WEBVTT NOTE Rollback: An Interview with Thomas E. Woods, Jr. 1 00:00:00.000 --> 00:00:05.420 Joining us on the program in FSN In Depth this week is Thomas Woods Jr. He's author 2 00:00:05.420 --> 00:00:11.520 of a new book called Rollback, Repealing Big Government Before the Coming Fiscal Collapse. 3 00:00:11.520 --> 00:00:16.680 You know, Tom, last week I had John Williams on the program and we went through the government's 4 00:00:16.680 --> 00:00:25.400 2010 income statement and what is amazing is you go through this, 80% of the government's 5 00:00:25.400 --> 00:00:33.880 This budget entitlements, defense and interest is considered untouchable and in Washington 6 00:00:33.880 --> 00:00:40.400 they're arguing over $4 billion or $6 billion worth of budget cuts or $60 billion with money 7 00:00:40.400 --> 00:00:46.240 being spent of this magnitude when the government, I think the budget deficit this year is going 8 00:00:46.240 --> 00:00:47.920 to be $1.7 trillion. 9 00:00:47.920 --> 00:00:48.920 Is it too late? 10 00:00:48.920 --> 00:00:53.240 Well, if we're going to stick with this attitude, it absolutely is. 11 00:00:53.240 --> 00:00:58.680 I just saw a poll the other day in which a majority of Americans were saying that social 12 00:00:58.680 --> 00:01:01.160 security and Medicare payments should be increased. 13 00:01:01.160 --> 00:01:05.720 Now, I mean, that's just, I don't know what kind of la-la land these people are in, but 14 00:01:05.720 --> 00:01:11.280 social security and Medicare are already in the hole $114 trillion. 15 00:01:11.280 --> 00:01:12.760 Is that not enough for these people? 16 00:01:12.760 --> 00:01:16.880 So yeah, if that's the mentality we're going to have, then there is no hope. 17 00:01:16.880 --> 00:01:22.920 The only chance that we've got is for people to, for us not to act like seven-year-olds, 18 00:01:22.920 --> 00:01:34.680 You know, it was interesting, Tom, I can remember after the November elections and everybody 19 00:01:34.680 --> 00:01:40.520 was excited, the Republicans had taken the House and one of the biggest turnovers in 20 00:01:40.520 --> 00:01:47.200 Congress since 38, but what I find remarkable, which reflects back on what you just said, 21 00:01:47.200 --> 00:01:53.120 In public opinion polls done by the Washington Post and the Wall Street Journal, basically 22 00:01:53.120 --> 00:01:59.400 the gist of those polls were cut spending, don't cut mine, raise somebody else's taxes, 23 00:01:59.400 --> 00:02:00.400 don't raise mine. 24 00:02:00.400 --> 00:02:05.400 And in your book Rollback you talk about most of the people reading this book will live 25 00:02:05.400 --> 00:02:10.040 through one of the most significant periods of change in American history. 26 00:02:10.040 --> 00:02:16.800 The scale of the coming inevitable spending cuts will be unlike anything Americans have 27 00:02:16.800 --> 00:02:23.560 have ever experienced during peacetime, Americans have never seen federal spending scaled back, 28 00:02:23.560 --> 00:02:28.160 even when the newspapers speak of budget cuts, they don't actually mean the budget will be 29 00:02:28.160 --> 00:02:34.240 lower than it was the previous year, they mean only that its rate of growth is following. 30 00:02:34.240 --> 00:02:40.800 So between now and the entitlement collapse, you talk about what our politicians will likely 31 00:02:40.800 --> 00:02:47.800 The Federal Reserve, fiat money, fractional reserve banking, Human Action, Man Economy and State, The Theory of Money and Credit 32 00:03:10.800 --> 00:03:16.680 all off the table in my book, there are also practical considerations. I mean, for example, 33 00:03:16.680 --> 00:03:20.840 it seems that there are people in this country, a lot of them, who seem to think there is 34 00:03:20.840 --> 00:03:26.360 no problem that taxes couldn't solve, that weren't just for these absolutists to oppose 35 00:03:26.360 --> 00:03:32.320 all tax increases why we'd solve this problem in a jiffy. Well, the tricky part of that 36 00:03:32.320 --> 00:03:38.240 is that there's a stubborn statistic that most people are unaware of that Jeff Hummel 37 00:03:38.240 --> 00:03:43.400 The Professor on the West Coast dug up, and it's this, that ever since the Korean War, 38 00:03:43.400 --> 00:03:49.160 no matter what the actual marginal tax rates have been, the actual tax bite that the federal 39 00:03:49.160 --> 00:03:54.640 government has been able to confiscate from the public has more or less hovered around 40 00:03:54.640 --> 00:03:59.040 20% of GDP, and only very, very rarely has it gotten slightly above that. 41 00:03:59.040 --> 00:04:03.480 But basically, that's as much as they've gotten, and that is quite an interesting statistic 42 00:04:03.480 --> 00:04:08.000 that you know tax rates go up tax rates go down and yet that the tax take 43 00:04:08.000 --> 00:04:13.480 hovers around the same amount of percent of GDP so it's like this is some kind of 44 00:04:13.480 --> 00:04:17.800 built-in limit so if they're thinking that somehow we'll just seize more 45 00:04:17.800 --> 00:04:22.080 property from the people and solve it that way just on practical grounds that's 46 00:04:22.080 --> 00:04:25.320 going to run into problems and of course with the terms of borrowing well you're 47 00:04:25.320 --> 00:04:30.420 running into practical brick walls there not simply because foreign lenders may 48 00:04:30.420 --> 00:04:36.420 I think they begin to lose confidence in the U.S. government, which indeed they will likely do, and indeed should. 49 00:04:36.420 --> 00:04:43.420 But the fact is, a lot of the countries that would lend to us are themselves going to be facing pretty substantial problems in the coming years. 50 00:04:43.420 --> 00:04:50.420 Japan is already going through a wrenching demographic change in its country, a very rapid aging of the population. 51 00:04:50.420 --> 00:04:54.420 China, with its one-child policy, is going to be reaping the fruits of that. 52 00:04:54.420 --> 00:05:05.420 They're going to need a lot of their money at home. They're not so much going to be interested in parking it in 0% return, the lending to the U.S., so that's inevitably going to start to dry up. 53 00:05:05.420 --> 00:05:15.420 And then finally, printing the money, I think, refutes itself. The only remaining possibility, other than actually cutting things, is the sort of old supply-side notion that we'll grow our way out of the problem. 54 00:05:15.420 --> 00:05:44.540 In order to stop the government's spending juggernaut, you talk about we need to expose 55 00:05:44.540 --> 00:05:46.540 The Theory of Money and Credit 56 00:06:14.540 --> 00:06:44.540 Well, this, Jim, is really the key to rollback, which I think of all the titles of mine. I intended this to be the most blow-your-mind sort of book. It's the kind of thing you hand to a tea party guy, and it looks like an anti-Obama book, you'll be comfortable with it. Sure, you know, it's against Obama, but it's the kind of thing you hand to a tea party guy, and it looks like an anti-Obama book, you'll be comfortable with it. Sure, you know, it's against Obama, 57 00:06:44.540 --> 00:06:45.540 Programma. 