I'm Dr. Mark Thornton, I'm a senior fellow here at the Ludwig von Mises Institute and
my talk this morning is 350 years of economic theory in 50 minutes.
You know I'd like to tell you about the whole history of economics, how it developed, who
were the important contributors and what they did and when they did it, what their books
What were their methods and all the debates that have gone on? Who made the big mistakes? Who were the crooks? Who were the villains?
But that would take several months to do that and we might hit a few low points along the way.
So the question is what can we do in our time here?
Here, well, usually people want economists to tell them how to make money, right?
And so that's one of the things we're going to do, is I'm going to show you how money
is made.
And I'm talking about lots of money, not just a little bit of money.
We're going to give away a little bit of money here today, but we're going to be talking
And I'm going to show you how to become an economist in five minutes, but before I do that, I want to give you an idea of what the Austrian School of Economics is all about, and how does it compare to other schools of economics, and to try to simplify that down to the very basics of economic points of view, and to try to simplify that down to the very basics of economic points of view, and to try to simplify that down to the very basics of economic points of view.
So we're going to look at two views of money and economics.
On the one hand, you have the Austrian School of Economics, which teaches about the market economy.
On the other hand, you have what you could generally call the statists.
And this would include everybody else, the Marxists, the Socialists, the Communists, the Keynesians, the Fascists, the Mercantilists, the Interventionists.
economist, the Keynesians, the fascists, the mercantilists, the interventionist, which
was mentioned on the movie here earlier.
And just about everybody else, even those people who might consider themselves market
oriented, except in their area of expertise, so for example we could have a market oriented
and economists who worked at the Federal Reserve Bank, but only as long as that economist espoused
government control of money and banking.
So everybody else is going to be the status.
Now the Austrian School is the champion of economic theory and the market economy.
We have found that everything that is worth having is produced within the market economy
and available to everyone including money, jobs, security, justice, goods and services,
everything that's worth having is produced in the market economy.
In addition, exchange in a market economy benefits all parties and harms none.
So in an exchange of goods or services for money, both parties benefit and no one is harmed.
So Austrians find the market process to be not only efficient but also to be a just system.
As such, we are the champions of individual liberty, private property and honest money.
We believe that it is the market economy that produces prosperity and nothing else.
The statists, on the other hand, are generally apologists for government intervention and control.
For you students out there, and you parents as well, in a typical college course in economics, you will be told all of the shortcomings of the market economy
and all the possible government remedies for those problems.
Generally, the cry is always for more government intervention to cure various social problems.
More government regulation, more government spending, more government subsidies, more government price controls, all across the board.
Austrian economists have shown that the social problems that the statists talk about
about are actually caused by prior government interventions in the economy and cannot be
cured with more government intervention. The bigger and more powerful government becomes,
the less prosperous the people become. Poverty, unemployment and inflation do appear in the
economy, right? These problems actually appear. People lose their jobs. People have to pay
Pay Higher Prices, People Become Poor or Displaced or Homeless, Seemingly or Appearingly,
in the Market Economy.
But all of these problems are caused by government interventions that we don't necessarily see
and not the marketplace.
Many of you are being homeschooled because of how bad public schools have become.
Actually, when government schools were first introduced more than a century ago in the
United States, they really weren't that bad.
They were thought of very highly, mostly because they were based on schools that had already
appeared in the marketplace, so that government was just basically mimicking what people had been doing voluntarily.
However, 100 years of government intervention and ever-increasing control over government schools
have made these government schools more about indoctrination and very little about education.
That's basically the problem. You look back in history and people thought very highly of public schools at one time. That's no longer the case as the home school movement grows ever and ever larger.
The Austrian economists are like David, where the statist economists are like Goliath.
They are much bigger, they are much stronger, and they control powerful government bureaucracies like the Federal Reserve System.
They control all the prestigious economics departments.
You might be taken aback by the fact that one of the most market-oriented economics departments in the United States is actually Harvard University.
The Statist Economist also control all the important journalistic posts in the nation.
