WEBVTT NOTE A Recipe for the Next Great Depression 1 00:00:00.000 --> 00:00:30.000 I'm going to talk about a recipe for the next Great Depression, and I'm going to recommend a book, I'm not sure if it's for sale out there or not, but it's a friend of ours named Jim Powell, who wrote this book called FDR's Folly a couple years ago, and what Jim is good at is, and he was a student of Hayek, of Friedrich Hayek, back at the University of Chicago way back when, and what he's good at is he read about 50 years of academic research on the effects of the New Deal on the economy. 2 00:00:30.000 --> 00:01:00.000 and summarized it in very readable language in this book FDR is Falling and so it's a great resource if you want to know you know what was the effect of the Tennessee Valley Authority during the during the New Deal years in the Great Depression what was the effect of the creation of the FDIC and so forth you know chapter after chapter and at the end of the book the last chapter after summarizing 50 years of research and it's all footnoted there you know hundreds of footnotes to 3 00:01:00.000 --> 00:01:05.920 academic, you know, boring academic literature. And if you want to pursue that, the last chapter 4 00:01:05.920 --> 00:01:12.120 gives, you know, lessons we should have learned from the New Deal. You know, what mistakes 5 00:01:12.120 --> 00:01:20.080 were made in those days by FDR and his regime that we should not repeat. And so I'd like 6 00:01:20.080 --> 00:01:27.240 to talk about some of these. In lesson number one here is, and I'll quote Jim Powell, he 7 00:01:27.240 --> 00:01:42.240 The basic problem with central banks is that like socialist economic planners, they can never have more than a fraction of the vast knowledge needed to make a society work, knowledge that is dispersed in the minds of millions of people. 8 00:01:42.240 --> 00:01:54.240 In addition, when central bankers make mistakes, as they inevitably will, since they are human beings, these mistakes harm not just the economy in a city or a region, but the entire country. 9 00:01:54.240 --> 00:02:05.240 End quote. You know, we certainly know that now, in today's world. And he's basically parroting much of the life's work of Friedrich Hayek. 10 00:02:05.240 --> 00:02:13.240 This is the famous Hayekian knowledge problem that he's talking about. Hayek called it the pretense of knowledge. 11 00:02:13.240 --> 00:02:23.240 He believed socialism could never work because to have an economy operate, you need decentralized information in the minds of many millions of people all around the world 12 00:02:23.240 --> 00:02:26.240 who participate in the International Division of Labor. 13 00:02:26.240 --> 00:02:33.240 And it wasn't only Hayek's idea, but he was the most prominent spreader of that idea. 14 00:02:33.240 --> 00:02:42.240 And so, when I look at this, and I look at what Ben Bernanke has been saying recently about increasing the powers of the Fed, 15 00:02:42.240 --> 00:02:51.760 It makes me think that his years as a professor at Princeton were either a matter of academic 16 00:02:51.760 --> 00:02:57.960 fraud or gross incompetence. Because consider this, in 1990, the famous socialist Robert 17 00:02:57.960 --> 00:03:04.200 Heilbrunner wrote an article in the New Yorker magazine entitled Mises was Right. This was 18 00:03:04.200 --> 00:03:09.760 after the collapse of communism and Heilbrunner had been advocating socialism in America his 19 00:03:09.760 --> 00:03:16.960 his entire career. Those of you who are my age or older or maybe 10 or 15 years younger 20 00:03:16.960 --> 00:03:22.640 probably were subjected to reading his book The Worldly Philosophers in an economics class 21 00:03:22.640 --> 00:03:27.200 and it should have been called The Left Wing Worldly Philosophers and he left out Milton 22 00:03:27.200 --> 00:03:35.040 Friedman even, not to mention Mises himself. But he admitted, well, the great battle, the 23 00:03:35.040 --> 00:03:49.040 The Great Debate over Capitalism vs. Socialism is over. Capitalism has won the intellectual debate, and he didn't entirely get it right as to why Mises won, but he capitulated. 