58 00:06:45.540 --> 00:06:49.980 But with each chapter, it gets more and more daring in its conclusions, and it's basically 59 00:06:49.980 --> 00:06:50.980 arguing this. 60 00:06:50.980 --> 00:06:56.540 It's not primarily a book on the budget, it's primarily basically saying what you just said, 61 00:06:56.540 --> 00:07:00.700 which is that it would be nice to cut the budget, and I'm all in favor of that, but 62 00:07:00.700 --> 00:07:05.620 much more important is to cut the propaganda that leads us to have these big budgets in 63 00:07:05.620 --> 00:07:06.620 the first place. 64 00:07:06.620 --> 00:07:11.060 That to cut out this way of thinking that we were all initiated into when we were in 65 00:07:11.060 --> 00:07:12.060 in the sixth grade. 66 00:07:12.060 --> 00:07:15.860 And we all know this by heart, what we were taught in sixth grade, that government is 67 00:07:15.860 --> 00:07:21.620 composed of wonderful self-sacrificing public servants pursuing the common good, and why 68 00:07:21.620 --> 00:07:26.340 without them, think of where we'd be, we'd have no art or science, everybody would be 69 00:07:26.340 --> 00:07:32.200 an ignorant boob, we'd probably all be doing a rain dance somewhere, we'd all be having 70 00:07:32.200 --> 00:07:36.460 our limbs blown off because our computer monitors would be exploding, or we'd all be working 71 00:07:36.460 --> 00:07:38.660 in a mine for a dollar a day. 72 00:07:38.660 --> 00:07:46.160 We all got this, and I know that it is superficially plausible, but pretty much what I'm doing 73 00:07:46.160 --> 00:07:50.980 with Rollback is arguing that given that we're going to have to make wrenching changes anyway, 74 00:07:50.980 --> 00:07:55.180 we're going to have to roll this thing back anyway, we're going to have to cut anyway, 75 00:07:55.180 --> 00:07:58.420 we might as well embrace this as an opportunity. 76 00:07:58.420 --> 00:08:03.140 This is not a calamity to be deplored, because the various causes on behalf of which the 77 00:08:03.140 --> 00:08:07.300 government has racked up all these debts have not in fact helped us. 78 00:08:07.300 --> 00:08:08.980 They were not necessary. 79 00:08:08.980 --> 00:08:14.860 The myths on which they were handed to us are laughable, and the free market itself 80 00:08:14.860 --> 00:08:21.420 has a far better record when it comes to eradicating poverty, providing for consumer safety, providing 81 00:08:21.420 --> 00:08:26.160 for sound money, and so on and on down the line, providing for scientific research. 82 00:08:26.160 --> 00:08:29.240 It has a much better record than government has. 83 00:08:29.240 --> 00:08:34.460 So this is where we need to be, is believing that we as a free people could in fact provide 84 00:08:34.460 --> 00:08:40.100 and all these things that we're told we couldn't ever have if it weren't for Joe Biden watching 85 00:08:40.100 --> 00:08:41.100 over us all. 86 00:08:41.100 --> 00:08:43.500 I don't buy that and I don't think Americans should buy it. 87 00:08:43.500 --> 00:08:50.140 Now just to put this in perspective, how big this problem is, and this is something that 88 00:08:50.140 --> 00:08:54.820 just really struck me when I looked at the government's budget last year. 89 00:08:54.820 --> 00:08:56.980 We've been doing this every year on the program. 90 00:08:56.980 --> 00:09:00.860 Now everybody hears about the debt ceiling over 14 trillion. 91 00:09:00.860 --> 00:09:03.740 Unfortunately that's only part of the picture. 92 00:09:03.740 --> 00:09:09.860 There's another additional amount that's $111 trillion, I don't even know if people know 93 00:09:09.860 --> 00:09:15.900 how big that number is, and even by the own reports published by the Congressional Budget 94 00:09:15.900 --> 00:09:22.740 Office, by the year 2020, and Tom, this assumes no major increase in interest rates, the US 95 00:09:22.740 --> 00:09:29.820 will be spending close to $1 trillion a year on interest alone, but these budget deficits, 96 00:09:29.820 --> 00:09:36.120 As big as they are, don't, I guess, reflect the impending problems of unfunded social 97 00:09:36.120 --> 00:09:41.840 security and Medicare, and as you pointed out, they want to increase that even more. 98 00:09:41.840 --> 00:09:48.640 And even a Democrat such as Lawrence Kotlikoff, an economist at Boston University, he said 99 00:09:48.640 --> 00:09:53.220 that the fiscal gap is an astonishing 200 trillion. 100 00:09:53.220 --> 00:09:56.660 Now he says we can reform it, but he doesn't say how. 101 00:09:56.660 --> 00:10:02.020 Yeah, he tells us that he's got several different possibilities, but then you finally track 102 00:10:02.020 --> 00:10:06.700 down what they are and none of them are politically plausible. I mean, really, if there were a 103 00:10:06.700 --> 00:10:11.220 painless way out of this or a politically feasible way out of it, it would have already 104 00:10:11.220 --> 00:10:15.220 been implemented. I mean, that's basically, I mean, anytime somebody comes along and assures 105 00:10:15.220 --> 00:10:18.260 you there's some simple way out of this, you know it's not true because they would have 106 00:10:18.260 --> 00:10:21.780 done it already if that were the case. But you're right, this is the elephant in the 107 00:10:21.780 --> 00:10:26.820 in the Living Room, and in fact, although a lot of attention has been focused on social 108 00:10:26.820 --> 00:10:32.100 security, it's actually overwhelmingly Medicare, of that 100 plus trillion dollar figure that 109 00:10:32.100 --> 00:10:38.820 you mentioned, overwhelmingly, I mean, 80% of that is Medicare. And of course, part of 110 00:10:38.820 --> 00:10:44.220 the problem here is that we've got an aging population, I mean, a rapidly aging population. 111 00:10:44.220 --> 00:10:48.860 We've got a situation in which, in our lifetimes, we're going to see the number of people in 112 00:10:48.860 --> 00:10:53.860 in this country aged 100 or over, increasing by 13 times. 113 00:10:54.380 --> 00:10:55.860 Now that's not, I say this, Jim, 114 00:10:55.860 --> 00:10:58.380 not because I'm sorry that people are living longer lives. 115 00:10:58.380 --> 00:11:00.180 That's a wonderful thing. 