WEBVTT NOTE Bernanke and Gono: Modern Central Bankers 1 00:00:00.000 --> 00:00:06.280 Now I suppose most of you know what the Ludwig von Mises Institute is but always at these events 2 00:00:06.280 --> 00:00:09.240 I find people who've been drugged here against their will 3 00:00:11.080 --> 00:00:16.560 They were misled they thought they were doing something completely different. Hey, we're going to go to a hotel 4 00:00:17.920 --> 00:00:22.120 Saturday afternoon, it's going to be like a spa day, you know, you're going to love this 5 00:00:22.720 --> 00:00:24.720 they get stuck here listening to 6 00:00:26.000 --> 00:00:28.320 You know talks about economics 7 00:00:28.320 --> 00:00:43.320 But the Ludwig von Mises Institute was started in 1982 by our founder, Lew Rockwell, and we've really become the center for classic liberalism, libertarian political theory, and of course, the Austrian School of Economics. 8 00:00:43.320 --> 00:00:54.320 So, it's really a worldwide movement. We're at the center of it, and it's terribly gratifying to be a part of it. 9 00:00:54.320 --> 00:01:03.320 In that regard, we have a number of students here. And if I could have those students stand, please. 10 00:01:03.320 --> 00:01:07.320 And I think I'm looking at them because these people all look young, yes. 11 00:01:07.320 --> 00:01:15.320 Alright. 12 00:01:15.320 --> 00:01:19.320 So these are students, we have 24 students from 14 colleges. 13 00:01:19.320 --> 00:01:36.320 All the way from a couple kids being homeschooled to the University of Notre Dame, and even someone from the University of Liverpool, which sounds pretty darn exotic to me, but everything in between. 14 00:01:36.320 --> 00:01:47.320 So not everybody, not all our students are out there studying Marxism, Keynesism, they're here, and they're here to learn about the economics of freedom. 15 00:01:47.320 --> 00:01:57.320 It's always great to have students here and by you paying to attend today allows us to invite students here. 16 00:01:57.320 --> 00:02:10.320 In regards to helping us in our programs, you'll see a card on your table where we invite you to become members or supporters of the Institute. 17 00:02:10.320 --> 00:02:35.320 and so if you choose to, if you like what you hear today, don't know anything about us but want to become involved, please do and with contribution today and today only, you will receive this book, Re-Assessing the Presidency and so please sign up. 18 00:02:35.320 --> 00:02:43.160 We have one of the authors here, Tom DiLorenzo. He actually has two essays in his book. So 19 00:02:43.160 --> 00:02:49.000 he could sign this for you if you would sign up today. So please think about that. We're 20 00:02:49.000 --> 00:02:55.840 not supported by any big foundations. It's just working people, entrepreneurs like you 21 00:02:55.840 --> 00:03:02.200 that keep the lights on for us and allow us to do these kind of things. 22 00:03:02.200 --> 00:03:09.000 We also have started something at these events. We have a sign-up sheet. A lot of people think 23 00:03:09.000 --> 00:03:13.120 they're out in the wilderness all by themselves thinking about freedom. Then they come to 24 00:03:13.120 --> 00:03:17.500 an event like this and they say, gee, there's lots of people that feel just the way I do. 25 00:03:17.500 --> 00:03:22.520 And they want to exchange names, they want to exchange email addresses. So we help facilitate 26 00:03:22.520 --> 00:03:30.860 that. So we have a sign-up sheet for your email addresses. We don't give them to anybody. 