austrian explanation of the business cycle?

6:29But that certainly got my attention and talked about it all. Overall, the issue that's always driven me has been the issue of liberty. And yet, you can't deal with the overall issue of liberty if you don't deal with the issue of money because money is a driving force. It is all powerful in a moral sense, in an economic sense, in a constitutional sense, and it is very, very vital because if somebody gets control over the monetary system, they have ominous control and ominous power. And there was a conversation I had with Greenspan a couple years ago when I pushed him on this issue on the amount of power he had. I said, you can dictate interest rates, you can decide how much money people who are retired and they're in their CDs, what they're going to earn, and he acknowledged that and he called it an ominous power that he indeed had, but he said, but it was given to us, the Congress gave it to us, but that's why he believed very much in openness of the Federal Reserve

7:44and that people know what they're doing, which is an absolute falsehood because we don't know exactly what we're doing and they're doing a lot behind the scenes. But anyway, he did confess up to the fact that there was an awful lot of power in the hands of the Federal Reserve Board and the Federal Reserve Board Chairman. When I first went to Congress, which was in the tail end of the 74 election, which would The Chairman of the Federal Reserve at that time was Arthur Burns, and so I was on financial service with the Banking Committee all the years I've been in Congress, so there's been a few Federal Reserve Board Chairmen I've seen before the committee, Burns was there of course and stayed a good while, not that I was there that many years when he was Chairman, but then G. Williams Miller came in, and of course he didn't last long when we had those terrible problems at the end of the 70s and they brought in Volker. Volker I did have a

8:46fair amount of experience with him and then of course after Volker, Greenspan and then Bernanke. So it's it's been a few people a few individuals that have served as a Federal Reserve Board chairman but I think the overall atmosphere of the relationship of the members of Congress or especially with me have evolved a bit since that time. You know the two that I was most fascinated with and thought about old times with both Burns and Volcker but for a rather silly reasons because when I think about it they were actually allowed to come to the committee room and smoke a pipe and smoke a cigar right in the I hate the smell of smoke. It's horrible. It's bad for your health. But there's still something mystical about the fact that somebody could actually sit, stand in a building there and smoke, you know, and old burns would there be playing with this pipe, and then, of course, Volcker smoking those horrible cigars. But things have changed. But attitudes have changed, too. I know when Lew was working with me up there, we would have conversations.

10:06Conferences, and actually right after he started the Mises Institute, we had a gold conference up there, and we could get Federal Reserve Board Chairman to come out and participate. Part T was one that participated, and Wallach used to be on TV debates with me, and Volcker was really a gentleman about it all. I can remember when we were working on the Monetary Control Act, which I believe would have been 1980, and he was pushing hard for this, and this was giving a lot more power The two things that bothered me the most was, one, the authority for the Federal Reserve to take reserve requirements down to zero if he wanted, and also that he could buy anything he wanted, not only domestically, but he could buy foreign debt.

10:53and but he was annoyed and disturbed by the fact that I was saying this out in public so he invited me to a personal breakfast something that would never happen by Greenspan or Bernanke they wouldn't do that but Volker felt it was important enough that he get me over there and explain to me the Monetary Control Act and this one we this breakfast can be verified because I had Lugo with me. And the interesting thing that happened there, it must have been in the end of 79, and we walked in, Lew and I walked in, and Volker's staffer was there, and we chatted a bit, and then Volker came in, and Volker did not come over and shake my hand or say hello, he immediately went to his staffer, and he asked him, what is the price of gold? So they do pay attention to the price of gold, And is there interest to know what the price of gold is?

11:51I think that is still just as important today to the members of the Federal Reserve and to the monetary establishment around the world, what is the so-called price of gold, which means they're asking what is happening to the perception of the value of the dollar. So I think they're still intensely interested in that. But we did have this discussion about the Monetary Control Act, and he kept arguing ." He's saying his case, oh no, no, it's not going to do this, it's not dangerous. But I remember at the end of it, he conceded. He says, yes, he says, that is true, that we could take reserve requirements down to zero if necessary, and if we had to do something like bail out a foreign country, we could do this. But he said, we would never do it.