116 00:11:00.180 --> 00:11:01.620 You know, we should be delighted 117 00:11:01.620 --> 00:11:03.340 with a development like that. 118 00:11:03.340 --> 00:11:05.500 But the problem is no one has made provision for it. 119 00:11:05.500 --> 00:11:08.900 And of course, people of that age absorb far more resources 120 00:11:08.900 --> 00:11:12.300 in terms of medical care than the people who are younger do. 121 00:11:12.300 --> 00:11:13.980 And there's no provision for this. 122 00:11:13.980 --> 00:11:15.740 There's no provision has been made. 123 00:11:16.940 --> 00:11:18.240 In fact, when Pete Peterson, 124 00:11:48.240 --> 00:11:55.240 What a myth it is that we've been fed that supposedly the private sector is very short-term-oriented. 125 00:11:55.240 --> 00:12:00.400 It thinks only about short-term profits, whereas the public sector, well, here we have our 126 00:12:00.400 --> 00:12:04.800 far-seeing public servants who think in terms of long-time horizons. 127 00:12:04.800 --> 00:12:05.800 To the contrary! 128 00:12:05.800 --> 00:12:10.000 It's precisely because they don't have a long-time horizon that we're in this situation in the 129 00:12:10.000 --> 00:12:11.000 first place. 130 00:12:11.000 --> 00:12:16.000 I want to move on to the numbers that we look at the federal level are staggering in themselves, 131 00:12:16.000 --> 00:12:21.120 There's even bigger problems developing at the state and the municipality level. 132 00:12:21.120 --> 00:12:25.900 You talk about, for example, just to show how this doesn't work, one of the worst run 133 00:12:25.900 --> 00:12:31.080 big cities in the US is in my own state of California, which is San Francisco, despite 134 00:12:31.080 --> 00:12:35.200 spending just millions and millions of dollars on homelessness. 135 00:12:35.200 --> 00:12:39.840 The homelessness problem is worse than any other comparable city. 136 00:12:39.840 --> 00:12:43.640 It's not only poorly managed, but let's talk about some of the things that we're seeing 137 00:13:13.640 --> 00:13:28.640 I mean, talk about having no dignity whatsoever. I mean, these are people who would, and I know people who live in Greece and who are all too aware of the political culture there, of people's expectations that if I can't retire at age 50, I've got to go burn down a building. 138 00:13:28.640 --> 00:13:42.640 I mean, good grief. I hope we have more dignity than that in this country. But, indeed, I mean, what's basically the way that state governments have dealt with public sector unions is they've had to walk a tightrope for a number of years, because on the one hand, the unions demand 139 00:13:42.640 --> 00:14:00.640 The Union demands higher and higher salaries, and they can't give them super-duper high wages or salaries because then they're in danger of getting ousted from office, but at the same time they can't ignore these wage and salary demands entirely, then they lose the support of the Union. 140 00:14:00.640 --> 00:14:06.640 So what they've done is they've given them just modest enough wage and salary increases to keep them happy. 141 00:14:06.640 --> 00:14:07.640 University. 142 00:14:07.640 --> 00:14:12.240 But really what they've done is they've back-loaded the promises by saying, well, here's what 143 00:14:12.240 --> 00:14:13.240 we'll really do. 144 00:14:13.240 --> 00:14:16.720 We'll give you these really generous pension programs. 145 00:14:16.720 --> 00:14:21.360 And given that the pension program, of course, isn't going to come due until 10, 20, 30 years 146 00:14:21.360 --> 00:14:27.880 down the line, it's an easy way for politicians to, in the present, and the payout will come 147 00:14:27.880 --> 00:14:30.440 long after the politicians involved are retired. 148 00:14:30.440 --> 00:14:32.240 It was a clever scheme. 149 00:14:32.240 --> 00:14:39.000 But like many clever schemes, the giant footnote that no one paid attention to is now coming 150 00:14:39.000 --> 00:14:40.000 to the fore. 151 00:14:40.000 --> 00:14:44.000 And we're seeing now, I was just in Ohio the other day, and apparently there's going 152 00:14:44.000 --> 00:14:48.000 to be a similar sort of showdown there, not just with the teachers, but also with police 153 00:14:48.000 --> 00:14:49.000 and fire. 154 00:14:49.000 --> 00:14:54.120 I mean, we've seen in New York, they've got countless people retiring with six-figure 155 00:14:54.120 --> 00:14:55.120 tax-free pensions. 156 00:14:55.120 --> 00:14:56.120 It's astonishing. 157 00:14:56.120 --> 00:15:01.400 At some point, in fact, last year, it got so bad that the governor of New York even 158 00:15:31.400 --> 00:15:38.400 I don't know exactly when that moment is, but I certainly wouldn't want to be invested in municipal bonds or anything like that at a time like this. 159 00:15:38.400 --> 00:15:44.400 I want to move on to what we're doing with the economy, especially after the credit crisis. 160 00:15:44.400 --> 00:15:53.400 And I want to move on to these gargantuan deficits that we have coming from Social Security, Medicaid, Medicare. 161 00:15:53.400 --> 00:16:02.400 Medicare, and then on top of that, in 2010, we pass an additional entitlement with Obamacare. 162 00:16:02.400 --> 00:16:09.320 I mean, the system's broke as it is, and it's like somebody that has run their credit cards 163 00:16:09.320 --> 00:16:15.120 up to the hilt is facing bankruptcy and then is suddenly granted a new credit card to go 164 00:16:15.120 --> 00:16:16.840 out and spend even more. 165 00:16:16.840 --> 00:16:17.840 This is insane. 166 00:16:17.840 --> 00:16:23.520 It absolutely is, and so in probably one of the tamest of my chapters, I do talk about 167 00:16:23.520 --> 00:16:24.520 Obamacare. 168 00:16:24.520 --> 00:16:30.000 Basically, it's Obamacare for people like me who are not that interested in the details 169 00:16:30.000 --> 00:16:31.000 of health care. 170 00:16:31.000 --> 00:16:35.000 Just tell me what's wrong with this thing, why should we not have done it, what would 171 00:16:35.000 --> 00:16:36.720 be a better alternative? 172 00:16:36.720 --> 00:16:41.320 But one thing that's interesting about this is that one of the architects of the Obama 173 00:16:41.320 --> 00:16:47.760 plan, just a few weeks ago even, just openly admitted that this is not a cost-cutting measure, 174 00:16:47.760 --> 00:16:54.080 The Cost Cutting Plan, which we were promised, well that'll come down the road, but we thought 175 00:16:54.080 --> 00:16:56.080 coverage was more important first. 176 00:16:56.080 --> 00:17:00.540 So we've been assured that really people like you and me were just worried about nothing 177 00:17:00.540 --> 00:17:05.080 because don't worry, Obamacare is going to do the cost containment for us, and so a lot 178 00:17:05.080 --> 00:17:07.740 of these nightmare scenarios aren't going to occur. 179 00:17:07.740 --> 00:17:10.040 But to the contrary, it does nothing. 