24 00:03:49.040 --> 00:03:57.040 Now, an academic, a professor at Princeton like Ben Bernanke, should know this. You know, he doesn't have to necessarily agree with it, but he should know this. 25 00:03:57.040 --> 00:04:03.040 But what is Bernanke doing now? Well, I caught his speech in front of the Council on Foreign Relations. 26 00:04:03.040 --> 00:04:11.040 It was on television a couple of weeks ago, and he's very smug and arrogant in his outlook, in his appearance. 27 00:04:11.040 --> 00:04:15.040 And he sat back and he said, well, you know, when I was a professor at Princeton, 28 00:04:15.040 --> 00:04:20.040 I was aware that there were a few people who did believe that markets could work in a situation like this. 29 00:04:20.040 --> 00:04:24.040 But I hope there isn't anybody out there like that anymore 30 00:04:24.040 --> 00:04:29.800 has any faith that markets can handle a disruption like this and the crowd all giggled and laughed. 31 00:04:29.800 --> 00:04:33.980 The Council on Foreign Relations all giggled and laughed. And then the main purpose of his 32 00:04:33.980 --> 00:04:42.420 speech was to advocate a new grand central planning authority called the Systemic Risk 33 00:04:42.420 --> 00:04:47.020 Authority that would regulate and control all risk taking by financial institutions 34 00:04:47.020 --> 00:04:52.760 in America. I don't think the Soviets were even that crazy to think that that would be 35 00:04:52.760 --> 00:05:22.760 be a good idea. And so that's why I said either it's academic fraud in that, you know, he knows this is a bad idea, but he does it anyway. But he doesn't know this at all. He doesn't know this. He doesn't know this literature at all about why socialism failed, or, you know, he's just incompetent as an economist. How could you ignore all the literature on the great debate over socialism that existed for the past hundred years almost, but he ignores 36 00:05:22.760 --> 00:05:27.600 There's all this in this speech before the Council on Foreign Relations. 37 00:05:27.600 --> 00:05:32.020 So there's lesson number one that Jim Powell said about the Fed during the Great Depression. 38 00:05:32.020 --> 00:05:36.440 We of course are going in exactly the opposite direction, giving the Fed more and more and 39 00:05:36.440 --> 00:05:38.620 more power. 40 00:05:38.620 --> 00:05:45.640 Lesson number two is, quote Jim Powell again, deposit insurance must be priced to reflect 41 00:05:45.640 --> 00:05:49.080 the risks of the banks that buy it. 42 00:05:49.080 --> 00:06:09.080 Providing the Federal Government provide deposit insurance inevitably introduced political pressures to offer deposit insurance at the same price for all banks, which regardless of risk, which meant subsidized banks engaging in risky practices and contributed to the instability of the banking system, end quote. 43 00:06:09.080 --> 00:06:18.080 Well, that's what happened with the creation of deposit insurance in the 30s. What are we doing today? Well, we just increased deposit insurance. 44 00:06:18.080 --> 00:06:25.080 The first things they did, and you know the short history of this too is some of you might remember the SNL crisis of the 1980s. 45 00:06:25.080 --> 00:06:29.080 Well there was a government regulation called Regulation Q. 46 00:06:29.080 --> 00:06:32.080 Bureaucrats are very innovative aren't they with language. 47 00:06:32.080 --> 00:06:35.080 What should we call this? Regulation Q. 48 00:06:35.080 --> 00:06:42.080 It placed a limit of 5% on the interest that savings and loans could pay on savings accounts. 49 00:06:42.080 --> 00:06:46.920 and so what was happening was what if you could put a thousand dollars in a 50 00:06:46.920 --> 00:06:53.380 mutual fund and make 17% in 1980 but you could only make 5% in a savings 51 00:06:53.380 --> 00:06:58.480 account you know money was you know flying out of savings accounts and so 52 00:06:58.480 --> 00:07:03.760 the the SNLs were in trouble and so when the bankruptcies were occurring and so 53 00:07:03.760 --> 00:07:07.040 forth so what does the government do they increase the amount of deposit 54 00:07:07.040 --> 00:07:12.720 Insurance from $40,000 per account to $100,000 per account. 55 00:07:12.720 --> 00:07:18.280 And that meant that the risk-taking of savings and loans was being subsidized by a much greater 56 00:07:18.280 --> 00:07:20.160 extent by the government. 