WEBVTT NOTE The Social Imperative of Sound Money 1 00:00:00.000 --> 00:00:15.000 This last week the U.S. government announced that it would take Freddie Mac and Fannie Mae, the mortgage giants or what we used to think of as the mortgage giants, under conservatorship, which is a nice way of saying they will be nationalized. 2 00:00:15.000 --> 00:00:19.000 We don't use the word nationalize much anymore. 3 00:00:19.000 --> 00:00:24.000 We can try and experiment and read the term conservatorship back into history. 4 00:00:24.000 --> 00:00:31.000 In fact, we might say that Stalin and Lenin put Russia's industries under a kind of conservatorship. 5 00:00:31.000 --> 00:00:36.000 Or we might say that Mao pushed a kind of land conservatorship. 6 00:00:36.000 --> 00:00:41.000 Or that Hitler's policy was one of national conservatorship. 7 00:00:41.000 --> 00:00:47.000 Marx's little book could be retitled, The Conservatorship Manifesto. 8 00:00:47.000 --> 00:00:51.000 You see, the government keeps having to make up new names for these things, 9 00:00:51.000 --> 00:00:57.500 Because the old policies, which were not that different in content, failed so miserably. 10 00:00:57.500 --> 00:01:05.000 The old terms become discredited and new terms become necessary in an effort to fool the public. 11 00:01:05.000 --> 00:01:10.000 It's as if a restaurant served a shrimp dish that gave all the customers food poisoning. 12 00:01:10.000 --> 00:01:16.000 And so each night it decides to serve that same shrimp, but name the dish something new. 13 00:01:16.000 --> 00:01:24.000 Crangon cocktail, prawn pasta, scampi salad, or what have you, but no matter what they call it, it's still poison. 14 00:01:24.000 --> 00:01:30.000 Such a restaurant would be out of business very quickly. People would not be fooled. 15 00:01:30.000 --> 00:01:35.000 But the government gets away with it mainly because, of course, we have no real choice about the matter, 16 00:01:35.000 --> 00:01:40.000 because people are predisposed to believe the government far more than they ought to. 17 00:01:40.000 --> 00:01:47.000 It doesn't help that the media are willing to echo the government line on this, adopting every new phrase as if it were the gospel. 18 00:01:48.000 --> 00:01:59.000 Hence the same is true of the word bailout, which you might think an unexceptional description of this move by the government to protect Fannie and Freddie from further losses. 19 00:02:00.000 --> 00:02:08.000 No, that word is not allowed either. President Bush informed us the other day, don't call it a bailout, I'd call it a stabilization. 20 00:02:08.000 --> 00:02:18.000 We're soon putting on a new edition of Mises' 1922 book, Socialism, so I think maybe we should keep up with the time we're going to call it, stabilizing conservatorship. 21 00:02:18.000 --> 00:02:27.000 What I also find striking is the way this move was announced. Here's what the New York Times said, 22 00:02:27.000 --> 00:02:32.000 quote, the Bush administration seized control of the nation's two largest mortgage finance companies on Sunday. 23 00:02:32.000 --> 00:02:36.000 It could become one of the most expensive financial bailouts in American history. 24 00:02:36.000 --> 00:02:42.000 Even the most sophisticated observers of our present scene had to blink their eyes in reading such words. 25 00:02:42.000 --> 00:02:51.000 Without debate, without votes, without anything other than executive fiat, the White House decided on its own to seize the mortgage markets. 26 00:02:51.000 --> 00:02:55.000 Harry Truman, who seized the steel industry, would be proud. 27 00:02:55.000 --> 00:03:02.000 Actually, this is an action to excuse dictators the world over, past, present and future. 28 00:03:02.000 --> 00:03:08.500 The sort of thing makes a mockery of the Constitution and the very idea of freedom and free markets. 29 00:03:08.500 --> 00:03:13.000 To say nothing of the myth that we have a limited government. 30 00:03:13.000 --> 00:03:19.500 What's more, if we can believe press reports, President Bush had little to do himself with the decision. 31 00:03:19.500 --> 00:03:24.500 It was the work of Henry Paulson, the Secretary of Treasury and former head of Goldman Sachs, 32 00:03:24.500 --> 00:03:29.000 working on behalf of the nation's most well-connected financial elites. 33 00:03:29.000 --> 00:03:34.000 Nobody elected this guy. Most Americans don't even know his name. 34 00:03:34.000 --> 00:03:39.000 Look at how he throws around trillions of tax dollars. 35 00:03:39.000 --> 00:03:43.000 The New York Times says that it will be expensive. 