 Good afternoon, ladies and gentlemen. I'm Lydia Mashburn, Policy Director for Chairman Ron Paul's Subcommittee on Domestic Monetary Policy. On behalf of the congressman and his office, I'd like to thank you all for coming to our concluding lecture in our afternoon tea series on the basic principles of money. Today's question is going to be, what about money causes economic crises? It's sort of the culmination of what our other lectures have led to. Our first lecture was, what is money? And then our second one was, what is constitutional money? In those two lectures, our first lecture, Dr. Salerno, very nicely laid out for us what money is. That money is a commodity. It is a market-chosen commodity that serves the role of money. And what the market needs money to do is it needs it to be recognizable. Then you know that this is the same thing, that they're able to trade in future. They need to be able to divide it so that they can purchase large or small things. They need it to be portable. They need to take it with them. Catalyst money didn't work out very well because it's a little difficult to move it from one place to another. And then one of the pinnacle faculties of money is that it has a stable value. You need it to maintain the value for which you exchanged it for. Which then brought us to our second lecture, where Dr. Vieira talked to us about constitutional money. The founding fathers wanted us to understand or wanted us to keep stable money. And it had turned out that the market had chosen gold and silver to fulfill money because it filled all those other properties of divisibility, portability, recognition, and stable value. So they set up in the Constitution certain provisions to maintain what the market had chosen as money because they had already experienced through the Revolutionary War and then under the Articles of Confederation some terrible experiments with paper money where it did not retain its value because you could increase it at whim. Dr. Vieira sort of took us through, I think, roughly 200 years or more of history and showed how, over time, that stable value of money has eroded legally. And got us to the point where we are today, where we are now able to talk about what happens when your money loses its value. So while it's terrible that, over time, your money does lose its value, what's even worse, or I don't know if it's even worse, but it's not good, is that it also can cause booms and busts in an economy. It causes economic crises. And that's what brings us to today's question. What about money causes economic crises? Which is why I'm delighted to say that we have Peter Schiff to answer this question for us. He's CEO and president of Euro-Pacific Capital. He's a financial analyst. He's an author. I think most importantly, though, at least to me, is he was one of the few financial analysts to predict the collapse of the housing bubble. Everyone else was like, housing prices have gone up. They just keep going up. It's never historically dropped. And he said, look, it's going to collapse because it's not sustainable because he understood what it was about money that caused these bubbles in the economy. And he knew it was going to collapse. Analysts running the gambit laughed at his face. And when he was proven correct, we're now left picking up the pieces. But unfortunately, we still are not understanding what it is that caused the crisis to begin with. So our policy prescriptions are kind of off base in terms of dealing with the aftermath. So I'm delighted to welcome. And I hope you will join me in welcoming Peter Schiff. I thanks everybody for coming. Hopefully most of you are not here for the free desserts. But all right, let me talk a little bit about money. I'm going to turn my phone off just in case somebody decides to call me. I'll just put it on silent. Anyway, everybody else, I guess, can do the same thing. One of the roles of money, as you just alluded to, is that money needs to represent a store value. And the reason that that's so important is because that facilitates savings. You're not going to save money if you anticipate that its value is going to erode over time. So you need something that has a store value. And the reason savings are so important in a market economy is because contrary to the conventional wisdom, spending is not what grows the economy. People who believe that are basically putting the cart before the horse. What actually grows an economy is the opposite of spending. It's under consumption. It's savings. It's the money we don't spend that makes the economy grow. Because when we don't spend it and it's saved, that money is available to finance, capital investments, business expansion, job creation, all the things that grow the economy flow through from savings. A popular refrain, the Occupy Wall Street crowd, and they say, the businesses don't create jobs. When you say we can attach the job creators, they say, no, no, no, the job creators are the consumers. Because they're the ones that are spending the money. And they say, well, if there were no customers, then there would be no businesses. But of course, what that theory overlooks is where do the consumers get the money? They get it from their jobs. So you can't say that consumers create jobs when you need jobs to have consumers. So it's the other way around. And what gives the consumer purchasing power is his productivity. If everybody just had a job from the government and the government printed money and gave it to people, there'd be no demand. There'd be no supply. There'd be nothing to buy because nobody would be working. What creates