180 00:17:10.040 --> 00:17:13.760 Explain to me what exactly this thing does to contain cost. 181 00:17:13.760 --> 00:17:19.620 It aggravates every existing trend that has led to higher costs, and I can think of maybe 182 00:17:19.620 --> 00:17:24.200 half a dozen ways that it does that, and this just sort of brings to mind, I have heard 183 00:17:24.200 --> 00:17:30.680 through the grapevine that one of the things that Congressman Ron Paul is toying with if 184 00:17:30.680 --> 00:17:34.960 he were to run for president, now I don't have any direct line on this, but I've heard 185 00:17:34.960 --> 00:17:40.640 indirectly, is this possibility, basically saying to young people who are obviously going 186 00:17:40.640 --> 00:17:45.280 to get the short end of this stick. That's obvious. But really to anybody in the country, 187 00:17:45.280 --> 00:17:50.580 he's toying with this, saying, what would you say if we offered you this deal? You can 188 00:17:50.580 --> 00:17:58.160 be taxed 10%, we'll tax you 10% at that rate, and in return for getting that kind of tax 189 00:17:58.160 --> 00:18:02.740 rate, you get to opt out of the system. You don't get any of the so-called benefits, but 190 00:18:02.740 --> 00:18:08.160 all you ever have to pay is 10%. Would you take that deal? I mean, I think there would 191 00:18:38.160 --> 00:18:54.160 The answer to our problems are not going to be found inside that box. That's the source of our problems. That box needs to be crushed into the ground and set on fire and that's more or less what I've committed myself to. 192 00:18:54.160 --> 00:19:00.160 Well, it's amazing because, you know, one of the things that always disturbs me, Tom, 193 00:19:00.160 --> 00:19:06.400 is whenever they talk about, and you see this in the media with the Sunday Talk shows, that 194 00:19:06.400 --> 00:19:12.720 somehow there's some new tax that could pay for all this, or the one my favorite is the 195 00:19:12.720 --> 00:19:15.240 Social Security Trust Fund is sound. 196 00:19:15.240 --> 00:19:21.640 I mean, I looked at last year's financial statement for the government, and as you know, 197 00:19:21.640 --> 00:19:26.320 Tom, the government has been running these huge surpluses in Social Security. 198 00:19:26.320 --> 00:19:29.240 They spend the money and issue an IOU. 199 00:19:29.240 --> 00:19:33.600 Well that trust fund, you know, when I think of a trust fund, I think of, you know, like 200 00:19:33.600 --> 00:19:36.640 a pension account where money's been set aside. 201 00:19:36.640 --> 00:19:43.400 It's invested in stocks and bonds and some kind of asset that will be there to make payments 202 00:19:43.400 --> 00:19:48.560 when people need them, as most corporate pension plans are. 203 00:19:48.560 --> 00:19:50.640 But the government has no trust fund. 204 00:19:50.640 --> 00:20:19.200 Well Jim, not too long ago, Peter Schiff had on his program a former social security actuary. 205 00:20:19.200 --> 00:20:20.480 And Schiff just came out and said, 206 00:20:20.480 --> 00:20:22.960 do you know what a Ponzi scheme is? 207 00:20:22.960 --> 00:20:24.480 And the guy said, well, yeah, of course. 208 00:20:24.480 --> 00:20:25.640 And Schiff said, what's the difference 209 00:20:25.640 --> 00:20:28.280 between Social Security and a Ponzi scheme? 210 00:20:28.280 --> 00:20:32.960 And Jim, I kid you not, the line went dead, dead silence. 211 00:20:32.960 --> 00:20:35.980 And of course, on radio, dead silence is murder. 212 00:20:35.980 --> 00:20:38.000 I mean, you've got to fill that silence. 213 00:20:38.000 --> 00:20:39.920 So Schiff said, look, you know what? 214 00:20:39.920 --> 00:20:42.480 I'll give you the whole break to think over your answer. 215 00:20:42.480 --> 00:20:44.400 So they went to a commercial break, they come back, 216 00:20:44.400 --> 00:20:46.540 the guy still has no answer. 217 00:20:46.540 --> 00:20:48.920 Well, it's not like he was asking some critic 218 00:20:48.920 --> 00:20:49.920 of Social Security. 219 00:20:49.920 --> 00:20:54.640 He's talking to one of the guys who's involved in it, and of course, I mean, this Social 220 00:20:54.640 --> 00:21:00.720 Security Trust Fund, I mean, they must think we are seriously a bunch of stupid rubes to 221 00:21:00.720 --> 00:21:02.800 still be pulling this Social Security Trust Fund. 222 00:21:02.800 --> 00:21:03.800 Yeah, you're right. 223 00:21:03.800 --> 00:21:08.360 Any year there's a surplus of income over outlays with Social Security, yeah, there's 224 00:21:08.360 --> 00:21:11.480 a surplus, so you think, oh, that surplus probably goes in the Trust Fund. 225 00:21:11.480 --> 00:21:17.720 No, the surplus, as you say, is blown immediately on other things, and IOUs in that amount are 226 00:21:47.720 --> 00:21:51.720 I mean, no one would be able to get away with that, whereas here, when it comes to the government, 227 00:21:51.720 --> 00:21:54.720 well, we just consider this to be public policy, and that's just the way it is. 228 00:21:54.720 --> 00:21:59.880 It's unbelievable the double standard whereby we will look the other way at the most unbelievable 229 00:21:59.880 --> 00:22:07.160 outrage that's perpetrated in the public sector, whereas the private sector is constantly slammed 230 00:22:07.160 --> 00:22:13.080 and denounced as the den of exploiters and so on and on, people who care nothing for 231 00:22:13.080 --> 00:22:14.080 the common good. 232 00:22:14.080 --> 00:22:16.400 It is exactly the opposite, as far as I can see. 233 00:22:16.400 --> 00:22:21.080 I want to move on to, once again, something we discussed earlier, and any time there's 234 00:22:21.080 --> 00:22:26.280 an economic crisis, you know, there's cries from, you know, the Paul Krugmans in the world 235 00:22:26.280 --> 00:22:29.840 and politicians, the government needs to do something about it. 236 00:22:29.840 --> 00:22:35.600 And when we take a look at, even the New York Times talked about when the stimulus package 237 00:22:35.600 --> 00:22:43.120 was put together, it was drafted by inside corporations so it would favor money distributed 238 00:22:43.120 --> 00:22:44.120 to themselves. 239 00:22:44.120 --> 00:23:14.120 and much of the debate over the stimulus turned unfortunately in terms of how much pork the problem was with the fiscal stimulus is really tooth fairy economics as many economists know much of the recovery came from an inventory rebuild and what jobs the only jobs that were created were government jobs and yet you have talk right now about there's even talk what happens in June when the feds 240 00:23:14.120 --> 00:23:20.480 QE2 ends, there's even talk about maybe a new spending program, and let's talk about, 241 00:23:20.480 --> 00:23:27.200 Tom, in this TARP money that the public saw in bailing out a lot of these banks in corporations. 242 00:23:27.200 --> 00:23:30.440 Okay, a lot of those banks have paid back some of the money. 243 00:23:30.440 --> 00:23:31.440 What happened? 