36 00:03:43.000 --> 00:03:45.000 Well, that's one way to put it. 37 00:03:45.000 --> 00:03:48.000 Makes the SNL bailout look like a warm-up. 38 00:03:48.000 --> 00:03:53.000 Freddie and Fannie carry about $5.3 trillion in mortgage commitments 39 00:03:53.000 --> 00:03:57.000 and another $2.4 trillion in financial exposure. 40 00:03:57.000 --> 00:04:05.480 The total cost of this operation is unknown, but it could easily reach two trillion and untold amounts of future exposure as well. 41 00:04:05.480 --> 00:04:14.240 These two New Deal institutions were founded to speed up the home ownership process for people the banks otherwise considered unqualified. 42 00:04:14.240 --> 00:04:25.600 In time, both Lyndon Baines Johnson and Richard Nixon were given legal permission to expand without limit these institutions in the name of privatization of all things. 43 00:04:25.600 --> 00:04:39.600 The motive was a classic bipartisan effort. Universal home ownership. The left favored the redistribution. The right favored the support of moral virtue associated with the nuclear family in its suburban house. 44 00:04:39.600 --> 00:04:53.600 Thus was born the greatest wealth transfer in American history outside of Social Security and the warfare state. In a free market with sound money, borrowing is connected to the ability to pay. 45 00:04:53.600 --> 00:04:59.600 At first, this is only available to the rich. As prosperity spreads, so does creditworthiness. 46 00:04:59.600 --> 00:05:09.600 Any government intervention designed to inject steroids into this process is going to end in what Rothbard, as Doug and others have pointed out, call a cluster of errors. 47 00:05:09.600 --> 00:05:20.600 It's completely disingenuous that so many people are today decrying the banking system's failure to discriminate between those who should and should not be carrying a mortgage. 48 00:05:20.600 --> 00:05:24.600 The banking system in a free market handles this just fine. 49 00:05:24.600 --> 00:05:31.600 Varying out the difference between those who can handle loans and those who cannot is the main job of the competitive system. 50 00:05:31.600 --> 00:05:34.600 The market precisely calibrates this. 51 00:05:34.600 --> 00:05:40.600 If one lender fails in assessments of borrowers, another is there to correct the problem. 52 00:05:40.600 --> 00:05:46.600 If you rush the process of prosperity and insist that everyone who wants a loan should get one, 53 00:05:46.600 --> 00:05:51.600 If you had one, you end up in a situation with problems down the line. 54 00:05:51.600 --> 00:05:55.600 And of course that is precisely what the regime has given us. 55 00:05:55.600 --> 00:05:59.600 It created Freddie and Franny to subsidize loans. 56 00:05:59.600 --> 00:06:04.600 It engaged in a phony privatization that secretly socialized losses. 57 00:06:04.600 --> 00:06:11.600 The legal status of these privately owned, publicly traded and government protected agencies was always unclear, 58 00:06:11.600 --> 00:06:25.600 There was a moral hazard at the heart of this policy, but the real point is that the free-market judgment about who should get what was being overwritten. 59 00:06:25.600 --> 00:06:31.600 Of course, surely that was not a problem when it came to promoting the alleged American dream. 60 00:06:31.600 --> 00:06:38.600 In fact, we are paying for this mistake a half a century after the policy became a national priority. 61 00:06:38.600 --> 00:06:46.600 As the Evangelical ministers like to say, the wheels of justice grind slowly, but they grind mighty fine. 62 00:06:46.600 --> 00:06:51.600 Might be one problem with applying this principle to this case, where is the justice? 63 00:06:51.600 --> 00:06:57.600 If justice prevailed, the losses would be borne by those directly responsible. 64 00:06:57.600 --> 00:07:02.600 If we pursued a free market policy from here on, the answer would not be complicated. 65 00:07:02.600 --> 00:07:08.600 The assets and liabilities of Freddie Mac and Fannie Mae would be auctioned today in the free market. 66 00:07:08.600 --> 00:07:11.600 It's true that many loans would be defaulted on. 67 00:07:11.600 --> 00:07:16.600 What level of crisis would be precipitated by such a genuine privatization policy? 68 00:07:16.600 --> 00:07:22.600 It's true the press would be screaming bloody murder and the big players in finance would suffer. 69 00:07:22.600 --> 00:07:28.600 But in time the markets would re-evaluate the resources and an important lesson would be learned. 