the purchasing power is the production. And the production comes from productivity. And what makes workers productive is capital. It's the tools and the equipment that they have. If they were simply using their hands, they couldn't produce nearly as much. And all of that capital, all of those tools, are only here because of savings. So savings are very important. And also, savings help determine the rate of interest. Because interest rates are a very important aspect of money. Because interest rates represent a price. And like all prices, they are determined by supply and demand. The supply is all the savings. The demand is all the people that want to borrow money, whether it's businesses, whether it's college students, someone wants to buy a car, the government. Everybody borrowing money is competing for this store of savings. Because for every dollar borrowed, somebody had to save that dollar. Somebody had to not consume and put that dollar in savings so that somebody else could spend it or invest it. And so if you have a lot of savings, then you're going to have a lower interest rate because the supply is going to be greater. And what does that mean? If there's a lot of savings, what economic signals is that sending to the market? If people are saving a lot of money, what that says is that people prefer future consumption to current consumption. Because after all, when you're saving money, you're just deferring consumption. Every dollar you save is going to be spent eventually, except you're not going to spend it today. You want to spend it tomorrow. And hopefully, you'll spend the dollar tomorrow plus all the interest that you earned over time. And so it sends out signals that if there's a lot of savings, that there's low interest rates. And then, of course, the economy will react. Investments will be made based on the fact that consumption has been deferred to the future. And also, one of the reasons that people might save in a free market economy is in a free market economy, contrary to, again, the conventional wisdom, prices go down. The natural tendency in a free market is deflation. Prices go down. Prices went down for almost the entire history of the United States until the Federal Reserve. Our grandparents will tell us stories about how cheap things were when they were a kid. Well, their grandparents told the opposite stories, how expensive things were when they were a kid and how much cheaper they are now. And the politicians try to tell us that, no, inflation is a good thing, money losing value is a good thing, because the economy would collapse if prices weren't rising. They try to make us feel that falling prices would be a disaster when, of course, it's the opposite. Falling prices are a reward for capitalism. They make wages more valuable. They make savings more valuable. The argument is that, well, if prices are falling, nobody is going to buy anything. They'll just be waiting for lower prices. And of course, that's absurd. We all have cell phones. We all have laptop computers. We all have plasma TVs. The prices for those items are falling all the time. That doesn't stop people from buying them. In fact, it encourages people to buy them. If cell phones were still as expensive as they were when they first came out, nobody in this room would have one. The reason that we buy them is because the prices are coming down. So it's the exact opposite. Falling prices create demand. It's not the other way around. But that's another reason that people save. If you save your money and money gains value, you can buy more stuff in the future, not only because you earned interest, but because things got cheaper, the money became more valuable. So if you have a lot of savings, you can have low interest rates. If you don't have a lot of savings, well, you're going to have high interest rates. And the beauty of this is, let's assume that there's not a lot of people saving money, and a lot of people want to borrow money. Well, you have a very limited supply. You have a lot of demand. What happens to price? Price goes up. So interest rates go up. Higher interest rates discourage people from borrowing because it's more expensive, and they encourage people to save. And ultimately, the market's going to create an equilibrium between savings and debt, and you're going to have a market rate of interest. And investments are going to be made. Capital projects are going to be made that can be adequately financed. Now, the problem comes in, now that we don't have real money, and you don't know what that is, now that we have fiat money or a money substitute, the Fed can create money out of thin air. Now, when they create money, they don't actually create any value. They're just printing money. So they diminish the value of the money that already exists. But also when the Fed creates money, they do it in a way where they buy up treasuries. And they also control short-term interest rates, the cost of money to banks. And when they do that, the Federal Reserve can bring down interest rates. And that has the effect of sending the same types of signals to the market that there's more savings because interest rates are low. But people aren't saving their money. There is no real change in time preference for money. It's the same. And so you send out this false economic signal to the market. And as a result of that false economic signal, a lot of investments are made that really should not be made. There's no real viability there. But they're made because of these, the false signals. And I often joke when the housing bubble burst and one of the things that President Bush