However, like David, we do have a special weapon and it's called the truth.
And we regularly use it to bop the Statist in the head in the hopes of knocking some sense into them.
Now before going on to showing you what it is to become an economist,
I'd like to share with you a little bit about my personal journey through
Austrian economics because when I went to college I found Austrian economics
independently of the curriculum and I said you know I want to go into graduate
school and learn more about Austrian economics so I went searched all over
the world all over the country and there weren't any programs in Austrian
economics period the only place where Austrian economics had a following was
here at Auburn University.
So in 1982, I got in my little Ford Fiesta
with all my possessions and drove from Geneva, New York
to Auburn, Alabama and enrolled in the graduate program
here at Auburn University.
And it was a good program back then.
We had a lot of free market economists
and a couple of Austrians.
But I was told in the course of the first semester
that Austrian economics was really a thing of the past.
That there were only about a dozen Austrian economists
left in the world.
Half of those were already retired,
and the other six weren't at prestigious economics
departments with graduate degrees.
And if there's no Austrians working at PhD-granting institutions, then that means there's not going to be any more Austrian PhDs.
So it was very disheartening. I was told by one of my professors that the Austrian theory of the business cycle was a grisly embarrassment.
and so I was very dejected at that time in my first year in graduate school it
looked hopeless the the government was growing ever bigger and ever more
powerful and this thing that I thought might be able to save us Austrian
economics was on its way out it was a thing of the past and so I had basically
I finally decided to just about decided to drop out of graduate school and I almost didn't show up for one of my final exams but fortunately I did it was an econometrics exam and I didn't do quite as well as I had hoped to do but shortly thereafter I found out that the Ludwig von Mises Institute was coming to Auburn University that they were going to be on campus that they were going to be
providing seminars, publishing Austrian Economics, and they were going to give me a fellowship to stay in graduate school and study in Austrian Economics.
And I thought, wow, this is a pretty good turnaround. It certainly made my day.
So, Lew Rockwell, Marty Rockwell, and Pat Barnett showed up a couple months later and I helped them move the boxes in.
The Mises Institute at that time in 1983 consisted of a room that was about this big over to that wall and from here to there.
We had a table, four chairs I think, and an IBM electric typewriter, and that was it.
So you can see, and you're going to see this afternoon, how much bigger and how much more effective the Institute has become over the last 25 years.
A couple of things that Mr. Tucker didn't point out was that our webpage now is the most visited, most trafficked, most downloaded economic webpage in the world.
And the Wall Street Journal recently visited us this year and wrote up a story about the Institute, which appeared in August of this year, which showed how much influence the Institute is not just having here in the United States, but around the world with young intellectuals.
So, despite our minority status, our underdog status, we are making gains, we are taking ground, we are making progress, and you're all welcome in to join in the fight.
And to that end, I'm going to now make you an economist, and then we'll go on to make some money.
Almost all economic fallacies result from the fact that people only consider the immediate impact of a policy on a particular group of people.
The economists, the good ones anyways, always consider how a policy, a government project or a piece of legislation would affect all other groups.
And what are the long-run effects that we can expect from those particular policies?
For example, let us say that we pass a law that everyone in this room should get a million dollars.
Okay? That's the law. Everyone gets a million dollars.
Well, this is going to allow each and every one of you to go out and get a good education, to purchase a nice home,
to buy great medical care, to have the time to develop your talents and skills,
have time to devote to your family, charities, public works, whatever it happens to be,
Explore your various career choices, everything is taken care of, all the bases are addressed.
It must be a great policy because it's positively affected everyone that it was designed to affect.
But what this leaves out is everybody else.
It means 25 or 30 million dollars in higher taxes for everybody else.
It means $25 million of lower take-home pay for the other taxpayers.
It means less food for those families to eat.
It means fewer repairs on their homes and automobiles.
It means that they'll have a lower standard of living so that you can enjoy a higher standard
of living.
It means that other people are going to want to become millionaires too, right?
The easy way, via a government grant.
The more people who get these government grants, the higher tax rates will have to go.