70 00:07:28.600 --> 00:07:41.600 Sound loans would be picked up by financially responsible firms and carried to term. Home values would fall. Many people would have to move to cheaper homes. We would then be back on a sound footing again. 71 00:07:41.600 --> 00:07:55.600 From an administration that reports to favor free markets, this possible solution, of course, was not considered. Instead, they proclaimed their regrets that they would have to spread the cost of this error to the entire population. 72 00:07:55.600 --> 00:08:00.800 Association. Instead of fixing the problem, however, they only worsen it, underscoring 73 00:08:00.800 --> 00:08:06.400 the principle that America will not tolerate failure in business, and the bigger the failure, 74 00:08:06.400 --> 00:08:13.320 the more likely it is to be bailed out. Note that this socialistic bailout and nationalization, 75 00:08:13.320 --> 00:08:19.240 to use two forbidden words, were enacted by a Republican administration. It's ironic that 76 00:08:19.240 --> 00:08:24.600 when you look back at big upticks in government intervention over the economy, you often find 77 00:08:24.600 --> 00:08:27.440 and Republicans at the helm. 78 00:08:27.440 --> 00:08:32.040 As for McCain and Palin, they wrote in the Wall Street Journal that this bailout quote 79 00:08:32.040 --> 00:08:38.640 is sadly necessary, even as they promise reforms that will quote, require the highest standards 80 00:08:38.640 --> 00:08:43.960 of accounting, reporting and transparency ever demanded in government. 81 00:08:43.960 --> 00:08:49.120 Well here's the thing, no one demands high standards like the market, but you have to 82 00:08:49.120 --> 00:08:54.420 to turn these institutions over to the market in order to have such standards. 83 00:08:54.420 --> 00:08:58.020 Congress's role has, of course, been to yammer. 84 00:08:58.020 --> 00:09:03.220 Only Ron Paul will have anything sensible to say about this fiasco. 85 00:09:03.220 --> 00:09:07.520 In fact, it was more than five years ago that Ron said the following, quote, 86 00:09:07.520 --> 00:09:11.260 If Fannie and Freddie were not underwritten by the federal government, 87 00:09:11.260 --> 00:09:14.660 investors would demand that Fannie and Freddie provide assurance that they 88 00:09:14.660 --> 00:09:18.320 follow accepted management and accounting procedures. 89 00:09:18.320 --> 00:09:23.640 By transferring the risk of a widespread mortgage default, the government increases the likelihood 90 00:09:23.640 --> 00:09:29.160 of a painful crash in the housing market. This is because the special privileges granted 91 00:09:29.160 --> 00:09:33.880 to Fannie and Freddie have distorted the housing market by allowing them to attract capital 92 00:09:33.880 --> 00:09:40.080 they could not attract under pure market conditions. Going on, Ron Paul says, as a result, capital 93 00:09:40.080 --> 00:09:45.160 is diverted from its most productive use into housing. This reduces the efficacy of the 94 00:09:45.160 --> 00:10:15.160 It's remarkable to observe that hardly anyone dares be against this policy. On the day following the nationalization, a day that will live in infamy, the Wall Street Journal editorialized against the Democrats, but didn't oppose the bailout. The New York Times called it a, quote, reasonable and reassuring move. The Los Angeles Times said, 95 00:10:15.160 --> 00:10:16.760 It's inevitable. 96 00:10:16.760 --> 00:10:21.600 Steve Forbes in his magazine wrote that, quote, drastic action had to be taken because the 97 00:10:21.600 --> 00:10:27.960 default would have, quote, triggered the worst financial meltdown since the Great Depression. 98 00:10:27.960 --> 00:10:31.640 It's interesting, isn't it, that all these people believe that waving the magic money 99 00:10:31.640 --> 00:10:36.400 wand can make reality go away. 100 00:10:36.400 --> 00:10:42.180 That incredible superstition seems to be the official position of the entire U.S. establishment. 101 00:10:42.180 --> 00:10:48.140 And we'd like to flatter ourselves into believing that we live in an age without illusion. 102 00:10:48.140 --> 00:10:52.540 As for those who should know better, Greg Mankiw, author of the leading economics textbook, 103 00:10:52.540 --> 00:10:58.060 writes that it, quote, because it was likely to happen, it's better to get on with it, 104 00:10:58.060 --> 00:10:59.060 unquote. 105 00:10:59.060 --> 00:11:03.820 The supposedly free market economics blog, Marginal Revolution, warns that without the 106 00:11:03.820 --> 00:11:08.780 bailout, quote, most of the U.S. banking system would be insolvent. 