27 00:03:30.860 --> 00:03:36.100 We don't sell them to anybody, and believe me, there's people that want them. 28 00:03:36.100 --> 00:03:41.060 We just give them to the people who signed up and allow them to work together in their 29 00:03:41.060 --> 00:03:47.620 local either activism or if they want to get together and meet and talk about Austrian 30 00:03:47.620 --> 00:03:53.180 economics, we just do that to help them out. 31 00:03:53.180 --> 00:03:58.220 Also I want to introduce James Fogel, who is here, and if he would stand. 32 00:03:58.220 --> 00:04:18.220 He's our Development Director at the Institute, and for those of you who would like to disinherit Uncle Sam and want to know how to do that, James is the guy to talk to, so please corner him during the course of the day if you want to talk about something like that. 33 00:04:18.220 --> 00:04:23.340 And with that, it is time to get the program going. 34 00:04:23.340 --> 00:04:28.100 As you notice from your program, I am the warm-up act. 35 00:04:28.100 --> 00:04:35.580 And so we will proceed in that direction. 36 00:04:35.580 --> 00:04:41.100 And I'm going to talk about two central bankers, one of which 37 00:04:41.100 --> 00:04:43.980 I think you know, and one of which 38 00:04:43.980 --> 00:04:46.900 I don't think you know a whole lot about. 39 00:04:46.900 --> 00:04:53.900 And I think if you follow economic affairs at all, you know who Ben Bernanke is. 40 00:04:53.900 --> 00:04:59.900 He's the chairman of the Federal Reserve. He was Time's 2009 Man of the Year. 41 00:04:59.900 --> 00:05:07.900 CBS News said he may be the most important Federal Reserve chairman in history. 42 00:05:07.900 --> 00:05:12.900 When Scott Pelley interviewed him for 60 Minutes last year. 43 00:05:12.900 --> 00:05:18.900 You know, Bernanke is an expert on the Great Depression. We've been told that time and time again. 44 00:05:18.900 --> 00:05:27.900 And he famously said back in 2002, but the U.S. government has a technology called a printing press. 45 00:05:27.900 --> 00:05:37.900 Or today it's electronic equivalent that allows it to produce as many U.S. dollars as it wishes at essentially no cost. 46 00:05:37.900 --> 00:05:56.900 By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of the dollar in terms of goods and services, which is equivalent to raising the price in dollars of these goods and services. 47 00:05:56.900 --> 00:06:08.900 We conclude that under a paper money system, a determined government can always generate higher spending and hence positive inflation. 48 00:06:08.900 --> 00:06:18.900 But while Helicopter Ben is considered the great inflator, he's no match for Gideon Gono. 49 00:06:18.900 --> 00:06:25.900 Gideon Gono is the governor of the Reserve Bank of Zimbabwe. 50 00:06:25.900 --> 00:06:53.900 So Bernanke may have been named man of the year in 2009. Gonoa was awarded the IG Nobel Prize in 2009 for giving people a simple everyday way to cope with a wide range of numbers by having his bank print notes with denominations ranging from one cent to 100 trillion Zimbabwe dollars. 51 00:06:53.900 --> 00:07:02.900 The aim of the Ig Nobel's is to honor achievements that first make people laugh and then make them think. 52 00:07:02.900 --> 00:07:06.900 But don't think Gono is lacking for self-esteem. 53 00:07:06.900 --> 00:07:15.900 When he was interviewed by Newsweek in 2009 and asked if he viewed his term as Reserve Governor as success, 54 00:07:15.900 --> 00:07:24.660 Dono responded, I am modestly credited with the survival strategy of my country. 55 00:07:24.660 --> 00:07:30.780 On the other hand, Mr. Bernanke can count on his friends to sing his praises. 