12:39And you know, a few weeks ago Volker came before the Joint Economic Committee and I happened to bump into him in a receiving room, just he and I talked for a bit and he was interested in chatting and I didn't do it but I think I should have and the thoughts that crossed my mind was, what did I tell you about that Monetary Control Act? Look at what they're doing. They don't even take it down to zero, it's minus zero now, you don't have to have anything And they'll keep giving you everything you want, you know, it makes no difference whatsoever. I didn't do that, but he was fascinated with a friendly chat, but his story was the same. Nothing has changed. So I think he's still a big central banker, obviously, but probably a little more decent individual than the more recent Federal Reserve Board chairman.

13:31So it is something of course to me has been crucial and so important. Today a lot is going on financially. Nobody needs to go very far to figure that out. But in many ways it's a wonderful thing happening for us because we're getting more attention about this issue. I know a lot of the establishment don't want to hear about what we're talking about in and Sound Money, but something has happened. Something dramatic has happened. And it's happened in these last two years. My goal had always been to talk about the issues, believing sincerely a major crisis would come. Hopefully, I could participate in the discussion and debate and how it would be rebuilt, how the system would be rebuilt.

14:23But I think it's very, very clear that what we're witnessing today is the end of that second stage of the Bretton Woods. It's the dollar standard with no relationship to gold, and it's lasted since 1971. And I think in the last several months the declaration has been made. It's a non-viable system. I think they know it. I think we know it. I think the Congress doesn't have any idea what's going on. But it's very clear that the current system isn't maintained, and it has to be replaced by something. And I think they are scurrying around like crazy. They do admit there's going to be a global summit, and there's going to be the discussion, but the plans are being laid. I do not believe that they are quite ready to accept our views, but the discussion is out there.

15:13But what has happened during the campaign, and since then, is to me rather remarkable, because I've had more opportunities than ever before to get our message out on the more for Conventional Stations. And, you know, what always astounded me in the campaign was the attention. You know, people say, well, you didn't get enough attention. They sidelined you, and they wouldn't cover you, and they complained about it. But, you know, after that little minor altercation with the mayor of New York City, whatever his name is, you know, somebody in the meeting came up to me and they said, well, are you ready to quit and ready to get out? This was about a week after that little incident. They said, aren't you going to quit and get out of the race?

16:00I mean, like you were humiliated and proven completely wrong and all this. And I said, you know what? I said, in the last week, I got more attention than I did in the 30 years I've been in campaigning. So I wasn't about to back down on that. But the need for a global summit is obvious. The plans for the global summit are something else. Sarkozy from France has been very clear on what he wants to do.

16:50And now, I think he's pretty good friends with Bush, and they get along fine. And Sarkozy says, what we need to do at this conference is revamp capitalism. It's capitalism that is so bad. But I don't think you should worry about that, because our president is standing up for us. and he said that the president said that he's all for the global summit with the one condition that we not violate or abuse any free market principles so we have nothing to worry about he will he will take take care of us and make sure that we have sound economic principles apply to this summit.

17:45I see what's happening is that they've conceded that the dollar standard that we have is at an end. But they probably have gotten together, which they do all the time, and we're not allowed to know what we do because it's literally in the code exempted from ever auditing or knowing what the Federal Reserve does, especially on international corporations and international discussions. You cannot have any acts of that. There is absolutely no oversight as far as what they do. I believe they've gotten together and they're willing to temporarily do what they can to prop up the dollar. Keep the dollar on the international exchange markets reasonably valued and then with the idea that the plans will be laid to come up with a new system.

18:35So what is happening today probably is very, very temporary because they know they can't Sustain it, and then there will be this announcement. And this is just a continuation of what I think George Bush Senior became more bold about when he talked about international finance. He was the first president to say that we do indeed need a new world order. And this is part of that. This is the continuation of a new world order, and they are going to come up with a new program. Our side will have a tough time. The only thing we have on our side is truth and the right economic views and ultimately I believe they can prevail.

19:20And we have tools today that we didn't have before. We have tools that through the internet, I think it's fantastic, I think we have more and more people joining organizations like the Mises Institute that is getting this information out. This is why I've always admired what the Mises Institute does, because it's not to have a group of people together and talk about it and talk to the choir, but it's to spread these views and talk to teachers and promote it and have new teachers come out and influence the next generation. And that's what counts. So the prevailing attitude of the people to me is key. That is the most important, if we're ever to undermine this system of banking. and Banking. And it is indeed the banking system that is allowed so much corruption.