107 00:11:08.780 --> 00:11:14.780 failing to point out that a system that needs a bailout with fiat money is already insolvent. 108 00:11:14.780 --> 00:11:19.780 Econlog had lots of good thoughts, but didn't oppose the bailout either. 109 00:11:19.780 --> 00:11:24.780 The Cato Institute argues that the Treasury had to bail out the mortgage industry because it was, 110 00:11:24.780 --> 00:11:30.780 quote, forced to do so, and that Fannie and Freddie indeed are, quote, too big to fail. 111 00:11:30.780 --> 00:11:38.780 The Heritage Foundation agrees that it was a necessary step and a vital move towards reform. 112 00:11:38.780 --> 00:11:46.780 Sure, these people have plenty of recommendations about what should have been done in the past and lots of ideas about what should be done in the future. 113 00:11:46.780 --> 00:11:54.780 As for the present, they are ready to propagandize for the largest socialist operation in American history. 114 00:11:54.780 --> 00:12:03.780 In all of these latter cases, we are looking not at a problem of economic education, but rather the courage to stand up to the state when it is needed most. 115 00:12:03.780 --> 00:12:08.780 They didn't do so after 9-11, and now they have caved again. 116 00:12:08.780 --> 00:12:14.780 Part of the problem is the belief in the great myth propagated by Milton Friedman. 117 00:12:14.780 --> 00:12:22.780 As good as he was on many issues, he was not correct, as Murray Rothbard used to point out on his specialty of American monetary history. 118 00:12:22.780 --> 00:12:29.780 His view was that the depression was caused by a Fed that failed to fully bail out the banking system. 119 00:12:29.780 --> 00:12:37.780 Ben Bernanke and many others are pleased to accept this view of history and they are determined, they say, not to let it happen again. 120 00:12:37.780 --> 00:12:42.780 In fact, of course, the Fed did attempt to bail out the banks and was far too successful. 121 00:12:42.780 --> 00:12:45.780 This is the basis of the problem. 122 00:12:45.780 --> 00:12:51.780 In the end we are talking about a price system that has rendered a verdict on the housing market. 123 00:12:51.780 --> 00:12:56.780 Prices don't lie, and there is nothing we can do to reverse them. 124 00:12:56.780 --> 00:13:00.780 Even the most powerful governments in the world cannot do so. 125 00:13:00.780 --> 00:13:03.780 The attempt, however, causes calamity. 126 00:13:03.780 --> 00:13:09.780 The Austrians understand this, whereas it seems as if hardly anyone else does. 127 00:13:09.780 --> 00:13:13.780 Pretty much alone in predicting the calamity and actually opposing the bailout 128 00:13:13.780 --> 00:13:17.780 are those who have learned from the Misesian tradition. 129 00:13:17.780 --> 00:13:29.780 And they've said plainly and clearly that this is a terrible error, one in Jim Rogers' words, that makes the U.S. seem more socialistic than Communist China. 130 00:13:29.780 --> 00:13:39.780 Let us address this claim that not bailing out the system and not nationalizing the mortgage market would lead to a financial meltdown on the level of the Great Depression. 131 00:13:39.780 --> 00:13:46.780 People talk as if the Depression were some sort of natural disaster that the government had to fight. 132 00:13:46.780 --> 00:13:53.780 In fact, it was the very fighting of the depression that deepened it and caused it to last all the way through World War II. 133 00:13:53.780 --> 00:13:58.780 Instead of letting prices fall and letting the bad investments wash out of the system, 134 00:13:58.780 --> 00:14:08.780 the government tried for years and years to keep prices high, to employ people in make-work programs and generally to centrally plan the economy. 135 00:14:08.780 --> 00:14:17.580 In 1920-1922 we had a financial meltdown just as bracing and systematic as the one in 1929. 136 00:14:17.580 --> 00:14:22.480 The difference was that the government didn't do anything to try to fix it. 137 00:14:22.480 --> 00:14:27.300 As a result, it solved itself and is a forgotten event. 