56 00:07:30.780 --> 00:07:37.100 I shudder to think what the world would be like if Ben hadn't been running the Fed. 57 00:07:37.100 --> 00:07:45.140 Former Secretary Hank Paulson says, it's just hard to explain that yes, we're in deep doodoo, 58 00:07:45.140 --> 00:07:49.740 But we would have been in much deeper doo-doo. 59 00:07:49.740 --> 00:07:55.300 Now Mr. Gono is a relatively young man, 50 years old, started his career at national 60 00:07:55.300 --> 00:07:56.300 breweries. 61 00:07:56.300 --> 00:08:01.460 He joined the Zimbabwe Fertilizer Corporation when he was a young man. 62 00:08:01.460 --> 00:08:05.660 I don't know if that's significant, maybe. 63 00:08:05.660 --> 00:08:11.180 And then he went on into banking, which was a natural progression, of course, with Zimbank, 64 00:08:11.180 --> 00:08:13.580 which is operated, of course, by the government. 65 00:08:13.580 --> 00:08:22.580 He then went to the commercial bank of Zimbabwe and he became Zimbabwe President Robert Mugabe's personal banker. 66 00:08:22.580 --> 00:08:29.580 He was appointed to head the University of Zimbabwe Council. He was granted an honorary degree. 67 00:08:29.580 --> 00:08:36.580 Andono has a doctorate in strategic management from Atlantic International University 68 00:08:36.580 --> 00:08:43.580 after beginning his secondary education at Rapid Rewards College. 69 00:08:43.580 --> 00:08:47.580 So for those of you wanting to get into central banking, go start. 70 00:08:47.580 --> 00:08:50.580 You may want to start your career at Rapid Rewards. 71 00:08:50.580 --> 00:08:56.580 Meanwhile, Mr. Bernanke, on the other hand, has a doctorate degree from MIT, 72 00:08:56.580 --> 00:08:59.580 and he studied at Harvard. 73 00:08:59.580 --> 00:09:03.580 Now both central bankers embrace their humble beginnings. 74 00:09:03.580 --> 00:09:05.580 Gono told Newsweek, 75 00:09:05.580 --> 00:09:10.580 I owe a lot of my character and who I am today from my humble background. 76 00:09:10.580 --> 00:09:14.580 I was poor. I got to start making tea and keeping house. 77 00:09:14.580 --> 00:09:19.580 I'm a normal guy. I miss going to the supermarket. 78 00:09:19.580 --> 00:09:23.580 Bernanke grew up in a small town in Dillon, South Carolina, 79 00:09:23.580 --> 00:09:26.580 and he emphasizes his main street, Middle Class Roots. 80 00:09:26.580 --> 00:09:31.580 And his wife still makes him do the dishes and take out the trash. 81 00:09:31.580 --> 00:09:40.060 According to Time. And while Bernanke wears off-rack suits, owns a pretty nice four-bedroom 82 00:09:40.060 --> 00:09:48.000 townhome in Washington D.C. that he paid $839,000 for, his counterpart, Gono, lives in the richest 83 00:09:48.000 --> 00:09:58.900 suburb of career, Barrowdale Brook, in a 47-bedroom house down the street from President Mugabe's 84 00:09:58.900 --> 00:10:14.900 Now the Gono Residence, in addition to having as many rooms as a small hotel, has a glass swimming pool, a mini theater, landscaped gardens, and a gym larger than many of the houses in Zimbabwe's capital city. 85 00:10:14.900 --> 00:10:21.900 Gono also owns numerous farms that were of course confiscated by the Mugabe government. 86 00:10:21.900 --> 00:10:32.900 One is near Norton, which when the seasonal weather is dry, it draws clean water from a 25-mile-long pipeline linked to a reservoir. 87 00:10:32.900 --> 00:10:36.900 Now this is water that's supposed to supply water to the people of career. 88 00:10:36.900 --> 00:10:40.900 Gono also owns property in Malaysia. 89 00:10:40.900 --> 00:10:45.900 On the other hand, Chairman Bernanke lives a relatively modest lifestyle. 90 00:10:45.900 --> 00:10:58.900 He and his wife reportedly just own a Ford Focus for an automobile, while Governor Gono glides around in a 12-cylinder Mercedes Benz. 91 00:10:58.900 --> 00:11:07.900 So Gono would seem to be doing much better than Bernanke, who lives on a salary of less than $200,000. 