20:10And when you just think about the power of the Federal Reserve, think about off-budgeting. I mean, when the Fed should come in and inject a trillion dollars, I mean, it's not authorized by the Congress. I mean, where did we, the people, where have we been? Why have we allowed this? It's not only a trillion, it's a couple trillion or three trillion. And what are they doing with this? They're propping up bad people. It's all the bad people that are getting this. They're the ones that are getting the money. What are they doing? They're fighting wars that they're not supposed to be fighting. They're propping up of a welfare state that shouldn't even exist. And yet, hardly anything is said. And here we are on the verge of this, in the middle of a major crisis because we've allowed to go so far. You know they talk a lot about moral hazard that encourages people to make bad mistakes and to take more risks than they would ordinarily.

21:12But I've never wondered why they call it moral hazard. I keep thinking of it being an immoral hazard that's going on. There's a lot of immorality going on out there and there's a lot of people making a lot of mistakes. But just think of what contributed this fiasco that we're The Federal Reserve, of course, are the ones who have been most responsible in a way because they've controlled the monetary system. And under Greenspan, just look at what he's done. You know, took interest rates down to 1%. Of course, that caused trouble when we thought, well, they'll never get back down to 1% again. But isn't it like last week? Back down to 1% again. Too much inflation, too much money, that's the problem. How do you solve that problem? Too much money, too much inflation, more spending.

21:59So it goes on and on. But not only did you have the Federal Reserve System creating too much money, but you had other things too that not a lot of people talk about. Very important to cause people to make mistakes. How about the Federal Deposit Insurance Corporation? I mean, that in itself is a major contributing factor. This whole idea of valuing assets, you know, at a certain level, that's very important, they should be set by the market, but we have an SEC that's involved in trying to set the value of assets, so at one time they think that assets should be, they mandate that they be at a certain level below the market asset, then they come along and say, okay, all of a sudden what we're going to do is reverse this trend and set them at another rate, and more and more chaos but can can you imagine how smoothly that could work if you had a private FDIC that was monitoring each individual bank that

23:05would be measuring the the viability of the bank and in insurance rates may go up and the consumer and the customers would know and if they were not valuing their assets correctly then then the insurance company or somebody else would be able to tell us that it would happen on an individual bank but never And of course, to add fuel to this, we had Feeney May and Freddie Mac. Here's a program that was designed, of course, it lasted for a long time, so it must have been good. It came out of the thirties. But the seeds had been planted in the thirties. But it was only in the last decade or two that you could see what was forming. And it was not easy.

23:53about two many years ago, probably about eight or nine years ago, I had a piece of legislation in that said that, you know what we ought to do, is remove the line of credit to the Treasury. And they said, well, why do that? They've never used it. It's only two trillion or two billion dollars. Of course, that wasn't very much, but it didn't matter. But it was the atmosphere that the Treasury would always bail out Fannie Mae and Freddie Mac and therefore they had lower interest rates. and of course contributed tremendously to it. But the one thing you better not dare attack and say that contributed to it, because this is politically incorrect, to suggest the CRA, Community Reinvestment Act, had something to do with it. I mean, we wouldn't want to do that because then you just don't like poor people.

24:40But I guess if you don't like, well, if you did like poor people, maybe we would have a better system where houses aren't taken from the poor people. Poor people, you give it to them and then they say, oh, who's losing their houses right now? The poor people. If we're for the poor people, why wouldn't we be for lowering the price of houses? Housing prices are too high. People can't afford them. Well, good. That means we ought to allow the market to lower housing. But what's our policy? Keep the prices of houses up so that the poor people can't buy their houses. Well, if they can't, well, we'll give them more money. So it goes on and on. They have no understanding, no conviction, no confidence that freedom works, and I am convinced that freedom does really work.

25:37But in addition to contribute to this crisis, we've had the HUD programs insisting that to make the bad loans, and also the threat by the courts, some of these laws are written. If you don't do what you're told to do, if you're in the banking system and you don't do this, you could be fined up a half a million dollars for doing it. So why not do it, especially if you can make a killing? I'll make the loans, I'll sell them and get rid of them, and then it will satisfy the law and then lo and behold, a bubble is formed. So what are we doing today to try to correct this, these programs and these solutions orchestrated so much by the politicians and by the central bank, that we're ending up with a system where the poor people now have to bail out the rich people.

