 Welcome to the podcast that takes apart Paul Krugman's New York Times column. Join us as Tom Woods and Bob Murphy teach economics by uncovering and dissecting the arrows of Krugman, Nobel Prize winner, newspaper columnist, and destroyer of nations. It's time for Contra Krugman. Welcome everybody to another episode of Contra Krugman. I'm here with Bob Murphy and we've got a couple of special guests to introduce. But I'm particularly happy to tell the listening audience that today we are recording this episode for a live audience here at the Mises University program at the Mises Institute. We've just been through about a week of intense training in Austrian economics and everyone is still full of energy and zeal, am I right? Now going up through this past Monday, Paul Krugman, I am not joking, had released five consecutive columns on healthcare. Now it's the job of this podcast to refute those columns, but after a while, if he insists on saying the same darn thing over and over, we are going to force him to say something different. So sometimes we'll dig into his archives to find something to talk about or we'll go to the blog that he has where sometimes he talks about more technical economics, but this week we've decided, look, it's Mises U, anything goes, right? Make up our own rules as we go along. So what we're going to talk about today actually, which is to an extent Contra Krugman, which reminds me, I think you emailed me this morning, I never got around to opening it, so I hope that wasn't important. The subject line was Krugman, so I can't imagine that. No, it was just stuff for the show. Didn't get to that. Anyway, I thought by putting Krugman it would mean, I didn't mean like, hey, I guess I bummed to do a breakfast and never believe it. It was Krugman. Well, anyway, what we've decided to do is talk about central banking and how it affects ordinary people in a way that's detrimental. And this is of course Contra Krugman because you won't really hear that discussed or you won't, when he talks about inequality, hear him say monetary policy and monetary regimes might have something to do with that. So we're going to be Contra Krugman. He mentions it not at all. We're going to mention it as infinitely would be the opposite of that. So off we go. Just a note on a tire here. You notice the disparity in the way we're dressed. Tom and I are following the rules. The schedule clearly said we're supposed to be dressed down casual today. It looks like these guys are trying like interviewing to be the new host of the show. I don't know what they're doing. And actually, because again, we normally record this, you know, in our own apartments or houses or what have you. So normally when I do Contra Krugman, I don't even have pants on. So this is a step up. So I just want to clarify. This is an amazing step up for Bob, actually, because sometimes he accidentally has the video on on his Skype. Bob, I'm begging you to shut that thing up. All right, let's introduce you to the two folks here with us. We have Louis Rouenet, who is beginning a PhD program at George Mason University this fall and is super smart and great and has done work in this area, this precise area, particularly on the question of inequality and its relationship to monetary policy. And then of course, you all know by now, Professor Jeff Herbner, who's the chairman of the Department of Economics at Grove City College. Is he super smart? He is. In fact, I've told everybody, if anybody will listen, I've told people you want to ask a question in economics, you're not going to stump Jeff Herbner. And I really thought that would be a fun thing to do at Mises U. We'll call it Stump Jeff Herbner and we'll give away prizes. And then we bring in David Gordon and you can ask on any topic in the history of mankind and we'll give you give you prizes. Anyway, so let's kick this off by Bob. I will pitch a little thought to these folks and then we'll all start start talking. A lot of times when you say things like the Federal Reserve may in some way be contributing to inequality. Now, I don't really care that much about inequality, but if it's unjust inequality, even then I don't think of it that the problem is inequality. I think of it as unjust gains by some people. That's the problem. But you bring this up and people say, okay, maybe it's true that, you know, consumer prices have gone up, but people's wages have also gone up. So big deal. So it's a wash. It doesn't matter. Why would you focus on this? So what should we be thinking about in this area? Can I give, well, let me just give a specific example of that. So remember with Ron Paul, when at one point was repeating the statistic about how much the dollars purchasing power had gone down since the Fed had been formed. And there was a guy, an economist, who worked for the Federal Reserve. I guess I won't mention his name and he was making fun of that, right? And he was saying, oh, look at this, just this, you know, low brow stuff from Ron Paul. Of course, look at how much weight nominal wages have gone up. So yes, it's true that the ability of a dollar to purchase something at the store has gone down, but by the same token, there's a reciprocal effect that everybody's nominal wages go up and it's basically washes Thomas. And so then I went through and tried to explain something and he actually came back and said, oh, this guy Murphy's trying to use logic against me and he put logic in quotation