said at the time was he's blamed everything on Wall Street. He said, you know, Wall Street was drunk and they did a bunch of stupid things. So, of course, yeah, they were drunk, but he never asked the question, why? You know, where'd they get all that alcohol? Why were they drunk? And they were drunk because the Fed liquored them up. I mean, Allen Greenspan kept interest rates very, very low for a long period of time. And just like anybody, you know, if you're drunk, you know, you're gonna do some stupid things while you're drunk. You don't realize it while you sober up the following morning, you know. And so this is what causes this business cycle, right? People think that the business cycle is just some flaw in capitalism. Just for some reason, you know, we have these booms and busts. And that's not the case. These booms are caused by the malinvestments that are created in response to the Fed intervening in money supply where you have the Fed price fixing interest rates creating too much money. And fueling these bubbles. And one thing all of these bubbles have in common is debt. A lot of them are financed by borrowing money, particularly the housing market. I mean, obviously what made it possible for people to buy houses they couldn't afford other than Freddie and Fannie or the FHA that might have been, you know, guaranteeing the mortgages was the fact that the interest rates were so low. When people buy houses in America, they buy them based on the monthly payment. And the monthly payments were a function of the mortgage rate. And especially when you got an interest-only mortgage where the only thing you're paying is the interest, then the low interest rates really made it cheaper. And when you had the Fed with interest rates at 1% and the banks were offering teaser rates based on those temporarily low interest rates, people could really get in over their head. So this was a function of money being too cheap. Instead of the market setting interest rates, you had central government planners at the Fed picking an interest rate. And why did they pick one that was so low? Well, the reason is the politicians like the boom. They like it when people feel good, when voters feel good, because they're more likely to reelect the people who are in office if they feel good. If they think they're getting rich in housing, if they think they can get rich without working, they're gonna be happy. Especially if you're taxing them so much on what they earn, if you can create the illusion that they're making money in the real estate market, well, then they're not gonna be as upset at all the taxes they have to pay. So the politicians like the boom. In fact, everybody thinks that the boom is what's good. And then when the minute you have a recession, what does Congress wanna do? What does the president wanna do? We need a stimulus. We can't have this recession. We need to stimulate the economy. Well, they don't understand it. The stimulus is why we have a recession. The stimulus is what caused the boom. But the boom is the problem. The boom is where all the mistakes are made. The recession is where the mistakes are corrected. That's where the cure takes place. So we need the recession. Now, when people say we need the recession, they'll try to say, oh, you're heartless. You're happy that people are suffering. Now, that doesn't mean we're happy about it. It just means it's necessary. It's like if somebody checks in the rehab because they're a drug addict and then they're going through withdrawal, that doesn't mean that the rehab center is happy that the people are suffering through withdrawal. They just know that if they wanna get healthy and kick the habit, that they're gonna go through withdrawal. That's just part of the cure. If when you checked in the rehab, every time you started having withdrawal symptoms, they gave you drugs, right? You're not gonna get cured. You might be popular. You might be a popular rehab center if you're giving out drugs to everybody. But not because you're curing anybody. And so what happens is the minute the narcotic of the cheap money begins to wear off, right? And we realize the mistakes that we made, people are like, I can't believe I bought that condo. I can't believe, how do I buy that internet stock? You don't see this when it's in the mania, but their interest rates eventually rise and the mistakes. And so what happens during the recession is the market tries to correct all these imbalances because during the boom, resources are misallocated. Capital, labor is misallocated. In the housing bubble, too much capital went into building homes, remodeling homes. Too many people were buying all sorts of furnishings for their homes, buying cars based on home equity loans. Too many people were working in the mortgage industry, in the finance industry. People had jobs where they shouldn't have gone because the whole idea behind an economy is to allocate the resources, which include labor, but capital and land, in a way to maximize productivity, to maximize our enjoyment and our utility from these resources so that we can have a rising standard of living. But if capital and labor and land are where they're not supposed to be, that you have to correct that. And what does that mean? What happens when the bubble burst? Well, people that made bad investments lose money. People that have jobs that they shouldn't have, they have to lose those jobs so they can get other jobs. You see, a lot of times in Washington, people don't differentiate between jobs. They just think as long as people have a job, it's okay. If somebody has a job digging a ditch