26:26We have the innocent people bailing out the guilty people, as well as we're relying on the sound investments, the people who invested wisely, put down payments that are making Payments, and they've done decent investments, they have to be punished to bail out the people who did the bad investment. Everything is turned on its head. One of the basic principles that I believe that we fail to follow, and it's very clear in the Constitution, that we should not be doing, and we've done it from the beginning in this business on the Heusenbabel, interference in the contract going in, and now interfering in the contract going out saying that you know if you have a if you have sold a mortgage and you want to foreclose they're essentially saying oh no you can't foreclose you're going to have to do this and you're going to have to make sure that nobody is thrown out of out of their house it's the the the limited responsibility of the government is to enforce contracts but instead they're meddling in contracts all the time that basic principle is not talked about a whole lot but the government is involved in the contract

27:35all the time. I mean, it's constantly, whether it's the price of assets, the regulations that we have, it's the price of labor, wages, and on and on, the government is constantly involved in contracts. But what about the contract that the people and the government should have about soundness and money? The contract ought to be that we shouldn't have Do we have any counterfeiters out there? You and I aren't a lot of counterfeit. Why do we allow our government to counterfeit? It makes no sense whatsoever. The Coinage Act of 1792 didn't like counterfeiters, and they said that anybody that was caught counterfeiting would receive the death penalty.

28:25whether we should apply that to the Federal Reserve or not, but they considered it very serious. The problem is, of course, they think only counterfeiting is taking a piece of paper and counterfeiting the paper, but counterfeiting is destroying the value of money by duplication of money illegally, and that's what we've been doing. You know, with Alan Greenspan over the years, he came to the committee and I had a fair There's a fair number of conversations with him both on and in the committee and out of the committee. And I did at one time on a casual conversation bring up the subject of Murray Rothbard and he indeed said that he knew Murray and had nothing negative to say about him but it was a brief conversation.

29:11I know Murray had a different opinion or a very strong opinion about Greenspan. but some of you have heard this story before but I'll tell again in case you haven't heard about it but everybody I think remembers and knows that Alan Greenspan at one time you know was a gold standard person and he wrote for Anne Rand and he wrote in the Objectivist Newsletter in his Golden Freedom article was fantastic and so he one time was coming before the bank Committee. And we had a chance to meet before that and get a picture taken. And I knew that he was coming, so I dug out my original copy of the Objectivist newsletter, which was at that time, if anybody remembered, was a green little booklet. And I was reading that. That would have been, you know, all through the 60s, I guess. So I dug that out and dug up the article. So when I had my chance to have a couple minutes with Greenspan, I walked

30:09up and I showed him this faded green book and I said, do you recognize this thing, this book and he said yeah he says I recognize that and so I flipped it open to the page with his special article in there and I said do you remember this article and he said yes he did and I said well would you I'd like you to autograph this article so he took it he took out his pen and he autographed it and while I was I said, do you want to put a disclaimer on it? And then he said something which was rather astounding. He says, no, no, he was very serious. He says, I've just read that recently. He says, and I stand by every word of it.

30:55So, but you know, in about the last meeting we had when he was getting ready to leave, about a year before he was, or so before he was ready to leave, he was reappointed. and, you know, Republicans and Democrats, one after another, about 15 of them just sort of bowed to the maestro and so when I had my turn, as politely as I could be, I said, you know, I said, I can't quite join in and I said, my suggestion is, why don't you leave right now while the getting is good? But he didn't take me up on that. I always thought he'd get out of town before he'd be blamed for anything, but it looks like he is going to be blamed for a few things, and that is good. I mean, he's responsible, and I thought it would all fall on Bernanke, but fortunately they have put a lot of blame on Greenspan.

31:50But you know, Greenspan came before the Banking Committee not too long ago as a former chairman. And he had this paper, this was probably within a month or so, an explanation of this. And I guess the best way I could describe this testimony was pretty pathetic. You know, it was, in a way, really sad. you know because when you think of where he was and where he is today and then he came and it looks like he's desperately trying to save his his image and but he he's going wrong and instead of saying I confess all my sins and I'm going back to my 1966 article no he has he's gone in the wrong direction and saying The first thing he said that we must do in order to get out of this crisis is stabilize prices, you know, make sure the housing prices do not drop, because as Paulson said, it's the dropping of the housing prices that is all the fault, and if we could just stop the dropping of housing prices, everything would be okay.