57 00:07:20.160 --> 00:07:25.760 And so a lot of the SNLs that were in trouble financially decided, well, we'll take on more 58 00:07:25.760 --> 00:07:32.960 risk because if this risky real estate venture in the Arizona desert doesn't work out, well, 59 00:07:32.960 --> 00:07:34.680 the government will pick up the tab. 60 00:07:34.680 --> 00:07:49.680 It's a bailout. It was a form of bailout, privatized profits, socialized losses. And, of course, they did. They took on a tremendous amount of additional risk, thinking that it would be covered by these additional deposit insurance. 61 00:07:49.680 --> 00:07:58.680 And, of course, the whole thing led to a big collapse in the SNLs, and the bailout there cost about $500 billion or so back in those days. 62 00:07:58.680 --> 00:08:04.760 and so what do we do and not you know 20 years later some 20 years later the same 63 00:08:04.760 --> 00:08:09.240 thing the same the same same dumb thing and so you know we haven't learned 64 00:08:09.240 --> 00:08:15.040 anything there either lesson number two lesson number three is this about the 65 00:08:15.040 --> 00:08:19.380 Great Depression quoting Jim Powell again especially because taxes are the 66 00:08:19.380 --> 00:08:24.400 biggest burden millions of people face today it's crucial to cut taxes tax cuts 67 00:08:24.400 --> 00:08:28.920 What's mean expanding economic liberty? How about, you know, what a remarkable thought. 68 00:08:28.920 --> 00:08:35.240 But of course, we're moving in exactly the opposite direction. You know, government spending 69 00:08:35.240 --> 00:08:41.080 is a good measure of taxation, because every dollar government spends diverts resources 70 00:08:41.080 --> 00:08:46.520 from the private voluntary sector one way or another, regardless of how it's financed. 71 00:08:46.520 --> 00:08:51.680 And so, what are we doing? We're talking about trillion dollar deficits for the next 10 years. 72 00:08:51.680 --> 00:08:57.560 That's what they're talking about, and Obama who, I don't call him Abraham Obama, I call 73 00:08:57.560 --> 00:09:04.200 him Abraham Delano Messiah Obama, because before he was inaugurated, the Democrats couldn't 74 00:09:04.200 --> 00:09:09.840 decide whether he was more like Abe Lincoln or FDR or the Messiah, and he's called the 75 00:09:09.840 --> 00:09:18.360 Messiah in the Newsweek magazine, so I call him Abraham Delano Messiah Obama, but so he's 76 00:09:18.360 --> 00:09:25.320 He's promising to cut the deficit. Yeah, that's a promise I'd put money on. But he's actually 77 00:09:25.320 --> 00:09:30.100 proposing trillion-dollar deficits. And so government spending, of course, everyone knows 78 00:09:30.100 --> 00:09:35.280 is ballooning. And that's a tax because it might not be a direct tax today out of your 79 00:09:35.280 --> 00:09:39.840 pocket, but it's a tax to the extent that all of those resources that government is 80 00:09:39.840 --> 00:09:45.880 now directing by politics will not be directed and allocated by private individuals in the 81 00:09:45.880 --> 00:10:15.880 Free Market. And so there's a huge tax. And of course, he wants to raise taxes on the most productive people. He wants to raise the capital gains tax and all sorts of other taxes. State and local governments are all scheming and plotting to raise taxes, everything from cigarette taxes to in Maryland. Now they're putting more and more and more red light cameras up to take a picture of your license plate. If you happen to run a red light and they'll send you the bill with a picture of your license plate. And that's we already have 82 00:10:45.880 --> 00:10:52.280 and every dime raised by the federal income tax, that's what it would have been, but 83 00:10:52.280 --> 00:10:56.460 that was even assuming that there would be no good economic effect to eliminating the 84 00:10:56.460 --> 00:11:02.440 income tax. But of course the economy would grow very rapidly and unfortunately that means 85 00:11:02.440 --> 00:11:06.640 that the other forms of taxes would go up that are tied to income. So it would probably 86 00:11:06.640 --> 00:11:12.580 be more like the 2002 level of government. And of course that is totally unacceptable 87 00:11:12.580 --> 00:11:27.260 Lesson 4. Efforts to soak the rich will