Eventually, the government is going to have to hire more and more bureaucrats to collect these taxes,
to select the recipients of these grants, to monitor their behavior.
Because, of course, if you start giving away millions of dollars to people,
they're probably going to get lazy and slothful and so on.
Higher taxes in the economy means that workers will have to be fired,
And of course, if you take this policy to the extreme, it gets absurd. We couldn't give everybody in the economy a million dollars and just let them stand back and spend the money. I mean, somebody's got to do the work. Somebody's got to produce those goods.
When you understand economics, you'll understand why it is the case that everything the government attempts to do ultimately backfires.
Let's take the example of the minimum wage. It's something that's currently back in vogue, gubernatorial candidates are talking about raising or creating a new Alabama minimum wage, and it's actually being discussed and talked about all over the country, about raising the minimum wage at state and national levels.
Now, if we look at the direct and immediate effect on the group that it impacts, the impact is positive.
People who earn the minimum wage are now going to see their wage rates rise in conjunction with that new law.
If you ask them, are they for or against it, they're going to say they're for a higher minimum wage.
But if we look beyond the immediate effects and we look at the indirect effects and the effects on other people,
What do we see happening? Well, a higher minimum wage means that some people who are making the minimum wage are going to have to lose their job.
Because if you're just making the minimum wage and you're just producing enough production for the firm to cover that wage rate, if we raise the wage, some people are going to have to be let go.
And the people who are let go typically, not always, but typically are the least advantaged people in the workplace.
The least productive, the least educated minorities in particular can be discriminated against as a result of the minimum wage.
And so the attempt of the minimum wage is supposedly to help the least advantaged people in the economy.
What it ends up doing is hurting the very least advantaged workers in the economy, keeping them out of the workforce and maybe causing a lifetime of living on welfare roles.
If we look at who the policy helps, this is a little harder to see, but raising the minimum wage actually helps high wage workers, union workers, manufacturing workers,
for the High-Skilled Workers
who compete in some sense with the low-skilled, low-wage workers.
And when we raise the wages of the low-skilled workers,
that creates more demand for the high-skilled workers.
So we find that unions are actually one of the biggest proponents of higher minimum wages.
So it actually ends up helping some of the highest paid workers.
So we have to look beyond the direct and immediate effects.
We have to look at the indirect effects.
We have to look at the longer run effects and what it does to people's incentives.
When you understand economics, you will understand why it is the case that everything the government
attempts to do ultimately backfires.
The more it spends on government schools, the less education we get.
The more it spends on research, the less technology we get.
The more it spends on medicine and healthcare, the less healthy we end up being and the less
access we have to healthcare.
The more it spends on NASA, the less progress is made in space.
The more it spends on the military, the less secure we become.
Now I realize that some of these statements are going to sound contradictory to you or
are Politically Charged.
All I ask is that you examine them over time
with your new economic lenses and see whether or not
they are true.
Now we're going to do a little bit here
about making some money.
I'm going to ask for some volunteers here
from the students.
And this is kind of be like a game show format.
So I'd like the Auburn person, any other Auburn fans here?
okay there's another Auburn one and there's another Auburn one okay we'll get
you up here in the three chairs and then we need some alternates to help these
these three people how about you you and you and you stand behind these three
contestants now that this game is actually pretty straightforward I have
these envelopes we're going to do three rounds the contestants will open the
There's two coins in each envelope and they're going to choose to keep one of the coins and whoever ends up with the most money at the end of three rounds is going to pick from envelope number one or number two or number three, it's a little prize that's attached to the game, okay?
So whoever ends up with the most value here, after the three rounds, is going to be the winner.
Okay, so you're contestant number one, round number one, you just open up that,
and you choose one of the two coins that are in the envelope. And they're American coins, there's no...
You can just rip them open.
And whatever coin you don't want, you'll hand to your alternate behind you.
Okay, round number two, yeah, you keep one coin from each round, you don't go in between
10 rounds there, okay?
Okay let's see what the contestants chose here.