138 00:14:27.300 --> 00:14:32.140 Herbert Hoover and Franklin D. Roosevelt, in contrast, intended to use their power over 139 00:14:32.140 --> 00:14:37.400 the economy and the monetary system to keep prices from falling and to keep liquidity 140 00:14:37.400 --> 00:14:43.480 in the banking system, precisely as everyone is attempting now. The result was to forestall 141 00:14:43.480 --> 00:14:49.400 the inevitable readjustment process. They believed that low prices were the cause and 142 00:14:49.400 --> 00:14:55.400 not the effect of the recession. Sound familiar? In other words, the Great Depression only 143 00:14:55.400 --> 00:15:00.580 became the Great Depression because the government followed the exact same policies the Bush 144 00:15:00.580 --> 00:15:06.620 administration is following now with regard to the mortgage market. It makes no sense 145 00:15:06.620 --> 00:15:27.620 To avoid another depression-sized downturn, we need to avoid the mistakes of the past, among which were the policies that attempted to keep failing firms and industries afloat in difficult times. 146 00:15:27.620 --> 00:15:32.620 What should have happened in 1929 is precisely what should happen now. 147 00:15:32.620 --> 00:15:38.620 The government should completely remove itself and let markets re-evaluate resource values. 148 00:15:38.620 --> 00:15:42.620 It means bankruptcies, yes. It means bank closures, yes. 149 00:15:42.620 --> 00:15:47.620 But these are part of the capitalistic system. They're part of the free market economy. 150 00:15:47.620 --> 00:15:52.620 What is regrettable is not the readjustment process, but the process was ever made necessary 151 00:15:52.620 --> 00:15:58.620 by the preceding central bank inflation and other government interventions. 152 00:15:58.620 --> 00:16:09.620 Let me state this very plainly. I do not believe for one second that if the government fails to nationalize Fannie and Freddie, that the world as we know it will come to an end. 153 00:16:10.620 --> 00:16:17.620 Those who are saying that are simply trying to scare the population. It was the same with every other major demand by the regime. 154 00:16:18.620 --> 00:16:27.620 It was the same with NAFTA, the WTO, the war on terror, the war on bird flu, the nationalization of airport security and everything else. 155 00:16:28.620 --> 00:16:39.620 If the government did nothing but sell off the assets of the mortgage diets, we do not know for sure what would happen, but the market has a way of finding value and readjusting. 156 00:16:39.620 --> 00:16:53.620 My guess is it would take about 18 months. Banks would fail, just as many businesses in the free market fail every day. Housing prices would fall more, just as all market prices are subject to change. 157 00:16:53.620 --> 00:17:03.620 But the process of readjustment would be smooth and rational, and we would all stop living a lie and believing in an illusion. 158 00:17:03.620 --> 00:17:10.620 Contrary to what the blogging heads say, there is nothing that makes this nationalization inevitable. 159 00:17:10.620 --> 00:17:18.620 If we had leaders, opinion leaders who had courage, who understood economics, and who could think about the long run, 160 00:17:18.620 --> 00:17:23.620 We could let the market handle the entire process, come what may. 161 00:17:23.620 --> 00:17:31.620 I guarantee that this solution is a better one than creating trillions more to bail out failing enterprises. 162 00:17:31.620 --> 00:17:36.620 And yet this is not just another longing for courageous leaders. 163 00:17:36.620 --> 00:17:40.620 We can't hope for that. We need a guarantee. 164 00:17:40.620 --> 00:17:46.620 We need a system that would make it impossible for government to do these things even if it wants to. 165 00:17:46.620 --> 00:17:59.620 Think about the preconditions that made it possible for the Bush administration to decide one evening to dump a trillion plus to guarantee three quarters of the home mortgages in the U.S. 166 00:17:59.620 --> 00:18:05.620 It is a system that is premised on the government's capacity to print unlimited amounts of money. 167 00:18:05.620 --> 00:18:11.620 If it could not do that, no one would be talking about conservatorship. 168 00:18:11.620 --> 00:18:17.620 No one would be talking about guaranteeing the liabilities of the automotive industry either. 169 00:18:17.620 --> 00:18:26.620 Wars on Afghanistan, on Iraq, on Iran, on Russia, and troops in another 100 plus countries would be out of the question. 170 00:18:26.620 --> 00:18:28.620 These wouldn't even be issues. 171 00:18:28.620 --> 00:18:33.620 If government had to tax people directly for all its spending priorities, 172 00:18:33.620 --> 00:18:38.620 we would see Washington's ambition in every area scale back dramatically. 173 00:18:38.620 --> 00:18:44.620 Every suggestion of a new program would be met with demands as to how it would be funded. 