backfire because the investments of the rich are needed 88 00:11:27.260 --> 00:11:29.900 to create jobs. 89 00:11:29.900 --> 00:11:35.780 You may have noticed the rich now, a good way of learning how the Washington Establishment 90 00:11:35.780 --> 00:11:41.020 defines the rich is take a look at the alternative minimum tax was it was 91 00:11:41.020 --> 00:11:47.020 established in 1969 because there were a hundred and fifty nine taxpayers who are 92 00:11:47.020 --> 00:11:52.380 very wealthy who the government decided were not paying enough income tax and so 93 00:11:52.380 --> 00:11:56.580 they said there's a special tax for you and we're going to call it the 94 00:11:56.580 --> 00:12:01.500 alternative minimum tax and since it was not indexed for inflation today there 95 00:12:01.500 --> 00:12:07.500 So there are people with family income of under $100,000 who pay the alternative minimum tax. 96 00:12:07.500 --> 00:12:14.500 And so if you want to know how Washington defines wealthy, it's anybody who makes family income of about $100,000 or more. 97 00:12:14.500 --> 00:12:23.500 And of course Obama keeps saying $250,000, but really if he abolished the alternative minimum tax and supported that, 98 00:12:23.500 --> 00:12:29.500 then I would believe him when he said $250,000 is wealthy. 99 00:12:29.500 --> 00:12:38.260 One of my articles on lewrockwell.com before the election in November was entitled, Fascism 100 00:12:38.260 --> 00:12:46.100 or Socialism, Take Your Pick. It was about McCain versus Obama. We got the socialist. 101 00:12:46.100 --> 00:12:52.560 The argument I made was, if you look at Abraham Delano Messiah Obama's career, he was a lawyer 102 00:12:52.560 --> 00:12:57.340 for Acorn. Of all the things, he gets a Harvard Law degree. What does he do? He goes to Chicago 103 00:12:57.340 --> 00:13:04.140 and Works for ACORN, Association of Community Organizations for Reform Now, right now, 104 00:13:04.140 --> 00:13:10.940 they want to reform right now. That's where the N comes from, on ACORN. And I wrote about ACORN 105 00:13:10.940 --> 00:13:17.980 25 years ago. I co-authored a book entitled Destroying Democracy. It was about the phenomenon 106 00:13:17.980 --> 00:13:23.260 of government funding, government writing checks to special interest groups of all kinds who use 107 00:13:23.260 --> 00:13:53.260 I used the money to lobby for bigger government and I had maybe 7 or 8 pages on ACORN because I had a big file of data on government grants to all these groups and ACORN was one of them back 25 years ago and so I got a research assistant to look into this and say what the heck is ACORN? What do they do? What do they believe in? And they're some of the most extreme, hardcore, left-wing communists in America. If you look, they want to nationalize all the energy industries, they want to nationalize the housing industry, 108 00:13:53.260 --> 00:13:57.260 They want to nationalize healthcare. They want to destroy capitalism. 109 00:13:57.260 --> 00:14:02.260 You read their literature from 20 years ago. That's what they were saying was their objective. 110 00:14:02.260 --> 00:14:06.260 And these are Obama's people. This is where he comes from. He was their lawyer. 111 00:14:06.260 --> 00:14:12.260 And so I would think you can make a good argument that he must agree with their basic philosophy. 112 00:14:12.260 --> 00:14:22.260 If that's where, after he left Harvard Law School, that's where he chose to go and start a political career, working with these people. 113 00:14:22.260 --> 00:14:30.260 So yeah, Soak the Rich is built into Abraham, Delano, Messiah, Obama's psyche. 114 00:14:30.260 --> 00:14:36.260 That's what he's devoted his entire political career to, to espousing, and we'll see if he gets away with it. 115 00:14:36.260 --> 00:14:45.260 Lesson number five is this. Public works and other jobs, quote, jobs programs, must be avoided because they increase the cost and burden of government, 116 00:14:45.260 --> 00:14:48.260 making it more difficult for the private sector to function. 117 00:14:48.260 --> 00:14:58.260 Well, of course they do. They divert billions of dollars away from the private sector to let politicians handle this, handle the money. 