marks, right? I don't, I don't do air quotes, you know, without justification. So that's part of the context. So that's not a straw man. We're attacking here. This really is a thing where people think wages just go up. And so therefore the concern about what the Fed has done to the dollar. That's just silly from low brow people. I have a funny feeling. If I had opened that email, I would have known all about that stuff you just said. Yes. Yeah, darn. Okay. I read your, isn't your master's thesis that I read the other night and you spent some time talking about asset prices and how monetary policy affects them. And we tend to focus on consumer prices. So we miss a big part of the story. Right. So maybe we should go back a little bit and so the first one really identified the redistributive effects of inflation was Richard Cantillon. He was a Franco-Irish economist in like the, you know, 18th century. And he became very rich during a period of inflation with a John Law system, which is called the John Law system, which created a massive bubble for the Mississippi Company, which was like a colonial corporation. And actually a funny thing is that he made so much money on the foreign exchange markets. Then one day John Law came to him and just said, if I were in England, I would have to sue you. And I would probably lose, but we are in France. So I can just give you 24 hours to leave the kingdom or I will execute to you. So, I mean, the corrupt origins of central banking was a talk by De Lorenzo this week. And I think it's very true. Like the beginning of central banking were very violent, much more violent that we can generally see. And so Cantillon, what he identified is that the first wants to receive the newly created money, gain from it because they have more cash balances and prices haven't risen up yet. But once like people start spending this money, prices adjust. And so the later receivers of the newly created money will lose from the inflation process. Now, today, if you think a bit about it, who is really benefiting from the newly created money? Who is the first receiver of the newly created money? It's governments, debt purchases, and you have the banking system. And rich people are much more able to benefit from it because so without inflation, the supply of savings is quite inelastic. So asset prices, they don't move that much in prices. Like aggregate asset prices, it's just pretty stable. But with credit expansion, you can have bubbles and very important ones. And capital gains are much more concentrated among like the 1%. Most of them are just, operated by the 1%. I think there was a CBO study who showed that in 2007, 70% of the capital gains were done by the 1%. So what you see since the 80s is inequality follows bubbles. Like during the boom, inequality is increasing very fast and during the burst, it's decreasing. And I think Austrian economics can really teach us a lot about that because it focuses on monetary non-neutrality. Okay, thanks. You got a bit of an accent. Are you from Boston? What is that? So one of the roles I play on the show for those who don't know is Tom will say something, and then I'll say, let me just put that in other words, make sure we're not losing anybody. So it's not for you guys here necessarily, but for the listeners at home. So what we mean by cantaloupe effects is that it's a step-by-step process. So the money first enters the economy. It hits one sector. So it's not that there's a helicopter drop. Everyone's cash balances don't all go up at the same time. The money comes in certain entry points and those people benefit. And so it's a sequential thing. So is it, I mean, this is incidentally, I'm glad you said it that way, because with that exchange I told you I had with this one economist who worked for the Fed, that's what I said in my response that look at if someone came in and printed a bunch of money went out and bought a bunch of Ferraris every year, they clearly would benefit from having access to that printing press. And over time, what would you see the dollars purchasing power would go down, but wages would also go up, right? So if the person ever stopped, everything would re-equilibrate and nominal wages would be that much higher based on how much new money was in the system. But clearly for the 80 years in between, when that was happening, the person who keeps getting Ferraris every year by just printing up dollars is clearly better off. So clearly everyone else is worse off. It has to be. And that's what the guy said. Oh, you're just using logic, right? And so And also, I think like Kregman's argument, Kregman should just read Keynes, because Keynes in the tract for monetary reform in 1924, I think just says that both inflation and deflation has adverse effects on the distribution of wealth and income, but that inflation is the worst, he says. And he says that wage earners are actually losing from inflation more than capitalists most of the time. So, wow, Keynes changes his mind because he's been Keynes, but I think it's instructive that for a long time it was accepted that inflation didn't benefit the poor in the society. All right, but if it's true that inflation occurs in this way and the money comes in at discrete places and then it makes its way through the economy, one of the early recipients then would be people receiving transfer payments, the poorest of the of the society. So that seems to me they would benefit the 