33:12So, that's what Greenspan said we do, we have to maintain housing prices. And then we have to recognize that private credit won't work, what we need to recognize that the only thing that can save us is sovereign credit. So we need more government credit, of course that had nothing to do with our problems whatsoever. But he did allude to what he thought was the real problem and he put the blame on the securitizers because they produced excessive demand for the securities and therefore they were at fault. If they wouldn't have been buying these things and the whole thing is, it was the principle of bundling and securitizing that was evil. And of course, that principle is not necessarily bad. I mean, if it's done honestly and above board in a free market, but he says no, it was an excessive demand.

34:04But then the one thing he did want to apologize in a way about the program that he was using, the computer economic program, because it didn't work quite the way it should have. And he said that it was flawed because it didn't have a long enough time span. They were calculating in the past 10 years and everything was okay, and it should have And on top of all this, he said, what we need are more regulations.

34:56That's where he really screwed up. He says the fact that we could have derivatives out there and not have enough regulations, that is the real problem. So if we'd only go back and do that, we would be much better. And then he comes up and he says, what we need now is to make sure that we do have a subprime market, but it be sustainable. I mean, how much worse can this get? But then he finished on a very positive note. He says, don't worry, the crisis will pass and we'll be okay. So all we have to do is listen to this. And I thought, what a sad ending to this career, which could have been so different if he would have just taken, you know a different a different approach but you know the place where we are today is crucial it's not this election isn't crucial you know what difference does it make really you know absolutely no difference whatsoever but we do live

36:08in in very very important times on the direction that we go in and we talked in In our campaign, a lot about change, and we routed a lot of young people, and a lot of people interested in what we were talking about, a lot of enthusiasm that still exists out there, probably more than I ever dreamed it would be, and it was very, very encouraging. But when you look at what's happened in the Obama campaign, I mean, this is really something Something pretty amazing going on. The number of people involved. Can you imagine the dollars involved? I am convinced in my own mind that probably from two and a half to three years ago when his real campaign started, there's probably been well over two billion dollars worth of publicity and advertising going into that campaign. Because for a year or so before he even announced, I mean just think of the positive publicity that came up on nine out of ten TV stations and that's very, it's hard to measure the value of that and he's tapped into it.

37:23The American people are sick of what they're getting in Washington. They're sick of the fact that they don't have enough money and prices are going up and they're sick of war that continues forever and ever and they're sick of people who live off the welfare state and they're sick of bailing out Wall Street. they indeed do want change so where are they going they're going to Obama for change and what change is there all this talk about change even McCain is talking about changing and trying to disavow Bush and we need to change things we need to do this and this and make a difference but all they're talking about is the change in the management of the same system the management of a flawed and the fraud system, a management that could care less about freedom and the rule of law and personal liberty and sound money.

38:11They don't care about that. They care only about the management. There is a contest going on. Not in ideas. There's a contest going on on who's powerful management group. But I am also convinced that those who really are in charge of foreign policy and monetary policy are not worrying that much about who wins and who loses because they both they both are going to just continue to manage the same very very flawed system and that will not bring about anything to our benefit it will just perpetuate our problems and so what we what we have to do though is we have to continue this effort because the opportunity is there the opportunity there is for for us to really have an impact, bigger than ever before.

39:02I mean, we have all been astounded. Lew and others who have been out and have heard some of the talks and they've been on the road, for individuals in the crowd to start applauding when you say Austrian economics. I mean, this is pretty amazing. And of course, the one episode that I sort of found fascinating was at the university, you know, that radical leftist school, the University of Michigan, went over there After We Had the Debate at Dearborn and that was where it first dawned on me that these college kids, you know, they seem to be up on some of this because then I got to talking about a little bit about the monetary policy, so a bunch of them pulled out their Federal Reserve notes and started burning them. And then every once in a while at these rallies, and I didn't start this, I didn't have a hold up a sign, but they started this chant, end the fad, end the fad, I mean, what's going on here?