You've got a $1.25. $1.25 and a $1.25. Let's see, that's, let me see what you get.
You got, now you got two dimes and a quarter. What'd you guys end up with?
Oh, but you know, you actually ended up with the pre-1964 coins, and so a dime is, this dime is actually worth a dollar, and this quarter is actually worth over two dollars, so the winners I guess are the three alternates in the back here.
okay so we'll go ladies first you can pick one of the three cards just just
pick just pick one okay and you guys fight over the other two okay you can
I'll return to your seats. So yeah, the 1964 silver dime is now worth almost a
dollar. The current dime of course is it doesn't have any silver content to it, so
So it's only worth a dime, basically.
And so the point of this little exercise is to show you the difference between what honest
money is in gold and silver and what we have in the current monetary system.
Our original U.S. dollar, if we had the original U.S. dollar, it would be worth about 35 of
of Today's Dollars, so that our dollar has actually lost about 97% of its purchasing power.
And if we look back at American history to say 1890, the 1890 dollar was worth almost exactly the same purchasing power as a dollar in 1790.
So 100 years went by and you have the same purchasing power.
Now the dollar in 1990 was only worth about 7% of the 1890 dollar.
So during the period when we went off of gold and stopped issuing silver coins, instead
Instead of the value of the dollar staying constant, it lost 93% of its value over that century.
Since 1990, it's lost 50% of that remaining 7%.
So what this indicates to Austrians is that process isn't going to stop,
that our dollars are going to continue to lose value and ultimately may become worthless.
That happens very often with paper money is not only does it change in value and lose value, but it can actually become completely worthless.
This has happened in recent times in Bolivia, it's happened in Yugoslavia, it happened in Iraq,
It happened in the Civil War, in the Confederacy, all those currencies became completely worthless.
Actually, the Confederate currency is actually doing much better today than the U.S. dollar.
The Confederate currency is actually increasing in value, and to show you how bad off the U.S. dollar is,
The Confederate dollar is now worth about eight U.S. dollars.
Now, when you look at higher prices, it's very important to look at them with an economist's eye.
What causes our money to lose purchasing power?
Most people are under the impression that it's just a part of the market process,
that things are just always becoming more expensive,
And so when we look at the market economy, we want to see, well, let's see, in some cases, prices are going down, if we look at clothing, computers, electronics, pencils, things of that nature, things that are completely in the marketplace, they're actually going down in price.
If we look at clothing, computers, electronics, pencils, things of that nature, things that are completely in the marketplace, they're actually going down in price.
Well, now there's other areas where the government is heavily involved, where they regulate, they restrict, they have controls, they have taxes, subsidies, places like education, health care and energy,
The Theory of Money and Credit
where prices are going up and where prices are going down, but the reason that prices
are going up in general is because of monetary inflation by the government itself.
They're creating more money and when you get too much money in the economy, prices are
going to rise overall.
Since we had the Federal Reserve system established in the U.S. in 1914, the amount of money in
in the U.S. economy has increased 500 times, I mean that's 50,000 percent, okay, from $20 billion to $10 plus trillion dollars, okay, so we've got lots and lots and lots of monetary inflation, and it's just a new version of the same old thing, in the old days, kings would, whenever they get tax revenues,
The King would take all those clippings and make new coins out of them.
So if the King took in ten coins in tax revenue, he would end up being able to spend eleven
coins because he made that new coin from the clippings.
And of course, people caught on to that.
You see a hole in your coin.
It's pretty obvious that something's wrong here.
And so what the king would do after that was they started shaving the outside of coins.
So you just take a little shavings from around the outside of the coin, not the flat part,
but the rounded part.
And then you take those shavings and make new coins so the government would have more
money to spend.
And if you look at our modern coins, you'll notice they have a very rough edge to them.
Well, we don't really need that anymore because nobody's interested in scraping these things.
But the reason that rough edge is there is to prove that the coin is relatively whole and hasn't been shaved.
Okay, then paper money comes into prominence during the American Revolution and the course of civil war.