and someone else has a job filling it back up, as far as Washington's concerned, they're both employed. But they're employed doing what? What do you have to show for the labor? Nothing. You filled the hole in the ground. You have exactly what you had before they started. We don't want jobs because we want jobs. Jobs are not an ends. Jobs are a means. What people want when they have a job is they want all the things that they can buy with their paychecks. But you can only buy stuff if something is produced. So people have to be employed productively. That's the key. In the old Soviet Union, before it collapsed, one of the things they used to brag about is that they had no unemployment. They would tell their citizens, look at these Americans, they have all this unemployment, but nobody in Russia was unemployed. Of course, everybody worked for the government. Everybody had a job. But they had to wait in line for six hours to buy some bread or whatever. Because nobody was making bread. Everybody was working for the government. And so if no one is producing anything, then your salary doesn't have any value because that's just money. You can print money all you want. That's not the solution. I mean, a lot of people now talk about the fact that we don't have enough demand. You hear all the Keynesians are saying, the problem with the economy is that Americans are broke. They have big mortgage debt. They have car loans. They have student loans. So they don't have any money. And so the government needs to print money so we can have more spending. But if you're broke, just adding money isn't going to change the circumstances. Because money in and of itself doesn't have any value at all. It's just a little piece of paper. They're broke because they're loaded up with debt and they're not productive. And more money isn't going to change that. Or if the government does say, well, the people are broke, so the government has to spend. Spend what? If the people are broke, the government is broke. Where does the government get the money? Doesn't get it from the moon. It gets it from the people. So if the people are too broke to spend, the government's too broke to spend. Because the government has to tax them to get the money. But one of the problems with the monetary system we have now is that people think, well, we don't have to tax them to get money. We could just print it. And then we can spend that. As if there are no adverse consequences to pretty money. Because that's a tax just like anything else, except instead of taking your money away from you, what that does is take the purchasing power away from your money. So you don't necessarily see the tax, but you feel the tax. But when you go to the supermarket and groceries are more expensive, or you go to the gas station and gasoline costs more money, a lot of people don't make the connection. They don't see that that's a tax. Especially when you have the government or the economist blaming the high prices on a greedy oil company or on OPEC, or on natural disasters, on bad weather, on a flood. So they thought, oh, it's not the government's fault. And then you'll have the economist say, look, it's a good thing that the prices are going up because otherwise we might have deflation. So this is the price that you have to pay to avoid deflation as you've got to pay higher prices. So they don't make the connection. So it lets the politicians off the hook because the public doesn't understand how all these benefits are being financed. Now, the other source of this big bubble, this big problem, has to do with the US dollar's role as the world's reserve currency. You know, up until the Second World War, all the countries were using gold. Everybody was on a gold standard, including the United States. And after the Second World War, we pretty much, America pretty much had almost all the world's gold. And we had 90% or more than 90% of the world's gold was held by the US government. And where did we get all that gold? I mean, we didn't mind it all. We got it because people used it to buy the products that we produced. And how did we produce all these products? We produced them because we were the freest country in the world. We had more capitalism and more freedom. And as a result, we were more productive. And the world wanted the stuff that we produced, yet they weren't productive enough to produce stuff for us so they had to give us their gold. So we had all this gold. And we went around to all the other countries and basically proposed a new monetary system. And this was gonna be where instead of foreign central banks backing up their currencies with gold, they would back them up with a dollar. And the dollar, though, was backed up by gold. Of course, that's the only reason it made sense. If the dollar was backed by nothing, then we couldn't have conned the world into signing up for this arrangement. But everybody knew the dollar was as good as gold. And if you had $35, you'd get one ounce of gold. That was the deal we made with the world. And what was in it for the world was if they held dollars, they got interest. If they held gold, they had storage costs. So it made sense. Hold the dollars. We're on a dollar standard. Did dollars to reserve currency? The dollar is backed by gold. America's the world's richest country. They have the biggest trade surplus. They're the world's biggest creditor nation. They've got all the gold. Good deal. Well, it was a great deal for us because the minute we got that privilege, we abused it. Because now all of a sudden, we could pay for our imports by printing money. Now, technically, we were