92 00:11:07.900 --> 00:11:17.900 But Bernanke's employer, the Federal Reserve, is making money like, well, like they were printing the stuff. 93 00:11:17.900 --> 00:11:27.900 Last year, America's central bank made $52.1 billion, the highest in its 96-year history. 94 00:11:27.900 --> 00:11:36.900 The central bank made over $30 billion in each of the previous two years, after making $29 billion in 2006. 95 00:11:36.900 --> 00:11:46.900 This shows that central banking is a great business to be in, especially in a crisis, said former Fed official Vincent Reinhardt to the Washington Post. 96 00:11:46.900 --> 00:11:53.900 You buy assets that have a nice shield and your cost of funds is very low. The difference is profit. 97 00:11:53.900 --> 00:12:02.900 Low cost of funds? Well, I guess. Reinhardt leaves out that part about creating money out of nowhere to buy these assets. 98 00:12:02.900 --> 00:12:09.660 And while it's the Zimbabwean way for the head banker to take the central bank largesse 99 00:12:09.660 --> 00:12:15.740 for himself and build a private palace, in America the central bank builds work palaces 100 00:12:15.740 --> 00:12:19.780 for its economists around the country. 101 00:12:19.780 --> 00:12:25.740 Now before Gono moved into his place, he had extra security sensors that were installed 102 00:12:25.740 --> 00:12:34.060 on the outside perimeter, biometric iris recognition on the inside of his place, and fingerprint 103 00:12:34.060 --> 00:12:38.100 authentication systems were also fitted in the interior. 104 00:12:38.100 --> 00:12:42.100 But he still wasn't sure it was secure enough. 105 00:12:42.100 --> 00:12:49.040 By the way, the security at America's central bank locations is equally as tight. 106 00:12:49.040 --> 00:12:52.540 Now we have to be fair to Mr. Gono. 107 00:12:52.540 --> 00:12:57.340 This wasn't exactly great in Zimbabwe when he took over in 2003. 108 00:12:57.340 --> 00:13:03.340 At the time, the annual inflation rate in that country was 619 percent. 109 00:13:03.340 --> 00:13:10.940 In the interview with, before, Ankama with New African in the fall of 2007, 110 00:13:10.940 --> 00:13:15.440 with his country's inflation rate at 4,500 percent, 111 00:13:15.440 --> 00:13:20.240 Gono blamed the high inflation on the differences that Zimbabwe had 112 00:13:20.240 --> 00:13:24.940 with its former colonial master, the UK, and added, 113 00:13:24.940 --> 00:13:32.600 we are busy laying the foundations for a serious deceleration program. 114 00:13:32.600 --> 00:13:36.780 But the Gono deceleration program didn't end up being all that serious. 115 00:13:36.780 --> 00:13:44.040 By the end of 2008, the inflation rate exceeded 231 million percent. 116 00:13:44.040 --> 00:13:46.840 And at the time, the Times Online wrote, 117 00:13:46.840 --> 00:13:56.840 A police inspector's Christmas bonus last week was worth one American cent in the widely used parallel black market. 118 00:13:56.840 --> 00:14:02.840 So while Bernanke is worshipped in the US, the Zimbabwean people have been angry with Gono, 119 00:14:02.840 --> 00:14:07.840 even resorting to throwing rocks at the reserve bank building. 120 00:14:07.840 --> 00:14:12.840 And many in the rock-throwing mob were low-grade civil servants, 121 00:14:12.840 --> 00:14:16.840 by his prison staff who had been trying to get money for Christmas, 122 00:14:16.840 --> 00:14:21.840 only to find that the banks had run out of cash despite introducing, just that morning, 123 00:14:21.840 --> 00:14:29.840 new 1 billion, 5 billion, and 10 billion Zimbabwe dollar notes. 124 00:14:29.840 --> 00:14:36.840 Now, Gono believes that there is a, quote, positive correlation between the drought and inflation. 