118 00:14:58.260 --> 00:15:06.260 In my book, How Capitalism Saved America, I surveyed some of the research on how FDR spent his money. 119 00:15:06.260 --> 00:15:13.260 You know, Herbert Hoover started tremendous public works spending projects to try to end the Great Depression. 120 00:15:13.260 --> 00:15:20.260 13% of the federal budget in one year was toward Herbert Hoover's stimulus bill. 121 00:15:20.260 --> 00:15:26.260 13% of the budget, Obama's is only something like 5 or 6% of the budget. 122 00:15:26.260 --> 00:15:34.260 And so Obama is stingy compared to Herbert Hoover in terms of stimulus bills, as far as that's concerned. 123 00:15:34.260 --> 00:15:38.260 And of course that didn't work because of the principle of opportunity cost. 124 00:15:38.260 --> 00:15:42.260 It's just simply taking money out of one pocket and putting it in another pocket, 125 00:15:42.260 --> 00:15:48.460 Letting politicians allocate resources rather than private individuals. 126 00:15:48.460 --> 00:15:53.360 And another thing that comes up in this literature is that the main criterion that FDR used for 127 00:15:53.360 --> 00:15:59.500 determining how this money was to be spread around was how big his vote margins were in 128 00:15:59.500 --> 00:16:01.240 the last election. 129 00:16:01.240 --> 00:16:07.300 Everywhere he had small vote margins in 1932, that's where the biggest chunks of money were 130 00:16:07.300 --> 00:16:13.420 were spent. Whereas he had big electoral margins in the South, because the South didn't really 131 00:16:13.420 --> 00:16:19.340 vote for a Republican until Reagan, because of the Abe Lincoln phenomenon. And so, Roosevelt 132 00:16:19.340 --> 00:16:22.920 didn't have to worry about buying votes in the South, but the South, the Deep South is 133 00:16:22.920 --> 00:16:26.740 where the Great Depression was absolutely the worst. And if you can make a case that 134 00:16:26.740 --> 00:16:32.900 there was a need for government help, certainly Mississippi and places like that, the Mississippi 135 00:16:32.900 --> 00:16:38.000 Delta would have been spot number one where you'd want to send money but no 136 00:16:38.000 --> 00:16:42.140 it would be places like Montana and California where there were small vote 137 00:16:42.140 --> 00:16:47.660 margins and so there was a big pork barrel during the 1930s. I also cite a 138 00:16:47.660 --> 00:16:54.340 report by the US Senate that showed that people who had public works jobs in many 139 00:16:54.340 --> 00:16:59.180 states were told you have to re-register as Democrats if you're a Republican or 140 00:16:59.180 --> 00:17:00.880 for No Job for You. 141 00:17:00.880 --> 00:17:04.060 And so it was used as one big giant political pork barrel. 142 00:17:04.060 --> 00:17:08.900 And I think it's kind of naive to expect 143 00:17:08.900 --> 00:17:11.620 that this pork barrel, the so-called stimulus bill, 144 00:17:11.620 --> 00:17:15.420 will not be used primarily as a vote buying gimmick 145 00:17:15.420 --> 00:17:19.820 rather than some attempt to make us prosper, 146 00:17:19.820 --> 00:17:21.360 which it couldn't anyway in any way 147 00:17:21.360 --> 00:17:24.540 because it diverts resources from the private sector. 148 00:17:24.540 --> 00:17:25.380 So that won't work. 149 00:17:25.380 --> 00:17:28.760 We haven't learned anything there in terms of economics, 150 00:17:28.760 --> 00:17:31.760 But it's a good political gimmick. 151 00:17:31.760 --> 00:17:34.860 Lesson number six is that, quote, 152 00:17:34.860 --> 00:17:37.500 especially during a recession or a depression, 153 00:17:37.500 --> 00:17:40.180 the government must not enact laws preventing prices 154 00:17:40.180 --> 00:17:42.540 from adjusting to circumstances. 155 00:17:42.540 --> 00:17:45.540 Prices are vital signals that help people decide 156 00:17:45.540 --> 00:17:47.940 what to produce and consume, end quote. 157 00:17:47.940 --> 00:17:49.980 That's Jim Powell saying that. 158 00:17:49.980 --> 00:17:51.140 And of course, the whole purpose 159 00:17:51.140 --> 00:17:54.140 of the Fed's tremendous inflation of the money supply 160 00:17:54.140 --> 00:17:57.060 is to attempt to keep prices from falling, 161 00:17:57.060 --> 00:17:58.820 to keep the market from working. 