39:57But in talking to so many young people who I met after the rallies or they come to my office, I'd ask them, what was the issue that caught your attention? attention. And it wasn't always the same. Sometimes it was just, I like your emphasis on the Constitution. But a lot of them would say the monetary issue. But the one that I sort of got a kick out of and I think is sort of fascinating is, and it is, well, we thought you were the only one that was telling the truth. You know, it didn't... in a way that that is rather sad because you hear other candidates mumbling sort of similar viewpoints you know oh yeah we gotta be blah you know we take an oath obey the Constitution and this sort of thing and I'd ask I'd point that out to them they said yeah but they just didn't sound like they were telling the truth and so young people are perceptive you know and and they do they do notice the

41:01difference and there's a fertile field out there there is no reason for us not to be optimistic enough to believe that many, many of those young people who are rallying around Obama are open to our ideas. There is no doubt in my mind that they are. Reaching them is another story. It's not that easy. But this economy is going to be in shambles for a long time, and our views not only make good economic sense, they make good constitutional Constitutional sense, good moral sense, but it it's so logical you know it just makes common sense that that our views should prevail and can prevail and and and this is very appealing so we need we need to you know increase our efforts and not get too downhearted and thinking well you know things are rather tough The foreign policy is an absolute disaster. You know, the other night was on TV. I was complaining about, nobody asked Obama and McCain. Have you heard it? Anybody ask them about, you know, why are we bombing Syria? And why are we bombing Pakistan? And why are we planning on bombing Iran? And why are we occupying Afghanistan forever and Iraq forever? I mean, they don't really even get into that.

42:28Bad as all that is, and as much as I'm convinced that foreign policy will not change under Obama, some are deceived into believing that, oh yeah, he's going to bring the troops home, sure, but you know what? The troops are going to come home. They are going to come home, just the way the Russian troops had to go home, too. And that, we should look at as a positive. Yes, we haven't deserved much of the prosperity we've had because it's been based on borrowed Money and Trust in a Dollar that's not trustworthy. We've been able to print money and spend them overseas. We've become a consumer nation, but it's going to, we have to pay for it. And that's what this whole financial crisis is about, is paying back for the things that we have done over these several decades. But we will be bringing our troops home, and, because they will not trust the dollar forever. And that will be good. But the big question

43:21The question is, do we want some semblance of a republic, or are we going to have this dribble about pure democracy and thinking that, you know, as long as there's 51%, stick it to the 49% just because they produce everything, it doesn't matter, 51% more, they get what they want, no, that has to end, we have to defend our position. We're fortunate in the fact that we have great traditions in this country. We do have at least a memory of property rights. We have a memory where contracts weren't to be interfered with. And we have a memory where the government was supposed to be minimal. And we have a document reasonably written.

44:07And even with its imperfections, if we followed what we have, we wouldn't be doing so badly. So it isn't the document. The document in many ways is irrelevant. It's the people who are in charge, the people that we ask to take care of government functions in a proper way. It's getting enough people in Washington with men of integrity, people that you can believe. This is what makes the difference, because if you say it's only the document, a document doesn't work. Of course it doesn't work. And it's not the failure of the document, it's the failure of the people. Is it the failure of the politician? No, it's the failure of the people. And that's why attitudes and ideas are so important.

44:54What our teachers are teaching, what the bureaucrats are saying, what the media is saying, and what our talk show hosts are saying, this is what really counts. And I sense that there is now a subtle shift and at least more questioning going on. I notice the difference because even within the last year, Of course, being in a campaign is one thing, you're less likely to get attention. Being out of a campaign is less threatening. But there are some serious questions being asked today. And I think we should thank all those who have, all of you who have been involved in education and promoting, all of you who have been supporters, many of you have been supporters of mine over the years for the various things I've done. And you're all supporters of the Mises Institute.

45:39This makes a difference. People keep asking me, what should I do as an individual? How can I make a difference? I'll tell you what, everybody has to do something, but it couldn't be different. I mean, it's not going to be the same. What Lew does is different than what I do, and if you're a teacher, you do something different. If earlier today somebody was talking about making a documentary, people have talents, everybody has a role and a responsibility. And besides, sitting back and doing nothing or hiding in the woods or trying to find a in a safe haven in Europe or some place, that doesn't excite me as much as saying why can't we change what we have here? As difficult as it is, I mean that's where our fight is principally.

46:28But it is a fight, it isn't a political struggle as much as it's an idea, it's a fight over ideas and the proper ideas. So in this manner I would say keep up the progress, let's continue this momentum, there's There's no reason to be discouraged, and all the problems that we have, look at it as opportunities, troops coming home, that's good. Running out of money for the welfare state, that's fine. Emphasizing the need to go to work, that's pretty good. That's not reward people who don't save money, that's reward to people who do save money, make sure the prices of houses go down so the poor people can buy houses once again. This is what we need. These ideas and views are logical. They make common sense. They appeal to a lot of people. They appeal to young people.