99% or the whatever, the lowest 50%, they would get access to social security, people on social security, people on Medicare, wouldn't they be getting the money first and therefore maybe this helps the poor? Only if it's fine and through inflation. Okay, well then how about Jeff, do you want Jeff in on this? Yeah, no, I think the key point here to notice is that the monetary inflation comes through credit expansion. And so, you know, social security payments that are received by poorer people aren't generated through credit expansion, right? So it's all generated initially through banks who engage in credit expansion on the increased reserve position that the Fed generates through the monetary inflation. So what we get in terms of the inequality is not just a greater stratification of a generally rising standard of living, but this whole process of the boom-bust cycle generates, well like we're seeing now, right? It generates a stagnation actually in economic progress. Actually, the real wages that the average person earns over time do not progress in the way that they do in a less inflationary economy. So we've seen growth rates now since the 2008 downturn that are under, growth rates at GDP under 2% per year. Yeah, that's it. There's an interesting statistic where during the Obama administration years again, not that it's a partisan thing, not that we're, you know, expecting Republicans to be great, but during the Obama administration years that yeah, that was the worst in terms of year over year real GDP growth, not breaking a certain threshold. That was the worst record since the Hoover administration, right? And yet, Krugman literally had an op-ed called the Obama boom and how that showed, you know, that all the critics had been wrong. As far as inequality, let me phrase it a different way. I'm curious to your guys reaction to this. What you'll notice in the standard debates over inequality and Krugman did have a famous piece on this back in 92 that he references often, again in the email I sent to Tom that he chose not to read, but it was he was going through it in his mind debunking all of the right-wingers who were trying to justify the Ronald Reagan's tax cuts. And so if you're familiar with U.S. politics, typically when people argue about inequality, they'll show series from income concentration like from Piketty or Seyes and it'll be this U shape, right? So after world, you know, the Great Depression, whatever the income became much more equal, right? Because the rich got crushed with the stock market crash and then it comes down and then it bottoms out and then inequality started rising again. And it's true that it does jump up in the mid 80s and there was the 1986 tax reform act, which drastically lowered marginal tax rates. And so it ends up, the debate over inequality ends up being a referendum on, did we like Ronald Reagan's policies or not? And the odd thing is though, and I was, you know, I was looking at these numbers, it bottoms out in like 1973, right? And so it's odd that all of a sudden they were arguing about what happened in the 80s when actually by their own statistics, inequality, the trend turned around in the early 70s. And also you'll often see when they want to show how bad things are for like the lowest quintile, they'll show statistics saying, oh, from such and such year this year, the bottom 20% only gained, you know, 8% of the total income gains it. And those starting points, they never pick like 1983. They always pick something in the 70s and often they'll pick something in 1973. And so that just made me suspicious. And I started going through it and it's true. There's, there's a lot of problems with those figures. They don't adjust for things like new products and right now, you know, like the having access to the internet is not going to go into those conventional statistics, but nonetheless, even at face value, it does seem like something changed drastically with the fortunes of the bottom 20% let's say of households, but those trends all started kicking in the early 1970s. So that made me suspicious that it wasn't about tax cuts. There was something else big that happened in the early 1970s. Do you guys have any thoughts about what that could possibly be? Can I just say one word about Piketty since he has a similar accent as mine? And so Piketty actually in his book is saying that inflation is a very inefficient way to reduce inequality and that in some cases it might even increase inequality. Now, I think that's very interesting. And I think that we underestimate how it was a conventional wisdom that inflation did render the situation more unequal, like incomes more unequal. If you want to read somebody about the 19th century in the US, you should read the Armani Jacksonians, William Legate, William Gouge, and they are talking a bit about the effect of fractional reserve banking and credit expansion on inequality. I think that's very interesting. Yeah, these free banking Jacksonians are totally forgotten, but there's a great Liberty Fund collection of the William Legate editorials from New York that should be read. Now let's say something about what you wrote in your work about the effects on asset prices of inflation because you point out that in the 1920s and in the 2000s we were inclined to think that, well, consumer prices seem to be rising not very significantly, if at all. And so therefore people missed the effects of the monetary inflation. And