162 00:17:58.820 --> 00:18:00.620 You know, we can't do that at all. 163 00:18:00.620 --> 00:18:02.620 So we're not learning that lesson. 164 00:18:02.620 --> 00:18:03.620 We're doing the opposite. 165 00:18:03.620 --> 00:18:07.300 Lesson number seven of Jim Powell's book is quote, 166 00:18:07.300 --> 00:18:09.860 government must not enact laws preventing wages 167 00:18:09.860 --> 00:18:12.140 from adjusting to circumstances. 168 00:18:12.140 --> 00:18:14.600 Labor union monopolies have been major obstacles 169 00:18:14.600 --> 00:18:16.820 to adjusting wages, end quote. 170 00:18:16.820 --> 00:18:20.300 During the Great Depression, wages rose in 1937 171 00:18:20.300 --> 00:18:22.340 by about 15%. 172 00:18:22.340 --> 00:18:25.580 So at a time when the only really hope you had 173 00:18:25.580 --> 00:18:35.580 to have a job in the depression was to say, okay, before the depression, I was being paid $5 an hour, I'll work for $3 an hour, but at least I have a job. 174 00:18:35.580 --> 00:18:47.580 Here comes the government enabling unions to push up wages to say $7 an hour, and the end result was very predictable to any economist, and you don't have to be an Austrian school economist, is more unemployment. 175 00:18:47.580 --> 00:18:54.580 Our friends Richard Vetter and Lowell Galloway published an excellent book called Out of Work, It's a History of Unemployment in America. 176 00:18:54.580 --> 00:19:08.580 They estimated, I think the number they gave was that the unemployment was eight percentage points higher than it would otherwise have been because of the empowerment of unions and other means by which wages were pushed up during the Great Depression. 177 00:19:08.580 --> 00:19:16.580 That was basically FDR's basic philosophy. If the government could somehow force up prices and wages, the Great Depression would end. 178 00:19:16.580 --> 00:19:20.580 He believed the cause of the Great Depression was low prices. 179 00:19:20.580 --> 00:19:26.580 Therefore, if we could get the government to push up prices and wages, we'll end the Great Depression. 180 00:19:26.580 --> 00:19:32.580 Of course, that was foolish and it never worked, but that was his basic operating theory for the whole duration. 181 00:19:32.580 --> 00:19:38.580 And it seems to be what we're still operating by today in the government anyway. 182 00:19:38.580 --> 00:19:49.580 And as Walter Block mentioned, one of Abraham Delano Messiah Obama's campaign promises was to do away with secret ballot elections with unions. 183 00:19:49.580 --> 00:19:57.080 Unions, so that they could intimidate workers more when they have a representation election 184 00:19:57.080 --> 00:20:03.580 and repeat this, increase private sector unionization and increase wages and that will create more 185 00:20:03.580 --> 00:20:06.980 unemployment. 186 00:20:06.980 --> 00:20:12.100 Lesson number eight is, quote, only if investors feel private property is secure will they 187 00:20:12.100 --> 00:20:18.080 be willing to make long-term financial commitments needed to spur recovery and boost employment, 188 00:20:18.080 --> 00:20:34.080 Well, announcing a new kind of bailout scheme, a new systemic risk authority, and all these different government regulatory authorities day in and day out creates tremendous uncertainty and makes it impossible for any kind of long-term planning. 189 00:20:34.080 --> 00:20:45.080 Not to mention the hyperinflation we're going to get that will make economic calculation very difficult if not impossible for any rational business person coming down the pike. 190 00:20:45.080 --> 00:21:15.080 And so we're moving in the opposite direction there. And not only has the government been proposing more and more different kinds of regulations and controls and nationalizations, threats of nationalizations, I heard Obama himself a couple of days ago on television say the cause of the crisis is not enough regulation. We don't have enough regulation. Laissez-faire has run wild once again. It's sort of like the dumbest explanation 191 00:21:15.080 --> 00:21:20.520 I've heard of this, and it's probably the majority of academics who will believe this, 192 00:21:20.520 --> 00:21:25.400 is that greed is the fault. All of a sudden, greed popped up on Wall Street like that. 193 00:21:26.200 --> 00:21:32.040 It never appeared before, but all of a sudden, like in the movie Ghostbusters, there it is. 194 00:21:32.760 --> 00:21:38.120 It vaporizes out of thin air, greed, all of a sudden. But there's not enough regulation. 