47:14And one thing that delighted me about the young people, they could see the connection about self-responsibility, self-reliance, and allowing people to do with their own personal life with what they want, in connecting that with economic freedom. For so long, we have divided this up. One group of people go out there defending economic freedom. Oh yeah, we want the market to work. But what you do with your own body, what you eat, drink, and smoke, and how you act, and sexual preference, all that, that's not good for you to make your own decision. Believe me, young people know and understand that. And the fact that you can reach them in a different way, Anyway, if they like economic freedom, you can teach them about the other.

48:01If they like personal liberty, you can teach them about economic freedom. And it is not too many of the young people that get turned off by saying, I don't want to send you off to war. I don't want to ever have a draft. I don't want to ever do this to you. We shouldn't be going to war unless it's declared. We shouldn't be financing war through inflation. And young people like this, they are not anxious to go back to the third and fourth time to Iraq one of the things during the campaign that I enjoyed the most was the fact that when they were putting me down so often in Congress and on the road that's un-American that's unpatriotic you don't care about the troops and lo and behold guess what when they added up the dollars in the primary races if you add up all the dollars of all the other candidates even the Democrats our campaign got more money from active duty military than all

48:56All the rest put together. One more comment about the summit reminds me of what one of the Federal Reserve Board Chairman told me one time in the committee when I brought this up about the immorality of devaluing

50:24Punish the Innocent, but this will all change. But I do want to close by once again praising the Mises Institute for all their hard work and all the work that Lew has done and all the support that Burt Blomert has given to the institution. I'm proud that in the early years I helped the institute get started and it's done a tremendous amount of work. I did not believe at the beginning that it would be as large and as influential it is now because on the road when I would talk to people, there were various people, I said, what got your interest? And one of the things they said, well, it was Lew Rockwell and the Mises Institute. And likewise, I would like to say that a lot of individuals that I have met and have heard me talk have gone in the other direction because of my support, they have found the Mises Institute as well. Thank you very much.

51:38Thank you. I'd be glad, Luce, as we have a little bit of time, I'll try to take a few questions. I found one of the most interesting conversations we had with the Chairman Bernanke was that we got him to admit that inflation was a tax. How significant do you think that was as far as in the future?

52:14I don't know one thousandth of one percent of the country that know about that and realize it, but no, I think it's very important and of course I used that in the debates as well. Remember one time they asked me about the income tax and they knew my position and then they came up with a follow-up question on that and since they knew I didn't want the income tax, I said the next thing I would do is get rid of the inflation tax. But the fact that he conceded that, I think, is pretty important. And that's the obvious immorality about it. This whole idea that 40% of the American people don't pay taxes, they don't pay income tax, literally. But they get punished, percentage-wise. If you're making $30,000 a year and barely making it, and you have the inflation tax, which is now 15%, probably, That is a high penalty and it's much more harmful to the poor person, but no, I think it's very significant and hopefully we continue to follow up on that to make sure people understand that and to be successful in politics, I think you have to have sort of a populist approach in caring about people.

53:29Too often conservatives and liberals, conservatives and constitutionals and libertarians have been careless and they come across as lack of compassion. But it is our position that should exude the most amount of compassion. Because, I mean, just look at this Obama campaign. I mean, to get close to a billion dollars in donations, you think it all came from poor people? How can he be the poor man's candidate? Do you care to comment on legalizing competing currencies?

54:21Legalizing competing currencies, you could just summarize that by saying this legalized freedom, and that would take care of the currencies. But no, we should repeal the legal tender laws, and that would be helpful. You could devise maybe some transitional programs. The case for gold, which was the minority viewpoint of our gold commission report, was designed to allow competing currencies. I don't think it would be technically that difficult. We have competing currencies on the world every day. They fluctuate by the second sometime. They're up and down. And you could have a domestic parallel currency. But the biggest thing we need to do is just, you know, legalize freedom by limiting government, making government very small and no need for taxes and all.

55:16It seems like you're alone more, it seems, in Congress. Are there those around you who are coming on to this kind of thinking?

55:46Have you ever noticed that? But the other members of Congress would come over to me and they would be sympathetic. Boy, I agree with you on that, but I couldn't vote that way. How would I explain that? They think politically it would be suicide. But it turned out that it was the fact that I took those votes that gave me the credibility with the young people. Because they would go and say, well, we heard you say this and we wanted to check it out to find it was true. Wow, you actually voted that way. But the numbers of people, there's more sympathy there than they express. They're, but you know, it's going to be overwhelmingly democratically controlled, which in a way is helpful.