then you even note that in a couple of major works, I think one of them might have been Friedman and I can't remember the other one, Alan Meltzer. Alan Meltzer, an expert on the Fed, at no time even mentions asset price inflation. So why is that such a big piece of the puzzle? I mean, because it's in the 20s, you know, like Ralph Bardi wrote this book, America's Great Depression and saying, well, credit expansion created the boom and best cycle. And people answered to him, well, no, because you had stable prices. But it doesn't matter if you have stable consumer prices. First of all, in the capitalist growing economy, you would have declining prices, you will have deflation because you have increase in productivity. But you have many, many causes of moves in the price index, like people can just demand more money, you have change in technology, for example, credit cards. So anyway, it's not stable. It's a demand for money. And so if you just ignore the increase in the supply of money, well, you ignore the problem. And one of the biggest problem with credit expansion is asset price inflation and a relatively more favorable situation for the financial sector, which tends to engender more inequality. Let me ask a quick question about that. I understand that a person who earns a relatively small amount of money per year is unlikely to have a large portfolio of these types of assets. But at the same time, wouldn't they in their retirement programs be owners of these sorts of assets? So wouldn't that also help them? Well, I say this as devil's advocate, of course. Yeah, it's also, well, it depends on many, many things. Like, for example, in France, you have like public retirement, so it doesn't apply. In America, it probably applies more. But even there, you have much more concentration of assets into like a rich class, if you such a class exist. I think another element to this is that these people who are in the position to receive new money first and then they have this kind of connection to the system where they're gaining through the initial asset price inflation, they're gaining in the canteon effects of their own production processes are becoming more profitable and they're ramping up production and earning all this additional income. The average person is not very entrepreneurial in their investments and so on. They're just plotting along in their 401k or whatever. And they're more or less just victims of the volatility. They're not playing it to earn greater income because they don't even think about their investments in this way. It's just a fund that they have and they, you know, that somebody manages this for them and they earn a kind of going rate of return. But they're adversely affected in the downturn. When the crash comes, well, their portfolios are wiped out and they are unemployed too. Yeah, and they're unemployed and right. So they tend to be victimized precisely because of this sort of stratification of entrepreneurial ability and the kind of political nexus that's created that gives these certain business folks, you know, the advantage of being insiders and early in the process of the monitoring question. Yeah, another aspect to all this is in the United States, it didn't used to be the case that average people had their like retirement savings in the stock market. All right. They had other types of assets, you know, they might, if they own the family farmers and they might have savings bonds, savings accounts in the banks, life insurance policies, things like that, that worry railroad bonds, what have you. And then it was only because of the massive price inflation. It was unleashed in the seventies that all of a sudden even normal people said, you will get killed. We can't just have something in dollar denominated assets. We have to get into something that's in what they want to call an inflation hedge. All right. So there's, there's that element involved too, where like in the 20s, it was more of a craze like, oh, well, more and more people are getting the stock market because hey, did you look at that thing called the stock market? It looks like people are making a lot of money. It wasn't the way it is now where it's just taken for granted that all the smart gurus say, take your paycheck and just plunk that down into your 401k and go ahead and the wizards on Wall Street will take care of you. So that it's, it's a, you know, sort of a circular process too, where the fact that they change the monetary regime pushes people into a certain thing. And that's why now they're so vulnerable for the boom and bust cycle. It's not just rich speculators who get wiped out. It's every, you know, average people with what they're considering to be their retirement savings. How do we balance out our, our view of the extent to which the rich benefit from the current system if the rich, just like anyone else and maybe even to a greater extent, because they're more involved in financial assets, those assets collapse. The other side of this coin is that the little guy doesn't suffer as much because, because he's not in them as much. So the rich really get hit during the business cycle. So isn't it better to just say monetary policy harms everyone? Well, I mean, it does in the long run, but in the short run, I think some people could say, well, you know, the ordinary Canadian argument, well, in the long run, we'll be dead. So we just have to print some money. And yeah, so we will save