195 00:21:38.120 --> 00:21:45.440 Well, you know, we have 15 cabinet departments devoted to regulating different aspects of 196 00:21:45.440 --> 00:21:52.400 the economy. There are over a hundred federal regulatory agencies. There are 73,000 pages 197 00:21:52.400 --> 00:21:58.480 of regulations in the Federal Register. And not to mention state and local governments 198 00:21:58.480 --> 00:22:02.400 that have hundreds and hundreds of more of government agencies that regulate everything 199 00:22:02.400 --> 00:22:32.400 from zoning to antitrust to everything else, to home building, a lot of you who are business people in the audience know all about this, and so, you know, we have nothing like a capitalist economy, there might be a few little tiny oases here and there, but this is economic fascism, pure and simple, which was, yes, we allow private property, but it is strictly regimented and controlled and regulated, supposedly in the public interest by the regulators. 200 00:22:32.400 --> 00:22:36.720 We have hundreds, maybe thousands of regulatory agencies, certainly tens of thousands of 201 00:22:36.720 --> 00:22:39.600 regulators who enforce all of this. 202 00:22:39.600 --> 00:22:42.160 And so talk about uncertainty. 203 00:22:42.160 --> 00:22:47.280 And so the direction we had to be moving is exactly the opposite of what we're doing now. 204 00:22:47.280 --> 00:22:53.880 And what happened during the New Deal is that everything Roosevelt did economically made 205 00:22:53.880 --> 00:22:57.080 the New Deal longer and worse. 206 00:22:57.080 --> 00:23:05.280 And we're doing the exact same things today, from Fed policy to regulatory policy to everything else. 207 00:23:05.280 --> 00:23:10.280 And one myth that you should not believe in any longer after you leave this room, 208 00:23:10.280 --> 00:23:13.280 is the myth that World War II ended the Great Depression. 209 00:23:13.280 --> 00:23:18.280 There were about five to six million people unemployed during the Great Depression. 210 00:23:18.280 --> 00:23:23.080 When World War II came, the military, the government drafted 11 million people, 211 00:23:23.080 --> 00:23:25.480 11 million, sent them overseas. 212 00:23:25.480 --> 00:23:29.280 That is not how you return to economic normalcy. 213 00:23:29.280 --> 00:23:33.180 You don't send somebody to sit in a foxhole and get his head blown off 214 00:23:33.180 --> 00:23:36.980 and call that the same as having that person working at a job 215 00:23:36.980 --> 00:23:39.780 and having dinner with his family every night. 216 00:23:39.780 --> 00:23:44.180 And the Great Depression didn't end, really, until after World War II ended. 217 00:23:44.180 --> 00:23:48.680 The federal budget in 1945 was 95 billion. 218 00:23:48.680 --> 00:23:52.980 In 1948, the federal budget was about 35 billion. 219 00:23:52.980 --> 00:23:58.980 So there was a two-thirds reduction in federal government spending from 1945 to 1948. 220 00:23:58.980 --> 00:24:07.300 That, coincidentally, was when the economy took off and also the Roosevelt regime was gone. 221 00:24:07.300 --> 00:24:13.860 Truman was not demonizing business every single day on television, like FDR and all of his cronies 222 00:24:13.860 --> 00:24:20.500 were constantly blaming everything on capitalism and capitalists and economic royalists and all this, 223 00:24:20.500 --> 00:24:23.780 creating tremendous uncertainty in the minds of business people. 224 00:24:23.780 --> 00:24:29.580 And so that's one lesson I think everyone here ought to learn, that it's a myth that World War II ended the Great Depression. 225 00:24:29.580 --> 00:24:36.140 Even though Paul Krugman in the New York Times big mouth says it every time he gives a speech almost, 226 00:24:36.140 --> 00:24:39.380 thank goodness for World War II, it ended the Great Depression, 227 00:24:39.380 --> 00:24:44.220 but it just goes to prove that winning the Nobel Prize doesn't mean you know a damn thing about economics. 228 00:24:44.220 --> 00:24:46.220 And that's it for me. 229 00:24:46.220 --> 00:24:48.220 Thank you very much.