244 00:23:31.440 --> 00:23:34.400 Was that money used by the government to pay down its debt? 245 00:23:34.400 --> 00:23:35.880 No, they spent it. 246 00:23:35.880 --> 00:23:41.640 Well, all of this combined, I mean, it's like if you were to try to devise a plan that would 247 00:23:41.640 --> 00:23:43.960 would consist of all the wrong things. 248 00:23:43.960 --> 00:23:46.920 I couldn't possibly improve on what they've done. 249 00:23:46.920 --> 00:23:49.900 And in the short run, they've put some Band-Aids 250 00:23:49.900 --> 00:23:53.160 and scotch tape on this crumbling building 251 00:23:53.160 --> 00:23:56.700 and saying, hey, look, the thing's still standing. 252 00:23:56.700 --> 00:23:59.720 I'd like to know what's in Ben Bernanke's personal portfolio. 253 00:23:59.720 --> 00:24:01.560 Is there any way to find that out? 254 00:24:01.560 --> 00:24:05.000 I'd love to know, or if anybody on CNBC 255 00:24:05.000 --> 00:24:08.360 who tells me I don't need to be in precious metals, 256 00:24:08.360 --> 00:24:10.120 that's just a lot of scare talk, 257 00:24:10.120 --> 00:24:11.460 how many of them are in precious metal? 258 00:24:11.460 --> 00:24:18.460 I just like to know. But yeah, when we look at all this, we look at TARP and we're told that this was all wonderful and the taxpayers made money. 259 00:24:18.460 --> 00:24:23.460 Well, on net, they didn't make money. On net, when you include all the TARP spending, it still was a loss. 260 00:24:23.460 --> 00:24:30.460 But also, this is all a good thing only if you think preserving Wall Street as we knew it was an end in itself. 261 00:24:30.460 --> 00:24:37.460 Whereas I don't think that was a good thing. I don't think it should be preserved as we knew it. I think it should be forced to restructure. 262 00:24:37.460 --> 00:25:07.460 and then in terms of the stimulus package well you're right it's not the pork and of course you can find ridiculous spending programs in the stimulus everybody knows that but the key objection to the stimulus is partly that of course the resources devoted to the stimulus have to come from somewhere so instead of being directed to genuine consumer demand they're redeployed in these arbitrary projects and also that the stimulus spending is totally irrelevant to the problem the problem is 263 00:25:07.460 --> 00:25:37.460 is that, as the Austrians would say, is that during the boom, we had artificially low interest rates, and the significance of that is that when interest rates are pushed down, it's not that more investment takes place, it's that different kinds of investment take place than would otherwise take place, investment that is more sensitive to interest rates. So if it's some project whereby I may not see a profit for five years and I'm going to have to borrow for five years, that type of project, like building a new 264 00:26:07.460 --> 00:26:09.860 the Wrong Time, and then we get the crash. 265 00:26:09.860 --> 00:26:12.380 Well, how does stimulus spending get us out of it? 266 00:26:12.380 --> 00:26:14.740 It just blows a lot of arbitrary money. 267 00:26:14.740 --> 00:26:16.860 We don't need more arbitrary money blown. 268 00:26:16.860 --> 00:26:22.620 We need the free market unhampered to use the price system to reallocate resources out 269 00:26:22.620 --> 00:26:26.540 of bubble sectors and into previously starved sectors. 270 00:26:26.540 --> 00:26:31.780 And we can't know what those are because we're not central planners, only entrepreneurs 271 00:26:31.780 --> 00:26:36.460 acting in response to what they're seeing in the price system. 272 00:26:36.460 --> 00:27:06.460 So in other words, it's not that we're saying we should do nothing. Government should do nothing, but we should do something. Entrepreneurs, private property owners, risking their own capital, they should do something. They should be allowed to do something without constantly being hampered and getting all these false signals and getting bubble sectors propped up and tax credits to keep expanding the bubble sector. No! That is taking wealth away from where it belongs and propping up our 273 00:27:06.460 --> 00:27:10.220 Artificial, phony, baloney wealth that never really existed in the first place. 274 00:27:10.220 --> 00:27:15.400 You know, one area when you talk about artificial wealth, as we saw in the bailout, we got this 275 00:27:15.400 --> 00:27:17.060 saying it was too big to fail. 276 00:27:17.060 --> 00:27:24.380 We couldn't let Bear Stearns and AIG and General Motors go under because they were too big. 277 00:27:24.380 --> 00:27:30.620 If you take a look at it as the consequence, it creates a different kind of business model 278 00:27:30.620 --> 00:27:36.300 in the economy because when you have a financial institution that is so large, it's deemed 279 00:27:36.300 --> 00:27:38.860 It's too big to fail. 280 00:27:38.860 --> 00:27:44.980 It stands, Tom, to gain an artificial advantage at the expense of its competitors, because 281 00:27:44.980 --> 00:27:49.240 smaller competitors are allowed to fail. 282 00:27:49.240 --> 00:27:53.980 Lenders know that these big, large firms, and I would say that as a result of the financial 283 00:27:53.980 --> 00:27:57.700 crisis, these too big to fail firms have gotten even bigger. 284 00:27:57.700 --> 00:28:02.440 JP Morgan is a much bigger bank today, with a lot more risk exposures. 285 00:28:02.440 --> 00:28:04.400 So is Bank of America. 286 00:28:04.400 --> 00:28:09.840 So is Wells Fargo, and look at Freddie and Fanny. 287 00:28:09.840 --> 00:28:14.580 You couldn't touch them in the 80s, but look how much they're hemorrhaging. 288 00:28:14.580 --> 00:28:16.960 Every month they're still losing billions of dollars. 289 00:28:16.960 --> 00:28:17.960 Yeah. 290 00:28:17.960 --> 00:28:22.600 I've got a bunch of stuff in Rollback about the too big to fail thing, and of course one 291 00:28:22.600 --> 00:28:27.320 of the ways that a too big to fail institution gets an artificial advantage is that it can 292 00:28:27.320 --> 00:28:32.040 borrow more cheaply, because it has this, you might call it a negative risk premium 293 00:28:32.040 --> 00:28:33.040 built in. 294 00:28:33.040 --> 00:28:37.680 have this kind of assurance, and as we've seen it's indeed a well-founded assurance, that 295 00:28:37.680 --> 00:28:41.080 their money will be perfectly safe and don't worry about it because this is a too big to 296 00:28:41.080 --> 00:28:47.360 fail institution, whereas the smaller ones, smaller institutions have a genuine risk premium 297 00:28:47.360 --> 00:28:52.840 built in and you know this is an industry in which just the tiniest difference in interest 298 00:28:52.840 --> 00:28:59.400 rates which they can borrow means everything, in terms of profits and so forth. 