ourselves in the short run. But if you can show that actually monetary policy, most of the time, it increases inequality. That means it hurts the little guy. Then it's a much weaker case, much weaker case, even in the short run. So I think it's the complementary arguments like, yes, in the long run, monetary policy is bad for everyone. And in the short run, it can be bad for the common man. And Louie alluded to another aspect of this earlier. He said, he said, during the course of the boom and the bust, when the crisis comes, and the bust occurs, the average, it's average people who lose their jobs, they lose their income, because they've been sucked into the higher wages they could earn in these boom lines, right, another fired. But the capitalist, you know, he's just okay. So he lost 20% of his portfolio, but he's still in his house. He's still right. He's not affected the emotional and personal impact of the effect is not as great on him. Let me take this in a different direction. And so Jeff, I'll be directing it to you. So it's either way it's going to win. Either he's going to have a great answer, knock on the park, or we'll stump Jeff Herner. And so either way, it'll work. But when I was looking for things like to tie this to Contra Krugman, since it is about Contra Krugman, again, all specified well in the email I sent to Tom that he chose not to read before the show. I read it just now. Just, you know, I'm ready. Yeah, that's good. So it's Krugman. I know he subscribes us use the term mainstream. They don't like to use cantaloupe effects, but they'll talk about senior edge. All right. And that's the way they deal with this. And so they'll say, Oh, it's the privilege that they that the king or whoever gets the sovereign gets from being in charge of the money. And so the way Krugman, he was dealing with the question people were worried about. Oh, is is the US going to lose the dollar's role as the world reserve currency, right? So when the Fed was doing all the rounds of QE, that was one of the ways that people like Glenn back and whoever were saying trying to wake Americans up. Look what the feds doing. You know what this means? We're going to lose reserve currency status. And that means, you know, all these cheap imports are major going to get more. And that was the tech there. So of course, Krugman's role was to save these rubes. They don't know what they're talking about. And so the empirical test that he used or the quantitative measure he used to try to assess is this a big deal or not? What, what benefit does the United States gets from the fact that the world uses the dollars, the world reserve currency is he looked at how much actual cash was held abroad, like in terms of like hundred dollar bills and stuff. And he said, oh, it's, it's, it's not that big a deal, especially when interest rates are low. He said it's basically like foreigners are giving Americans a five hundred billion dollar loan interest free. And he said, that's that's basically what it is. And so he was assessing the numbers. So based on what market interest rates were, and he said, ah, this is like point 15% of GDP at best. This is this is small potatoes. Don't listen to these right wing people. So I'm wondering you guys, I'll let Louis too, if you want to jump in. So the question is when crew wins of assessing the impact, and especially like the gain to the government of having the world hold the dollar, is it really just right to look at how many hundred dollar bills are held by foreign drug dealers and you know, brushing businessmen and stuff like that? Or is he missing a big part of the story? Notice how loaded I'm making this question. Well, Bob, I'd have to say that you've stumped me. I don't really understand the question. No, no, I'm just just kidding. Bob's a champion. Well, I would say this has to do the answer. The question has to do with something that Louis again mentioned earlier, and this is money demand. It's a general principle of money demand, right? And how this provides a method by which we as individuals and create effects that the Fed cannot control. And so we're seeing this right now. We've seen this since the downturn occurred. It's a massive increase toward more money holdings. A lot of this has been, of course, captured in the banks, but it also in private companies and so on and so forth, big liquidity positions taken by even by individual persons, right? Getting rid of other things and just holding money. And so this creates then a certain effect in economic activity as we see as we get this kind of lack of saving and investing and the regime uncertainty problems that Bob Higgs has talked about in the current situation and the sort of slow growth environment that we're in. So I think that's the proper way to think about this problem. It's the general question of what's going to happen to money demand and how the Fed is going to react to the changes that we engage in with respect to our money holding. So if we're moving into now a scenario where our demand for money is being relaxed and we're reducing our demands for money, then we're going to start seeing increases in investable projects. We're going to see consumption go back up and we're going to start to see price inflation generated by all of this. And then the Fed's going to be in the position of having to react to, what are they going to do in the face of this problem as they see it that's created by our own reaction to the