And now paper money inflation has been institutionalized since 1914 with the establishment of the Federal Reserve banking system.
system, gold was taken out of circulation in the Great Depression, silver was taken
out of circulation in the mid-1960s, and the gold window where our central bank would exchange
gold with other central banks was closed in 1971, and we've been on a fiat paper monetary
system that is completely unbacked and is completely disconnected from any kind of gold
or silver backing. We are on a monetary system by law. We are required to pay our taxes with
this paper money. We are required to accept this paper money for any kind of debts, public
or private. This is something we're being forced to use, and that's why we still use
Institute.
So we have a fiat paper monetary system.
We also have a banking system that is highly leveraged and highly regulated as well, but
a lot of people are surprised when this leveraging effect is explained to them.
It makes people feel uncomfortable and they would rather have this sort of fairy tale version
of what banking is all about.
When you think of your checking account,
you think of your money is in that bank
and I can go get that money any time I want.
And I tell my students, do you really
think that they have a vault in there with your money
and it's like on a shelf and it's got your name written
in front of it?
And that's the way people like to feel it.
but
the money isn't really there
we have what's called a fractional reserve banking system
it means basically there's no money in the bank
the banks hold money just like wal-mart holds money
just enough to make change
but they don't have a huge storehouse
of bank money
most of their reserves especially in the big banks
are in electronic format with the Federal Reserve itself, and the system depends upon
the idea that not everybody is going to want all their money at the same time.
So the modern form of inflation, and this is really the most important thing to understand
about money and banking, is that it's an electronic form of inflation.
It's not clipping, it's not shaving, it's not printing. They don't print money inflation nowadays, they just create it electronically.
And how the Fed does this is that they buy government bonds from banks and then they tell the bank, we've got reserves for you at the Fed.
You've got an account. We've added money to it. We haven't really added money to it. We've just put some more zeros in there.
And so that's how they electronically increase the money supply is just by writing money into existence.
And so when you want to learn what the real secret of the Federal Reserve is, that's it.
that's it they buy government bonds with electronic bookkeeping entries so the
government spends money they borrow to pay for it and then they buy their own
government bonds back with an electronic bookkeeping entry and I teach money and
and Banking courses and we go through this whole thing about money and banking over the
course of an entire semester and people come up and they say, you know, I still don't get
it.
There seems to be something wrong here and I said, there is something wrong here.
They are ripping us off.
And so that is one of the secrets of inflation.
It's monetary inflation is causing price inflation and in the modern electronic era, that's how
inflation is done.
It's done electronically with a bookkeeping entry.
Higher prices have their problems.
It's not just that prices are going up, higher prices make accounting difficult, they make
long-term contracting difficult, they make entrepreneurs' economic calculations more
difficult.
But the first secret of inflation is that monetary inflation at the Fed causes price
inflation.
The second secret, which you can't really see, you can feel it, you can't see it, is
that inflation secretly redistributes money from some groups of people to other groups
of people.
Some people are hurt by inflation, some people are helped by inflation.
A lot of it depends on how soon you can get your hands on the money as it comes into the
economy.
If you're the person who first spends the new money, then you're buying all your stuff before prices go up, and so you're getting a great deal, but as prices rise and the money filters through the economy, the people who get the money at the end, or don't get it at all, are going to be hurt because they're paying higher prices.
So their real income is drawn down. So that the people who are hurt the most are people on fixed incomes, people in retirement for example, people who work for a living and are on wage, who earn wages and salaries and of course wages and salaries only get adjusted to inflation after the fact.
People who buy things like education, housing, energy are hurt due to inflation because those prices go up the most.
Who does it help? Well, people who sell housing, energy and health care, education, those areas, they tend to get the money before everybody else.
And the biggest beneficiary is government itself. I mean, if you can borrow money and then pay for it electronically in this mysterious way, it's really great for them.
I mean, they've got trillions of dollars of debt. And every time those dollars go down in value, it makes their debt easier to pay off.
So the second secret of inflation is that it redistributes money away from some groups and helps other groups, primarily government.