299 00:28:59.400 --> 00:29:03.960 If it goes beyond just the financial sector and Fannie and Freddie, I mean, we see this 300 00:29:03.960 --> 00:29:08.820 also, I remember when I was a kid, if anybody would say that we need to look at the military 301 00:29:08.820 --> 00:29:12.560 budget, I would have said, what are you, some kind of commie? I mean, of course, nothing 302 00:29:12.560 --> 00:29:17.480 wrong with the military budget, perfectly fine. Well, there we also see the too-big-to-fail 303 00:29:17.480 --> 00:29:23.120 phenomena, that we have this very cozy relationship between certain military firms and the government, 304 00:29:23.120 --> 00:29:28.640 such that we've seen implicit bailouts of these firms, like when Lockheed was in trouble, 305 00:29:28.640 --> 00:29:33.760 It got the contract with the Trident missile, or when Boeing was in trouble, it got a bizarre 306 00:29:33.760 --> 00:29:40.560 contract to lease 767 passenger jets to the military at a time when the military was actually 307 00:29:40.560 --> 00:29:43.440 saying, we don't need these jets, these are not appropriate for what we need, and it would 308 00:29:43.440 --> 00:29:47.360 actually be cheaper for us to buy them outright than to lease them from Boeing. 309 00:29:47.360 --> 00:29:51.240 The leasing agreement went through anyway to prop up Boeing when it was in trouble. 310 00:29:51.240 --> 00:29:58.600 I mean, this is just, it permeates the whole system, and meanwhile, the brain-dead left 311 00:29:58.600 --> 00:30:03.520 clings to the idea that the Federal Government is a wonderful progressive institution looking 312 00:30:03.520 --> 00:30:04.880 out for the little guy. 313 00:30:04.880 --> 00:30:08.160 How deluded would you have to be to draw that conclusion? 314 00:30:08.160 --> 00:30:11.520 I don't know, but you know, here's another one, too. 315 00:30:11.520 --> 00:30:19.240 It's not just the bailouts that we've seen, the huge, massive, and I mean massive deficits. 316 00:30:19.240 --> 00:30:24.520 I never would have thought in my career when I started in this business 30 years ago we 317 00:30:24.520 --> 00:30:30.120 would be sitting here having a conversation about a $1.7 trillion deficit. 318 00:30:30.120 --> 00:30:33.160 That kind of number was just unimaginable. 319 00:30:33.160 --> 00:30:38.660 But let's talk about also the financial reform bill, all these regulators. 320 00:30:38.660 --> 00:30:44.300 Now I recently interviewed an individual that played an advisory role to the movie Inside 321 00:31:14.300 --> 00:31:22.700 more laws, more regulations if those who charged with enforcing them don't do so because, I 322 00:31:22.700 --> 00:31:26.420 mean, look at the SEC when they were given evidence on Bernie Madoff. 323 00:31:26.420 --> 00:31:27.420 Yeah. 324 00:31:27.420 --> 00:31:30.020 They're too busy watching computer porn to do anything about it. 325 00:31:30.020 --> 00:31:31.020 Yeah. 326 00:31:31.020 --> 00:31:34.020 I mean, that was seriously true that that was a big problem at the SEC because they're 327 00:31:34.020 --> 00:31:35.020 doing that instead. 328 00:31:35.020 --> 00:31:41.780 The financial reform bill, it's one of these things where everybody knows that we're going 329 00:31:41.780 --> 00:31:44.260 to have to just wait to see what it really means. 330 00:31:44.260 --> 00:32:14.260 This really is a Nancy Pelosi, you've got to pass the bill so you can find out what's in it kind of situation, because when you look at the text of it, there are over 100 uses of the phrase, the committee shall decide, the committee shall determine, and gee, who do you think is going to get to have many? Is it going to be Joe Blow at local community bank? Is it going to be some guy with a retail toy store? Who do you think is going to get these meetings? 331 00:32:14.260 --> 00:32:20.620 Another attempt to game the system as before, and then Kotlikoff, whom you mentioned earlier, 332 00:32:20.620 --> 00:32:27.260 he identified 115 distinct regulatory bodies for the financial sector. 333 00:32:27.260 --> 00:32:32.420 And in doing so, he was implicitly saying, you'll forgive me if I'm skeptical of the 334 00:32:32.420 --> 00:32:36.100 idea that if only we had had 116, then we wouldn't have had this problem. 335 00:32:36.100 --> 00:32:40.240 Look, first of all, the whole system is screwed up from the Federal Reserve on down. 336 00:32:40.240 --> 00:32:43.500 It gives exactly the wrong incentives to every major player. 337 00:32:43.500 --> 00:32:46.860 That's a fact, and that plays no role in the financial reform. 338 00:32:46.860 --> 00:32:53.020 But secondly, let's consider that the regulators who are supposed to keep us all safe, we attribute 339 00:32:53.020 --> 00:32:58.060 to these people superhuman qualities that usually they don't really deserve. 340 00:32:58.060 --> 00:33:01.620 I mean, these are usually just time-serving drones. 341 00:33:01.620 --> 00:33:04.580 Let's face it, these are not separate race of supermen. 342 00:33:04.580 --> 00:33:08.380 The regulators basically didn't see anything wrong, and they said that repeatedly. 343 00:33:08.380 --> 00:33:12.260 I mean, even the Federal Reserve chairman at the time, Greenspan and Bernanke, were 344 00:33:12.260 --> 00:33:19.260 The Theory of Money and Credit 345 00:33:42.260 --> 00:34:05.260 The natural watchdog function of these people is artificially diminished by these sorts of interventions. 346 00:34:05.260 --> 00:34:11.760 Much more trust somebody with his own box on the line than I would Joe Blow regulator 347 00:34:11.760 --> 00:34:15.020 because most of these regulators, let's face it, these are not the kids who graduated number 348 00:34:15.020 --> 00:34:16.460 one from Harvard Business School. 349 00:34:16.460 --> 00:34:21.180 These are the people who graduated number 512 from Podunk Business School. 350 00:34:21.180 --> 00:34:25.340 I'm pretty sure that the bright businessmen are going to run rings around these people 351 00:34:25.340 --> 00:34:26.420 regardless of what happens. 352 00:34:26.420 --> 00:34:29.540 I don't trust them to keep the system sound. 353 00:34:29.540 --> 00:34:36.500 I want a total reform of the monetary system and I want a much diminished or eliminated 354 00:34:36.500 --> 00:34:37.500 Fed. 355 00:34:37.500 --> 00:34:43.500 And then we might have some chance of a system that actually works instead of trying to constantly 356 00:34:43.500 --> 00:34:46.860 add more scotch tape to a house of cards. 357 00:34:46.860 --> 00:34:49.900 I want to move on to the elephant in the room. 358 00:34:49.900 --> 00:34:57.140 And so much of my business, Tom, is focused on every single little nuance or pronouncement 359 00:34:57.140 --> 00:35:04.760 by the Fed officials, and the Fed is expanding its balance sheet, and there's already talk 360 00:35:04.760 --> 00:35:09.740 that QE2 will come to an end, I just don't see that happening. 