policies that they said in motion long ago? You know where you won't have any problems? Nah. Do better than that. Can you do better than that, Bob Murphy? I can't do worse. Oh, why do I? It's like I hand everything to you on a silver platter. You know where Krugman won't botch his monetary analysis? Oh, that's terrible. That's worse than mine. It's hard to do this on stage. All right. All right. All right. Does anybody know what we're talking about? The contra cruise, of course. Isn't that great? Yes, that's right. Did you know Bob and I host a cruise every year? A week long cruise? Did you know that? Oh, by the way, did I say every year? We've done it for two years, but we may never do it again. So this would be the year to jump on board over at contracruise.com, and it's super fun and awesome and hilarious and great. And we have special guests this year, including Scott Horton, the great foreign policy expert that we love. It's going to be there. And he will start talking the minute we get on board, and just as we're leaving, he'll be done. And it's going to be great. So contracruise.com, check that baby out. All right. That's good. That's our ad. That's how we monetize the podcast right there. And you're all thinking, I'm too poor to go on the contra cruise, but just think someday if by some fluke we should revive it in future years, just keep in the back of your mind. And this podcast is showing you the dollar's going to crash at some point, so just get rid of them. Can you give them up? All right. Let me put another question to you guys. This is similar to the things we said before, but I know we're going to have listeners. They're going to say we've hit on this stuff, but let me just put it point blank. There's a look at why is it that when the feds doing all this stuff, they're pumping in all this money and people are going, ah, you guys warned about inflation, but look at it's a, you know, CPI is fine. And the fed actually uses like what is the consumer expenditures or something. They don't even use CPI. They use some other personal consumption expenditure. That's what it is. So even when CPI you over here is going higher than the fed's two percent target. No, that doesn't count because it's the PCE. All right. And then they'll be in the people email. So why do you guys let them get away with that? You know, shouldn't you be including? There's all sorts of prices that we're going through the roof. The moment they announce QE right oil prices skyrocket other commodities skyrocket stock prices gold. And so, you know, why is it that we have to just look at what what happened to the price of a loaf of bread? Those people are unemployed. It's not like rich speculators go out and start loading up on French bread right? I'm sorry. No, no. Yeah. Right. So that's it. So what do you what do you say that is that basically on target or is it again rubes who don't know anything about monetary policy? Well, I think again, it's just demand for money is at increased. So I mean, the CPI is just you have to make many, many assumptions. Oh, if any story like a friend of mine friends, he contacted the statistical office of France, you know, National Office, and he was asking for for the data and for how it's computed, what are the ponderations, etc. They answered to him, we are not publishing that because we are afraid people will manipulate the data. I mean, I mean, you have many, many problems. I think one good offer, which is who is very Austrian friendly is William Robker, who actually talked about that, that it's never neutral. How do you compute the CPI? You have to make many, many assumptions. Also, because preferences change and because what people consume change. So I mean, again, what's important is what is the effect of monetary policy on the structure of prices, much more than what is the effect of monetary policy on the price level, because there is no price level. Yeah, I totally agree with this. It's the image, the metaphor that Joe Salerno likes to use is the swarm of bees. If we think about prices in the economy, not as a level, but as a bee swarm. And so they're constantly, the bees are constantly moving with respect to each other up and down and so on and so forth. And then the bee swarm can move up and down collectively. So are you saying the Fed stings us? The Fed is like a hornet's nest, yes, yes. Yeah, don't kick the Fed because they'll come after you. No, I'm saying that the important thing is the position of the bees relative to each other, right? The price of output relative to the price of inputs. So we get asset price inflation, then we're generating this distortion of linkeding out production processes that has to be reversed later, even if the swarm is staying level or going down or going up, and that's really not relevant. Let's take the example of a period of stable prices, which is the 1920s. Has anyone read The Great Gatsby or seen the movie? I think it's a good example of the continual effects. So one of the heroes of the book, Nick Karatway, is moving from the Midwest to work in the bond business in New York. And he actually, you have this sort of strange geographical divide in the book because, well, my interpretation, it's because of inflation and the Fed. So you had credit expansion and basically you had a much more favorable position of the financial sector for people who are working in the bond business, et cetera, et cetera. So yeah, I mean, sometimes you will