125 00:14:36.840 --> 00:14:43.840 And he pointed out in his 07 New African interview that the droughts have become more frequent. 126 00:14:43.840 --> 00:14:51.840 Instead of a drought every 10 years, the drought has persisted through much of the early 2000s and mid-2000s. 127 00:14:51.840 --> 00:14:58.840 Those aspects have got a serious bearing on our inflation level, Gono said. 128 00:14:58.840 --> 00:15:03.840 So forget about money printing. Inflation is all about the weather. 129 00:15:03.840 --> 00:15:07.840 Lack of support from other nations, political sanctions. 130 00:15:07.840 --> 00:15:13.840 In Governor Gono's mind, he's had nothing to do with the hyperinflation in his country. 131 00:15:13.840 --> 00:15:20.840 No other central bank governor has had to deal with the kind of inflation levels I have, Gono told Newsweek. 132 00:15:20.840 --> 00:15:24.840 The people at my bank are at the cutting edge of the country. 133 00:15:24.840 --> 00:15:32.840 But Ludwig von Mises anticipated Gono's claims years ago in a book called Economic Policy. 134 00:15:32.840 --> 00:15:40.840 The most important thing to remember is that inflation is not an act of God, Mises wrote. 135 00:15:40.840 --> 00:15:46.840 That inflation is not a catastrophe of elements or a disease that comes like the plague. 136 00:15:46.840 --> 00:15:50.840 Inflation is policy. 137 00:15:50.840 --> 00:15:57.840 Now Mr. Bernanke also feels his central bank has nothing to do with inflation. 138 00:15:57.840 --> 00:16:00.840 When he was interviewed by 60 Minutes, he said, 139 00:16:00.840 --> 00:16:07.840 well, the Fed is an institution that people don't hear so much about, but it's a very important one. 140 00:16:07.840 --> 00:16:10.840 It manages monetary policy for the country. 141 00:16:10.840 --> 00:16:17.840 It's one of the main tools we have for stabilizing our economy and keeping prices stable. 142 00:16:17.840 --> 00:16:22.840 Reminds me of Murray Rothbard, who quipped in his book, The Case Against the Fed, 143 00:16:22.840 --> 00:16:26.840 Murray wrote, the culprit solely responsible for inflation, 144 00:16:26.840 --> 00:16:32.840 The Federal Reserve is continually engaged in raising a hue and cry about inflation, 145 00:16:32.840 --> 00:16:37.840 for which everyone else in society seems to be responsible. 146 00:16:37.840 --> 00:16:41.840 What we are seeing is the old ploy by the robber who starts out shouting, 147 00:16:41.840 --> 00:16:49.840 stop thief, and runs down the street pointing ahead at others. 148 00:16:49.840 --> 00:16:52.840 So you need dams and irrigation equipment, 149 00:16:52.840 --> 00:17:03.720 But of course, the citizenry has not saved and accumulated capital because what they did save was confiscated by the government directly or inflated away. 150 00:17:03.720 --> 00:17:06.440 Well, Governor Gono has the answer. 151 00:17:06.440 --> 00:17:12.200 We are printing money to build dams and buy irrigation equipment, he explains. 152 00:17:12.200 --> 00:17:16.720 Combine that infrastructure and the abounding energy of our people to succeed, 153 00:17:16.720 --> 00:17:22.280 and you have the makings of an agricultural revolution that is bound to take us to levels 154 00:17:22.280 --> 00:17:26.760 not seen in our living memory. 155 00:17:26.760 --> 00:17:30.840 But Zimbabwe already had an agricultural revolution. 156 00:17:30.840 --> 00:17:35.240 It was once one of southern Africa's most prosperous countries. 157 00:17:35.240 --> 00:17:38.720 It was referred to as the breadbasket of Africa. 158 00:17:38.720 --> 00:17:42.940 Its Victoria Falls is one of the seven natural wonders of the world. 159 00:17:42.940 --> 00:17:48.700 The Zimbiti River boasts abundant wildlife and pulsing rapids, the country's lush soils, 160 00:17:48.700 --> 00:17:50.820 the envy of all of Africa. 