361 00:35:09.740 --> 00:35:16.900 When the government is running a budget deficit of about $130 billion a month, plus we have 362 00:35:16.900 --> 00:35:25.660 almost more than $200 billion a month of short-term debt coming due, that's almost $350 billion 363 00:35:55.660 --> 00:36:05.660 is Bernanke has gone before Capitol Hill last week and he's gone before in the various speeches he's made the last couple of weeks 364 00:36:05.660 --> 00:36:14.660 where he said look at this QE thing I've done, it's wonderful, look at stock prices since we put QE2 into effect, the stock market is up 365 00:36:14.660 --> 00:36:23.180 up, but then he refuses to take any blame for the rise in commodity prices, the rise in 366 00:36:23.180 --> 00:36:29.700 food prices, the rise in cost structures that we're seeing as a result of inflation heating 367 00:36:29.700 --> 00:36:30.700 up. 368 00:36:30.700 --> 00:36:35.180 Let's talk about the Federal Reserve and its role that it has played in these crises. 369 00:36:35.180 --> 00:36:39.860 Well, this is another example of, I think it's the classic example of the propaganda 370 00:36:39.860 --> 00:36:43.780 version of history as opposed to the real one, and that's why I've got a whole chapter 371 00:36:43.780 --> 00:37:08.780 When you look at the Fed's mandate for a number of decades, it's got to keep price inflation low and output and employment high. 372 00:37:08.780 --> 00:37:13.820 Well, okay, has it succeeded or not? Well, we're told repeatedly that, you know, good 373 00:37:13.820 --> 00:37:17.820 heavens, what kind of a neanderthal would you have to be not to recognize that things 374 00:37:17.820 --> 00:37:22.220 have been much improved since we had the Fed, we've had fewer recessions and they have been 375 00:37:22.220 --> 00:37:27.020 shorter and shallower and so on and on. Well, actually, that's not true, believe it or not. 376 00:37:27.020 --> 00:37:31.820 I realize that this will meet some resistance, but I've got all the statistics in the Fed 377 00:37:31.820 --> 00:37:37.420 chapter. The key thing is that up until relatively recently, we've been relying on statistics 378 00:37:37.420 --> 00:37:43.100 from before the Fed that turn out to be unreliable. And in fact, even Christina Romer, who was 379 00:37:43.100 --> 00:37:49.060 a chief economist under Obama, so is by no means a Ron Paul and the Fed type, she wrote 380 00:37:49.060 --> 00:37:52.980 a couple of very important academic papers that others have followed up on, basically 381 00:37:52.980 --> 00:37:58.100 saying that the numbers are so unreliable from the time around the creation of the Fed 382 00:37:58.100 --> 00:38:02.580 and beforehand that, I mean, you might as well be using tea leaves to figure out what's 383 00:38:02.580 --> 00:38:04.580 The Theory of Money and State The Theory of Money and State 384 00:38:32.580 --> 00:38:57.580 Dave Ramsey 385 00:38:57.580 --> 00:38:58.580 Steve Ramsey 386 00:39:27.580 --> 00:39:32.340 Speculator, going into financial markets where they have no business being in the first place, 387 00:39:32.340 --> 00:39:37.260 just to hang on to the purchasing power of their nest egg, how is this? This is how the 388 00:39:37.260 --> 00:39:41.180 average person is affected by the Fed. How is this an unambiguous improvement? 389 00:39:41.180 --> 00:39:47.380 It isn't. The thing about this is there is no such thing as free lunch, despite Ben Bernanke's 390 00:39:47.380 --> 00:39:53.180 speech in 2002 where he said this government has this wonderful invention called the printing 391 00:40:53.180 --> 00:41:22.180 Tom, if we do not take any steps, and the kind of steps that you're talking about, I almost would give the example, it's like you just went to your doctor, you weigh 350 pounds, your cholesterol is 350, your arteries are clogged, and your doctor is saying, look, you need to go on a diet, you need to cut, you need to start exercising gradually, or you're going to die of a heart attack. 392 00:41:22.180 --> 00:41:26.880 I mean, the kind of things that you're talking about, given the size of government, you're 393 00:41:26.880 --> 00:41:30.020 talking about some dramatic cuts. 394 00:41:30.020 --> 00:41:35.300 In one of your chapters, you're talking about we as Americans are going to see something 395 00:41:35.300 --> 00:41:40.660 that we have never seen, probably in our nation's history, the kind of cuts that you're talking 396 00:41:40.660 --> 00:41:45.680 about that will be either taken voluntarily or be forced upon us. 397 00:41:45.680 --> 00:41:51.380 And every year that the entitlement problem is not addressed, we add to that problem a 398 00:41:51.380 --> 00:41:55.940 a figure somewhere between two and four trillion dollars every single year. So when the president 399 00:41:55.940 --> 00:42:00.300 says, well, you know, now's not the time to make any real changes. We have to just stand 400 00:42:00.300 --> 00:42:05.420 pat. It would be irresponsible to make dramatic changes right now. No, what's irresponsible 401 00:42:05.420 --> 00:42:10.100 is not to make them because then when the collapse comes, it's all the worst because 402 00:42:10.100 --> 00:42:15.340 then it's been underfunded all the worse all those years. And people continue because again 403 00:42:15.340 --> 00:42:18.860 of that naive view they got in the sixth grade that the experts are in charge and they're 404 00:42:48.860 --> 00:42:53.180 the budget by five hundred billion dollars in one year which is you know 405 00:42:53.180 --> 00:42:57.500 it's not even one-third of the problem given as you mentioned nearly one point 406 00:42:57.500 --> 00:43:01.060 seven trillion dollar deficit they were practically reaching for his heel cut 407 00:43:01.060 --> 00:43:05.300 his head off or they just ignored it and so he wrote in the Wall Street Journal 408 00:43:05.300 --> 00:43:09.340 he said look if anybody's got a better proposal or you've got other things that 409 00:43:09.340 --> 00:43:13.460 you would cut apart from the things I'm proposing I'd love to hear it and the 410 00:43:13.460 --> 00:43:18.500 response of course was cricket that no response at all but this is at least he's 411 00:43:18.500 --> 00:43:25.500 The Theory of Money and Credit 412 00:43:48.500 --> 00:43:54.380 have to be made very quickly in a time of great social upheaval and we will say to ourselves 413 00:43:54.380 --> 00:43:59.620 if only we could have made these changes back when we could have done them in times of tranquility 414 00:43:59.620 --> 00:44:04.700 and when we could have done them as sober adults, shame on us for missing that opportunity. 415 00:44:04.700 --> 00:44:10.180 Tom, how do you think this gets resolved because it doesn't matter whether it's Republicans 416 00:44:10.180 --> 00:44:16.300 or Democrats, I mean you've got Republicans talking about 60 billion in cuts in a year 417 00:44:16.300 --> 00:44:26.840 The National Debt is growing by leaps and bounds and at some point interest is going 418 00:44:26.840 --> 00:44:33.060 to consume almost 40% of government revenues, gross revenues. 