The third secret of inflation is that monetary inflation causes the booms and busts of the business cycle.
Everybody loves the boom and doesn't think it's a problem.
Everybody hates the bust and thinks it's a complete mystery.
Austrians view it as when the Fed gets active in increasing the money supply and lowering interest rates, they cause a boom.
That boom causes a lot of misallocations in the economy, which eventually have to resurface as bad investments.
Right now we're in a cycle where we've seen a lot of investment in housing, a lot of new home construction,
in development during a period of low interest rates that existed over the last several years and in some places in the economy there's been too many houses built, there's been too many second homes, there's been too much mortgage debt that has occurred within the American economy and around the world as a matter of fact in some places and eventually
The bust is going to occur, the downfall, the business cycle is going to, the contraction phase of the business cycle is going to set in.
And some of those bad investments are going to come to the surface in the form of bankruptcies and unemployment.
Hopefully it won't be too severe.
There have been housing bubbles in the past which haven't resulted in severe contractions because of the nature of housing being a consumption good for many people.
So we've analyzed all the major stock market and business cycle changes over the 20th century,
The 20th Century found that this theory holds up very well in explaining the Great Depression, the tech stock bubble of the 1990s, the Japanese stock bubble, the housing bubble, and other changes in the economy.
And so the third secret of inflation is that monetary inflation is the cause of the business cycle.
I think I'll stop and if we have any questions I can be answer a few
questions and then we'll break for lunch.
Yes.
I think both. For example, Alan Greenspan, who was the chairman of the Federal
Reserve until recently, he knows about Austrian economics. He was a student of
economics in the 1960s and attended Mises' seminar and Ayn Rand's philosophy
seminar. He wrote that the gold standard is the only appropriate honest money
Money, Monetary System, and so I think he understood it very well, and that listening
or reading him was always misleading because he, I think he knew the truth but was telling
a story to try to keep markets settled.
And it was interesting, in his last year as chairman of the Fed, he said, first of all
he said there's no housing bubble, and then he said, well there is a housing bubble, but
The Theory of Money and Credit
The Deal With Being a Statist Economist
How tough is that?
But you see that as being the next bubble that, because they've run out of places to go in the true economy,
that they have to keep things afloat, they have to forge their own.
So they will actually, the government will be the next bubble as far as they're spending.
Yeah, what comes out of this is hard to tell.
I mean, they do go through periods where they say, okay, let's let all this nasty business occur.
and other points because maybe election is coming up they'll say we got to
continue this on until after the election so very often what you do is you think
of the Fed behavior in terms of elections so I expect them not to raise
interest rates until after the election and even then they might not do it but I
certainly don't believe they're going to do it before the next election they
2008 elections or?
No no, this one right here.
Yeah, that they're going to keep interest rates where they are until at least after the election.
So that's another sort of timing factor that you want to look for, is the Fed is considered independent and scientific.
But it bends to political pressure, for sure. If it doesn't, Congress would simply, and the President would simply step in there and rewrite the legislation.
As it is, being semi-independent is good for their image. And Bernanke will want to demonstrate his independence and his toughness in the first couple of years of his administration.
So look for those things in particular.
17 Increases and Do-It-All
They wanted to let off a little steam there. We'll have to see what happens after the election.
One of their last meetings just a couple of minutes ago.
That's right. They didn't do anything.
Is the gold standard gone? I know it was a big trouble for the government because they couldn't make all that money with their scam going on, but there's a big load of voices out there talking about tying it to something.
and I think the momentum will depend a lot upon what's going on in the gold market and hopefully political change as well.
The United States could start a return movement to the real gold standard just by our independent, without having any kind of international agreements.
If we went on the gold standard, it would more or less force our trading partners and ultimately the whole world back onto the gold standard.
But who knows? Those kind of ideological changes, and that's what it really is, is we've got to get people to think right before they do right.
And some of the good thinking in the world is not necessarily going on just in the United States, it's going on elsewhere.
Have you heard any talk about some of the Middle Eastern countries that we've filed or from beginning to mention the idea of being paid in some form of gold and gold certificate because they understand that they have to do that evaluation job?