161 00:17:50.820 --> 00:17:56.420 The country is said to hold 80 percent of the world's platinum deposits, and it also 162 00:17:56.420 --> 00:18:02.440 has huge natural gas resources. 163 00:18:02.440 --> 00:18:11.620 And along with natural gas and other commodities, the Zimbabwe population has a literacy rate 164 00:18:11.620 --> 00:18:41.620 Exceeding 90%. So what happened? Well, committed Marxists, Robert Mugabe took over in Zimbabwe in 1980, and besides running the printing presses, Mugabe and the Zimbabwe Parliament pushed through an amendment to their constitution allowing for the seizure of white-owned farmland despite voters turning the measure down just two months prior. Now, the country that for many years was a major food exporter to the region 165 00:18:41.620 --> 00:18:46.620 has a quarter of its citizens dependent on international food relief. 166 00:18:46.620 --> 00:18:51.620 And while Gono blames the heavens for being stingy with rain, 167 00:18:51.620 --> 00:18:55.620 an all-parliamentary committee warned before the start of the rainy season 168 00:18:55.620 --> 00:18:58.620 that production would be at an all-time low 169 00:18:58.620 --> 00:19:03.620 due to shortages of diesel, seed, fertilizer, chemicals, 170 00:19:03.620 --> 00:19:08.620 functioning farm machinery and skilled labor. 171 00:19:08.620 --> 00:19:14.620 Printing money with more zeros will not increase production, it's just the opposite. 172 00:19:14.620 --> 00:19:18.620 But Gono looks to America for inspiration. 173 00:19:18.620 --> 00:19:24.620 Look at the bridges across the many rivers in New York and elsewhere, Gono says. 174 00:19:24.620 --> 00:19:28.620 And the other infrastructure in the country that was built with high budget deficits. 175 00:19:28.620 --> 00:19:35.620 These are times when it is necessary to dig deeper and construct and reconstruct. 176 00:19:35.620 --> 00:19:46.620 Therefore, printing money to sustain lives, to build infrastructure and a springboard from which to lead forward cannot be bad, Gonoz said. 177 00:19:46.620 --> 00:19:53.420 Now, that sounds familiar. That's what the financial rescue of 2008 and 2009 was all about, right? 178 00:19:53.420 --> 00:20:02.420 Sustaining lives, especially those on Wall Street and in Detroit, and providing a springboard for consumption, 179 00:20:02.420 --> 00:20:09.580 spending on shovel-ready infrastructure and hiring census workers and all of that. 180 00:20:09.580 --> 00:20:14.660 And Bernanke's been celebrated for pulling the American economy back from the edge of the abyss 181 00:20:14.660 --> 00:20:21.740 with a massive expansion of its balance sheet and interest rates just north of zero. 182 00:20:21.740 --> 00:20:27.820 And now Washington and the Federal Reserve believe they can cure what ails American economy 183 00:20:27.820 --> 00:20:33.460 and the speculative binge that caused the financial meltdown with stringent regulation. 184 00:20:33.460 --> 00:20:35.380 That's what's needed. 185 00:20:35.380 --> 00:20:40.980 The London Times reports that in his pugnacious lunchtime speech in January, 186 00:20:40.980 --> 00:20:47.380 President Obama introduced a sweeping series of measures aimed at checking the behavior of banks, 187 00:20:47.380 --> 00:20:52.460 which will be the biggest regulatory crackdown on banks since the 1930s. 188 00:20:52.460 --> 00:20:57.980 Yes, the authorities in Zimbabwe have also been cracking down. 189 00:20:57.980 --> 00:21:03.440 There is a very high level of indiscipline and corruption in the Zimbabwean economy, 190 00:21:03.440 --> 00:21:05.700 Gono told Newsweek. 