have inflation, sometimes you will not. It depends. You have like, I think even Rothbabe in one of his essay was talking about the growth of the drug business abroad, and that was increasing the demand for dollars because you are like drug dealers using dollars and cash. So I think it's too simplistic to say, oh, well, the velocity or the demand for money is stable. So you have no inflation, you have no problem. It just doesn't make much sense. One of my favorite articles in the quarterly Journal of Austrian Economics is called, I believe it's called Against Monetary Policy by Guido. And that's a very provocative... What's his last name? He's not like Madonna. Oh, sorry. Sorry, he's our friend. Guido Hulsman, who's the biographer of Mises. And in this article, he's not saying what we need this sort of monetary policy instead of that one. The article is called Against Monetary Policy. And I was thinking about it because of this conversation because we keep saying monetary policy can do blah, blah, blah. And we haven't said bad monetary policy can do blah, blah, blah. We've said monetary policy can do blah, blah, blah. So I wonder if our panelists here might comment on what would be or maybe it's optimal monetary policy. Maybe it's that. I forget the name of the article then, but it's along those lines that the optimal monetary policy is no monetary policy at all. I learned that Dr. Hulsman is generally right when it comes to this stuff. Indeed. And actually, you have a funny passage in The Fury of Money and Credit, written by Mises, where he says that the Bank of France protects the brandier, like the brandier class, by keeping a low discount rate. So sometimes it's not even inflation which favors the rich. Sometimes it's just the existence of the central bank. And you have like huge problems of more other with central banks that they can bail out basically every bank, every actor in the financial sector. So of course, they benefit from it. I would also say that this is a generalizable principle. I'm sure that Dr. Hulsman has pointed this out in his article. So we don't think as economists that we need to have a government policy about the optimal amount and types of men's dress shoes or the government policy about the optimal amount of oil that should be produced and so on and so forth. These issues can all be left to the market, to the entrepreneurs in the market to determine through the calculation of profit and loss and so on how much more should be produced of men's dress shoes or oil or in the case of money, as long as we have again a good commodity money, then these decisions about production, the optimal amount of money, so to speak, can be left to just the regular entrepreneurial process of deciding, hey, it's more profitable to mine the gold and mint it into coins or it's not so profitable so we won't produce any more money and so on. So the whole notion of policy, we would say of course is socialist, right? It's just, hey, the government is going to take over an industry and dictate to us how much they're going to produce and allow us to have of some particular good. Yeah, that's a good point. It's like nobody thinks the government should take over healthcare. Okay, we're running low on, do you have something or do you want to go? Yeah, let me just jump in just to say that it is hard conceptually to imagine how that works, as I think I said in one of my talks, because we can see how shoes and these other things would work but how do you buy and sell money? How do you have a profit on it? So Jeff, what we'll do is on the show notes page for this episode, which is not going to be up yet because you guys are hearing it before it gets posted but by the time it is up in a few days it'll be contracrugman.com slash 97. I'm going to link to Jeff's congressional testimony. You know, I talk about pearls before swine. Here's Jeff Herbner going before Congress trying to explain to them what a purely private monetary system would look like and he explains exactly how it would work and how it would be regulated by profit and loss the same way production of any other good would take place and what what I love about it is how beautifully argued it is but also imagining someday a hundred years from now some libertarian researcher is looking through you know online probably the congressional record comes across this and says to his friend get over here drop whatever you're doing you've got to see this I cannot believe somebody gave this speech in front of Congress so we're going to link to that and they'll say when did this happen on like 13 years before the U.S. fell to the barbarians and I said wow all right I guess we better wrap things up all right so that is our episode for today our thanks to Jeff Herbner, Louie Rouenet, of course Bob it's always great to have you too on this on this show do what I can all right so contracrugman.com slash 97 is our show whoa whoa whoa no we are not ready to go yet we have one minute I want to use to plug the cruise again you got to go to contracruse.com but of course contracrugman.com slash 97 is where we will have some really juicy stuff posted related to what we talked about today all right thanks everybody thanks guys there we thanks for listening to contracrugman subscribe to the show for free on iTunes or Stitcher contracrugman.com you'll also find detailed show notes pages our blog books by Tom and Bob and more at contracrugman.com see you next week