One of the things you want to understand is that the U.S. dollar is a world reserve currency,
which means a lot of these other central banks hold dollars as part of their reserves.
And so if the dollar is going down, they're losing money.
And so there has been talk about selling oil in terms of euros rather than just dollars
of Exchanges Trading Oil and Euros and Other Currencies, as well as gold.
The people of the Middle East, the peoples of the Middle East, the peoples of South Asia,
India, China, Southeast Asia, these are people who know the ravages of inflation historically,
for hundreds and hundreds of years, and they keep their wealth, not in terms of local currency,
What in terms of gold, of simple gold jewelry, and they wear, you know, they just keep on
putting more and more necklaces, more and more rings and bracelets, and they wear their
wealth around with them.
They just keep on buying more gold jewelry.
And so these sorts of notions about the honesty, the validity, and the soundness of gold and
silver in these other countries is much more systemic than it is here in the United States
Anymore, and so we very well, if we went through a tough world depression or hyperinflation, we very well might end up with metallic monies in some of these other countries around the world.
No, there's not. There is not. There's a nominal gold backing to the Swiss franc, but it's just a token.
Renumeration or foundation for the value of that money.
In other words, if you wanted the gold value, you'd be losing money.
So there's no system in place. There's only theory in place.
Well, we don't know how much they have. They supposedly have quite a bit.
Well, nobody has. The Federal Reserve has a lot of gold. All the central banks around the world hold a lot of gold.
We haven't lost gold in circulation. There's more gold right now than there's ever existed in the history of the world.
There's a huge amount of silver.
There's a lot of discoveries out there
that could be further exploited.
So I don't really worry about there being enough money.
As far as Austrians are concerned,
whatever the amount is, it could serve as a monetary system.
It would just be a different level.
And the only problem is the temporary problem
of reaching that level.
Is there any other country that by law stopped the purchase to go like the United States did, after the depression?
The other countries, but I've never heard one way or the other.
A lot of countries actually went off the gold standard altogether
during the Great Depression.
But the United States is the only one
that I know of that actually said,
people aren't allowed to own gold,
and you have to sell it to the government.
It's interesting, the Federal Reserve,
from their impact on the Depression and then the removal, you know, actually stopping the ability to hold it was almost a threat in their ideology that they were trying to promote.
is outside of war that ever well actually part of it was war but it was a huge increase
during that period of time and everybody thinks well you know that was the market economy
and it really wasn't we had gone through the progressive era progressive era and the
The United States have been changed dramatically.
You kind of touched on the fact that it's already 40%
I know there were several European countries
that were doing a fair attack
and I'm wondering if you know any information
on how that's changed,
would they be here or not be in the states?
I don't know if they've got a website for fair attacks.
Yeah, there's a lot of movements to change the tax code, the way we tax things, you know, going to a national sales tax, going to a flat tax, going to the fair tax.
There's a lot of suggestions. Yeah, that's what I like, is the no tax argument.
argument. But one thing I think that these movements do highlight is that people are upset about taxes. They realize they're unfair, they're too high, and they're hopelessly clumsy and antiquated. So that I think it's a good sign that there are these movements, but I always stress the need for lower taxes to eliminate certain taxes altogether and to make the movement downward in every and all cases.
not to create inner battles between one group and another, and so, you know, I think those
movements do highlight the problem, but I think the solution is always and everywhere
to just think downward and to never let them adopt a new tax with, you know, with the idea
And you can even vote against the tax and then the governor will go ahead and pass his own tax without your permission anyway.
I was just going to ask if there is ever going to be test participants by the government?
The Theory of Money and Credit The Theory of Money and Credit
You know, it's the same way with our economic theory. It's not perfect. We don't know the answer to everything.
And there's things that we haven't come across that we need to extend the theory to.
So it's not really a matter of ever shooting for perfection. It's always shooting for what human beings can do.
And the basic answer is, we can do a whole heck of a lot if we're allowed to do it, with the absence of government intervention.