56:35You know, when the Republicans are in charge, it was a real disaster. The disaster because the party leadership in the House did everything that Bush asked them to do. and Bush never asked him to cut anything, you know, it was a welfare-warfare state. So they were carrying the water for Bush and therefore I was the bad guy because I was voting like I'm supposed to vote whether it was a Republican or Democrat. But now all of a sudden there has been a shift where if you look in this last year, I imagine, I don't know whether I'm voting with the Republicans now or the Republicans are now voting with me, but they vote against the the Appropriations Bill, because they're a Democratic appropriation bill. And this is the thing that is pretty disgusting, because Republicans were actually pretty decent in opposing going into bombing in Kosovo and Serbia, as well as Somalia.

57:29I mean, Bush ran on a... he said some decent things in 2000. We don't want to be in nation-building and policing the world. Do you think there's any time in the foreseeable future when Congress will limit what the Supreme Court could rule on?

58:08my ways of trying to deal with the abortion issue, taking it out of the hands of the federal government, but the Right to Life groups opposed that because they liked the thing to go on and on, and they wanted to wait till we could change the Supreme Court and also have a constitutional amendment, which, you know, they have a right to work in that direction, but why couldn't we just take away jurisdiction How do you see your relationship with Russia?

59:02and they have problems now but I think our responsibility is to deal with our problems here at home if we have complaints about Russia or China all these times they bring up these resolutions dealing with you know condemning human rights abuse in the various countries around the world and a lot of times they're very true and I'll vote against all of them and if you how could you vote against the condemning of human rights in China I said well when we take care of Guantanamo No, I think it's a disaster what we're doing. We're just looking to stir up trouble.

59:47What in the world would we think if Russia was putting some anti-ballistic missiles in Mexico? But it isn't that I want to treat Russia in a special way. They ask about Israel. How do we treat Israel? Well, I treat Russia like I treat Israel and I like I treat Egypt like I treat everybody, you know, with an open mind and with a willingness to talk to people and trade with people and do your best to get along with them. And it's much more beneficial. But this idea that we have to be so confrontational and in their face this whole idea of what we've done in Georgia. But once again, is there a difference? Are we going to have a change in policy because we have Obama? No, when the skirmish broke up in Georgia, both Obama and McCain said they'll send, you know, a billion dollars and they're going to get more than a billion dollars.

1:00:40But I would treat everybody equally. They wouldn't get one red cent from us and they would get an open door and we would be friends. But none of your money would go to any of those countries. Okay, I'm not getting all, I know you're talking about 401Ks and what else?

1:01:21The paltry purchase of Treasury securities in 401Ks, would the government be forced to hold them in 401Ks?

1:01:51New New's having a bit of a problem up in New Hampshire. And one of the things that's hitting him has to do with Social Security. You know, he supported the revamping of Social Security. So his, you know, I want people to have all their own investments in control and spend their money the way they want, but if the government has a Social Security thing and then they perceive that they're going to invest in the stock market and tell them what to do, and he had a tough time defending that, and the Democrat used that against him because Considering what we know about the executive branch of powers and emergencies, and the behavior in government camps and the expansion of police and surveillance, do you think there's Do you think there's a chance that the executive branch might use the financial crisis as an excuse to expand the police state?

1:03:11I'm not sure that they, two years ago, designed this crisis as it's unfolding, I don't think they have that much control, it just is a flawed policy, but they, you know, go with the punches, and they, yeah, they'll use it, a 9-11, you know, that introduced a chance, they gave them a chance to increase the police state, what did the Depression do, look at what they used that for, He was always to blame freedom and capitalism and sound money, and that of course is what's going on right now. That's why this Greenspan thing was so bad. He was willing to blame freedom and capitalism, lack of regulations, and we just need more government.

1:03:57So the worse the financial crisis gets, the more likely they are going to use this to further intimidate us and control us, because the government has to take care of us. We have to, you know, financially take care of us if there's a financial crisis, but after 9-11 it's physical security, and unfortunately the large majority of the American people have gone along with it, and we are now less free. Unless we reverse that in a few years, we're going to be a lot less free, but what we're hoping to do is make sure that our views prevail and that trend won't continue.