419 00:44:33.060 --> 00:44:38.460 So sooner or later, we will either hyperinflate our way or we're going to default, but in 420 00:44:38.460 --> 00:44:45.620 your opinion, how does this thing get resolved because there doesn't appear to be any awareness 421 00:44:45.620 --> 00:44:52.780 or suggestions coming from the media, they're basically like lap dogs at press conferences, 422 00:44:52.780 --> 00:44:57.860 you're not seeing it come from Wall Street who loves the party time that stocks are going 423 00:44:57.860 --> 00:44:58.860 up. 424 00:44:58.860 --> 00:44:59.860 So how does this get resolved? 425 00:44:59.860 --> 00:45:03.900 Well, I'd love it to be resolved by people coming to their senses and saying, look, we're 426 00:45:03.900 --> 00:45:08.360 going to go through some very difficult years for a while, but it's unavoidable. 427 00:45:08.360 --> 00:45:12.620 And on the other side of this, we will emerge with a more robust economy, we'll be able 428 00:45:42.620 --> 00:46:12.620 The Federal Reserve, fiat money, fractional reserve banking, Human Action, man economy, 429 00:46:12.620 --> 00:46:16.620 and we all know our pensions are denominated in dollars so we're not doing that and you could 430 00:46:16.620 --> 00:46:21.580 see all kinds of things happen in the crisis you could see congress try to nationalize the fed 431 00:46:21.580 --> 00:46:25.740 and get that printing press from them and just start printing the money that's possible that 432 00:46:25.740 --> 00:46:31.420 it's more possible they would do that i think than that the fed would just go along with hyperinflation 433 00:46:31.420 --> 00:46:37.980 but regardless the possibilities are all pretty grim and as i say they would demand very dramatic 434 00:46:37.980 --> 00:46:43.340 changes in a very short amount of time. And when I say repealing big government through 435 00:46:43.340 --> 00:46:48.300 the collapse, what I mean is that when it comes down to a question of either we unplug 436 00:46:48.300 --> 00:46:52.740 your granny or we abolish the Department of Education, I think I know how most people 437 00:46:52.740 --> 00:46:56.040 are going to come down on this. You know, I'm pretty sure local parents could probably 438 00:46:56.040 --> 00:47:00.380 run their own schools without the privilege, without paying taxes for the privilege of 439 00:47:00.380 --> 00:47:04.420 being bossed around by their betters. I'm pretty sure we'd get by just fine without 440 00:47:04.420 --> 00:47:34.420 I think we had some education in this country before 1979 when we got that department. I think we'll be okay. I think that's when we'll see the big changes and probably not before. I'm doing my best with rollback and my public speaking, whatever, to try to resolve this as quickly as possible so that we don't just... so that this slow motion train wreck can be stopped. But I don't know if it's possible. 441 00:48:04.420 --> 00:48:12.060 It's a shame, again, because I remember years ago before I had children, and people would 442 00:48:12.060 --> 00:48:15.060 say, oh gosh, you know, what we're doing to our children, and I'd say, yeah, yeah, yeah, 443 00:48:15.060 --> 00:48:20.400 this is all kind of cloying and sentimental, but you know, now I've got four little girls, 444 00:48:20.400 --> 00:48:25.260 and I think, my gosh, you know, I think back to the years when I grew up, you know, I mean, 445 00:48:25.260 --> 00:48:29.420 I was a kid in the 80s, and I was in college in the early 90s, and you know, I got out 446 00:48:29.420 --> 00:48:31.260 of college, and there were just jobs everywhere. 447 00:48:31.260 --> 00:48:35.780 was great, booming, and it just seemed almost like this was the natural order of things. 448 00:48:35.780 --> 00:48:41.060 And of course it is the natural order of things when you have a normal economy. At that time 449 00:48:41.060 --> 00:48:45.860 we still had, I think we've had a lot of fed distortion of the economy, we've had a lot 450 00:48:45.860 --> 00:48:51.420 of prosperity that's been not really genuine prosperity, but the point was that we at least 451 00:48:51.420 --> 00:48:55.380 had optimism at that time, and it just seemed like whatever my criticisms of the way the 452 00:48:55.380 --> 00:48:58.860 economy is being run, you know, at least it's delivering the goods and somehow it's all 453 00:49:28.860 --> 00:49:35.860 The Theory of Money and Credit 454 00:49:58.860 --> 00:50:28.860 You know, I think it's eventually going to get to that because, you know, politicians as you know will scramble to keep anything going. I mean, they'll kick the can down the road. And I suspect we are going to see QE3. Maybe we'll have to go through some gyrations in the market. But next year is the presidential election year. And it's going to be a tough year. I think it's going to be a tough year. 455 00:50:28.860 --> 00:50:32.540 You know, Tom, who's going to want to get on the stump, whether you're running for president, 456 00:50:32.540 --> 00:50:35.860 senator or the House of Representatives high? 457 00:50:35.860 --> 00:50:40.780 If you elect me, I'm going to cut your benefits, I'm going to raise taxes or I'm going to do 458 00:50:40.780 --> 00:50:41.780 something like that. 459 00:50:41.780 --> 00:50:46.300 That's not the message you hear from, you know, your politician during an election year. 460 00:50:46.300 --> 00:50:47.860 They're usually handing out lollipops. 461 00:50:47.860 --> 00:50:53.220 That's true, but this year what will be interesting is if Ron Paul runs and then also Governor 462 00:50:53.220 --> 00:50:57.900 Gary Johnson runs, and Gary Johnson is basically calling for cutting a billion, a trillion 463 00:50:57.900 --> 00:51:27.900 The Theory of Money and Credit 464 00:51:27.900 --> 00:51:36.620 The name of the book is called Rollback, Repealing Big Government Before the Coming Fiscal Collapse. 465 00:51:36.620 --> 00:51:39.700 It's written by Thomas E. Woods, Jr. 466 00:51:39.700 --> 00:51:40.700 Tom's been my guest. 467 00:51:40.700 --> 00:51:42.660 Tom, thanks for coming on the program. 468 00:51:42.660 --> 00:51:46.620 All the best to you with this book and hopefully we can get enough American people to start 469 00:51:46.620 --> 00:51:50.700 reading it and understand the challenges we face in the next decade. 470 00:51:50.700 --> 00:51:51.700 Thanks, Jim. 471 00:51:51.700 --> 00:51:55.580 In fact, they can read chapter one for free if they go to tomwoods.com. 472 00:51:55.580 --> 00:52:00.140 I can read that and that's the most important one, so tomwood.com, read that for free and 473 00:52:00.140 --> 00:52:02.140 I'll never bother you again, I promise. 474 00:52:02.140 --> 00:52:04.340 Alright, Tom, all the best to you, sir. 475 00:52:04.340 --> 00:52:05.660 Thanks a million, Jim, appreciate it.