191 00:21:05.700 --> 00:21:12.060 I would enact tougher legislation that would ensure offenders would never do it again. 192 00:21:12.060 --> 00:21:17.980 Gono went as far as closing down the Zimbabwean stock exchange in the November of 2008, 193 00:21:17.980 --> 00:21:19.420 and said a couple months later, 194 00:21:19.420 --> 00:21:21.860 unless there is more discipline and honor, 195 00:21:21.860 --> 00:21:24.220 the exchange will stay closed. 196 00:21:24.220 --> 00:21:25.900 I can't be bothered. 197 00:21:25.900 --> 00:21:27.460 I don't know when it will open. 198 00:21:28.580 --> 00:21:30.840 And then Governor Gono commissioned a study. 199 00:21:32.660 --> 00:21:34.860 And you won't believe what this study found. 200 00:21:37.020 --> 00:21:39.660 The stock market has been traditionally 201 00:21:39.660 --> 00:21:43.840 one of the drivers behind Zimbabwe's hyperinflation. 202 00:21:43.840 --> 00:21:52.840 The stock market opened again in February 2009, but trading has been thin and only in U.S. dollars. 203 00:21:52.840 --> 00:21:56.840 One Zimbabwean businessman told the BBC, 204 00:21:56.840 --> 00:22:01.840 I don't even know if I'll have a job at the end of the week because there is so much uncertainty. 205 00:22:01.840 --> 00:22:04.840 There are so many companies closing down. 206 00:22:04.840 --> 00:22:10.840 It is quite interesting to see people going in banks with bags and sometimes even suitcases. 207 00:22:10.840 --> 00:22:18.840 You know that there are large amounts of money in there, which unfortunately will not buy very much. 208 00:22:18.840 --> 00:22:25.840 The things we buy, the groceries at home, the things that we get for our children, we have to buy immediately. 209 00:22:25.840 --> 00:22:31.840 As soon as we get the money, according to one woman, we know that if we wait, the prices are going to go up again. 210 00:22:31.840 --> 00:22:37.840 If we wait another week, we will not be able to afford anything. 211 00:22:37.840 --> 00:22:45.840 Now, as I said before, we're repeatedly reminded that Ben Bernanke is the foremost expert on the Great Depression. 212 00:22:45.840 --> 00:22:58.840 And he told 60 Minutes, the Depression was an incredibly dramatic episode, an era of stock market crashes, breadlines, bank runs and wild currency speculation. 213 00:22:58.840 --> 00:23:02.840 With the storm clouds of war gathering ominously in the background. 214 00:23:02.840 --> 00:23:08.840 For my money, he said, few periods are so replete with human interest. 215 00:23:08.840 --> 00:23:16.840 Bernanke believes that the Federal Reserve was too tight back then with monetary policy, making matters worse. 216 00:23:16.840 --> 00:23:21.840 Create more money and save failing banks. That's his prescription. 217 00:23:21.840 --> 00:23:28.840 Bernanke's counterpart in Zimbabwe has studied the same history, and guess what? He's come to the same conclusion. 218 00:23:28.840 --> 00:23:36.840 I am a student of economic histories of countries and I can tell you that what we are doing is not unique, Gono told New Africa. 219 00:23:36.840 --> 00:23:45.840 If you study carefully the history of the American economy, if you look at Chinese history, if you look at Russian history, British history and others, 220 00:23:45.840 --> 00:23:51.840 you will find that at some point they had to rely on their central banks. 221 00:23:51.840 --> 00:23:55.840 Bill Bonner wrote recently in The Daily Reckoning, 222 00:23:55.840 --> 00:23:59.840 Several countries are already past the point of no return. 223 00:23:59.840 --> 00:24:04.840 Even if America taxed 100% of all household wealth, 224 00:24:04.840 --> 00:24:09.840 it would not be enough to put its balance sheet in the black. 