174 00:18:44.620 --> 00:18:53.620 Fiat money and central banking, on the other hand, tempts corrupt politicians and bureaucrats, and it further corrupts them. 175 00:18:53.620 --> 00:18:56.620 It is the great occasion of sin in our public life. 176 00:18:56.620 --> 00:19:01.620 The tragedy is that their use of the printing press not only corrupts them, 177 00:19:01.620 --> 00:19:09.620 It imposes dreadful and intolerable costs on the rest of society in the form of price inflation and business cycles. 178 00:19:09.620 --> 00:19:13.620 We've seen the corruption grow worse over time. 179 00:19:13.620 --> 00:19:19.620 In the U.S. we are now living in the 37th year of fully fiat money with central banking. 180 00:19:19.620 --> 00:19:25.620 The politicians of the past seemed a bit reticent to use all the power they had. 181 00:19:25.620 --> 00:19:28.620 But they're becoming ever more brazen. 182 00:19:28.620 --> 00:19:33.420 their sense of shame seems to be gone forever their conscience completely 183 00:19:33.420 --> 00:19:38.900 papered over by the ominous power they possess the pundit class is following 184 00:19:38.900 --> 00:19:46.620 them believing there are no limits in truth all these bills must be paid to 185 00:19:46.620 --> 00:19:51.460 realize that is to realize the necessity of radical reform it can be 186 00:19:51.460 --> 00:19:55.500 overwhelming to contemplate the glorious results of a full gold standard 187 00:19:55.500 --> 00:20:01.180 Reform. Inflation would stop eating away at our purchasing power. The business cycle 188 00:20:01.180 --> 00:20:06.460 would be tamed. International trade would not be disrupted by wild swings in currency 189 00:20:06.460 --> 00:20:13.520 values. But of all benefits, this one is the greatest. It would stop arbitrary rule dead 190 00:20:13.520 --> 00:20:20.280 in its tracks. It would force the government to curb its ways. It would shore up our freedoms. 191 00:20:20.280 --> 00:20:25.360 For this reason the policy of son money is very much linked with morality. 192 00:20:25.360 --> 00:20:31.200 The Hebrew scriptures in the 19th chapter of the book of Leviticus warn, quote, you 193 00:20:31.200 --> 00:20:33.680 shall have just balances, just weights. 194 00:20:33.680 --> 00:20:39.520 The 25th chapter of Deuteronomy issues a similar warning, you shall not have in your bag differing 195 00:20:39.520 --> 00:20:42.400 weights, a large and a small. 196 00:20:42.400 --> 00:20:48.220 Proverbs says the same, a false balance is abomination to the Lord, but a just weight 197 00:20:48.220 --> 00:20:50.000 is his delight. 198 00:20:50.000 --> 00:20:56.240 Another passage says, diverse weights and diverse measures, both of them alike are abominations 199 00:20:56.240 --> 00:20:57.920 to the Lord. 200 00:20:57.920 --> 00:21:02.820 All of these relate in some degree to the need for sound money and condemn the act of 201 00:21:02.820 --> 00:21:05.820 fraud and monetary debasement. 202 00:21:05.820 --> 00:21:11.000 The consequences of monetary sin cannot be contained to the sinners only. 203 00:21:11.000 --> 00:21:16.880 They are spread out over the whole of society, destroying its economic basis and corrupting 204 00:21:16.880 --> 00:21:19.100 the morals of society. 205 00:21:19.100 --> 00:21:29.100 They foster crazed illusions that we can magically generate wealth through the act of printing money and the attempt to do so brings catastrophic consequences. 206 00:21:29.100 --> 00:21:36.100 As Mises wrote, inflation is the physical complement of statism and arbitrary government. 207 00:21:36.100 --> 00:21:45.100 It is a cog in the complex of policies and institutions which gradually lead towards totalitarianism. 208 00:21:45.100 --> 00:21:53.100 I find it sickening that there are so few voices, except in the Austrian School, that will stand up to this policy. 209 00:21:53.100 --> 00:21:58.100 And I fear the consequences of this policy will be felt for many decades into the future. 210 00:21:58.100 --> 00:22:04.100 But there is still time to reverse course. There is nothing inevitable about despotism. 211 00:22:04.100 --> 00:22:08.100 We are not being forced down this road. We can embrace freedom. 212 00:22:08.100 --> 00:22:14.100 If we understand that freedom is inseparable from sound money, we can embrace that too. 213 00:22:14.100 --> 00:22:20.100 Until then, we will continue to place our trust in the political establishment to do what is right. 214 00:22:20.100 --> 00:22:27.100 Call me a gold bug, if you will, but I trust hard money far more than I trust our rulers. 215 00:22:27.100 --> 00:22:31.100 And that, ultimately, is the choice we must make. Thank you.