225 00:24:09.840 --> 00:24:14.840 And Professors Kenneth Rogoff and Carmen Reinhart show that 226 00:24:14.840 --> 00:24:18.840 when external debt passes 73% of GDP 227 00:24:18.840 --> 00:24:27.840 and 239% of exports, the result is default, hyperinflation, or both. 228 00:24:27.840 --> 00:24:41.840 IMF data shows the U.S. already too far gone on both scores, with external debt of 96% GDP, 748% of exports. 229 00:24:41.840 --> 00:24:48.340 To ensure that my people survive, I had to print money, Gono told Newsweek. 230 00:24:48.340 --> 00:24:53.840 I found myself doing extraordinary things that aren't in the textbooks. 231 00:24:53.840 --> 00:24:57.840 Then the IMF asked the U.S. to please print money. 232 00:24:57.840 --> 00:25:02.840 The whole world is now practicing what they have been saying I should not. 233 00:25:02.840 --> 00:25:10.840 I decided that God has been on my side and had come to vindicate me. 234 00:25:10.840 --> 00:25:19.840 Well, Governor Gono may have God on his side while doing extraordinary things, but Chairman Bernanke has President Obama on his. 235 00:25:19.840 --> 00:25:32.840 When announcing the Fed Chairman's reappointment, the President cited Bernanke's background, temperament, courage, and creativity. 236 00:25:32.840 --> 00:25:39.840 So you might ask, what is Zimbabwe's inflation rate these days? Well, it's hard to know. 237 00:25:39.840 --> 00:25:48.840 But Steve Hanke, Professor of Applied Economics at the Johns Hopkins University, Senior Fellow at the Cato Institute, 238 00:25:48.840 --> 00:26:02.840 reports that as of November 14th, 2008, Zimbabwe's annual inflation rate was 89.7 sextillion percent. 239 00:26:02.840 --> 00:26:12.840 That's a daily rate of 98% with prices doubling every 24.7 hours. 240 00:26:12.840 --> 00:26:23.840 Since then, Hanke's not been able to update his index because the price data from Zimbabwe has deteriorated and it's unreliable. 241 00:26:23.840 --> 00:26:34.840 But imagine for a second, you save your whole life, you delay consumption, you save money to send your kids to college, your grandkids to college, 242 00:26:34.840 --> 00:26:47.840 live a comfortable life and have the government inflated away in 24 hours, cut it in half in 24 hours, cut it in half again in the next 24 hours. 243 00:26:47.840 --> 00:26:50.840 It's extraordinary what's going on. 244 00:26:50.840 --> 00:27:00.840 So Helicopter Ben's policies haven't yet produced the kind of price inflation numbers that Mr. Gono's policy have, but there's still time. 245 00:27:00.840 --> 00:27:04.840 According to our government's numbers, prices are going nowhere. 246 00:27:04.840 --> 00:27:14.840 But John Williams' numbers at shadowstats.com reveal that prices are rising at a 9.4% annual clip, despite the recession. 247 00:27:14.840 --> 00:27:27.840 Well, Mr. Gono's quotes, of course, are laughable, but hopefully the point is made that inflation is no laughing matter and hyperinflation is downright tragic. 248 00:27:27.840 --> 00:27:33.840 No other tool other than war can completely destroy an economy like inflation. 249 00:27:33.840 --> 00:27:39.840 Zimbabwe is living proof, happening right here, right now, in our lifetimes. 250 00:27:39.840 --> 00:27:48.840 and yet it's America's central bank that in many ways has served as the inspiration for Zimbabwean policies. 251 00:27:48.840 --> 00:27:51.840 The great Henry Hazlitt wrote, 252 00:27:51.840 --> 00:27:59.840 inflation is a twisted magnifying lens through which everything is confused, distorted and out of focus 253 00:27:59.840 --> 00:28:06.840 so that few men are any longer able to see realities in their true proportions. 254 00:28:06.840 --> 00:28:15.960 No two men are more confused and out of focus than Chairman Bernanke and Governor Gono.