supposed to have the gold to back it up, but that didn't stop the government. They just lied, right? They just wrote checks that they couldn't really cash, assuming that people would just not care or not notice. After the 1960s, when we had the guns and butter economy, the war on poverty, the great society, we went to the moon, Vietnam, all this stuff, we were running big deficits. And some of our creditors began to notice this and realize that we couldn't possibly have enough gold to back up these IOUs, which is what the Federal Reserve notes were. They were promises to pay real money. The real money was the gold that the Fed had in its vaults. So rather than acting responsibly, rather than devaluing the dollar and allowing a deflation to occur and cutting government spending and doing the right thing, the politicians did the expedient thing, but almost an unthinkable thing, and they defaulted. Nixon basically told our creditors, we promise to give you gold for your Federal Reserve notes, we're now gonna give you nothing. You can hold on to them if you want, but you're not gonna get any gold. And the world should have gone back on a gold standard at that point, right? But they didn't. Now, they marked the dollar down, rather dramatically, the dollar was marked down by about two thirds during the 1970s. The Deutsche Mark, when the 1970s began, you can buy four Deutsche Marks for the dollar. At the end, you can get about a one and a half. The Swiss rank went from like 23 cents to 75 cents. The yen used to get 360 yen for the dollar. Later in the decade, it was down to like 150. Of course, it's a lot lower now, but that was a big drop during the 1970s. Oil prices went from $3 a barrel to $30 a barrel. I mean, that's why oil prices went up. It wasn't because of the Arabs. It was because of Nixon. It was because of what the government did. It was all the money we printed, money lost value. Oil prices didn't go up at all. But in terms of a depreciated dollar, oil went from $3 a barrel to $30 a barrel. And, you know, gold prices went up from 35 up to over 800. Another thing happened too during the 1970s. A lot of women came into the workforce, and it wasn't because they were liberated. In fact, they were liberated before. But as a result of all this inflation and all these taxes, their husbands could no longer afford to support them. So they had to start working. Our standard of living declined dramatically with the loss of the purchasing power of the dollar. And in fact, you know, I mentioned that oil, I often use as an example. I think I even used it in that congressional testimony when people say, oh, you know, oil gasoline prices are so high now, we're paying almost $4 a gallon. These are record high prices. Say they're not, they're actually lower than they were in the 1950s. Well, what do you mean they're lower? Well, you know, back in the 1950s, you could buy a gallon of gasoline for a quarter. So it costs 25 cents. Well, if you have a 1957 Chevy and you scoop around in the seat cushions and you find a quarter that was dropped there in 1957, you could still buy a gallon of gas with that quarter. You get changed too. Because it doesn't cost that much, it costs less. Because real money held its value. The only reason that oil is more expensive is because we're paying for it with depreciated dollars. That is a problem. What was I talking about before I started talking about that? I just lost my train of thought. Standard of living. Yeah, okay. So the standard of living went down dramatically after the 1970s. But even though the world marked down the dollar, after it collapsed, it stabilized. It stabilized when Paul Volcker came in and interest rates went up to 20%. Ronald Reagan came in promising to reduce government and lower regulations and cut government spending. And that created some confidence in the dollar and it kind of stopped the hemorrhaging. And the world then began to continue to function. The dollar was still the reserve currency, even though it was backed by nothing. And that is the problem. Because the whole idea is if the Deutsche Mark wasn't backed by gold, it was backed by the dollar that was backed by gold. But if the Deutsche Mark is backed by the dollar and the dollar is backed by nothing, then the Deutsche Mark is backed by nothing. So that's when basically we embarked on this giant experiment that has failed every time it's ever been tried in fiat money. The whole world is on this fiat money system. But of course, once the world knew the dollar was backed by nothing, now it was so much easier for the government to run deficits. It was much easier than when they had to pretend it was backed by gold. At least back then, when Lyndon Johnson was doing this, he had a worry that somebody might figure out what was going on. But once we basically told the world, you're gonna get nothing for your dollars, then there was no limit to how many we could print. And that's when the US economy began this massive transformation from the world's biggest creditor to the world's biggest debtor, from the world's biggest manufacturer of low-cost, high-quality stuff. I mean, all the low-cost merchandise was made in America, everything. Even though we paid the highest wages in the world. If something was expensive, if something was imported, that meant it was expensive. People used to brag about the fact that they can afford to buy imports. If you bought imported products, it meant you were rich because everything that was imported was expensive. All the bargain basement stuff was made here. And it wasn't because we had low labor costs. We had the highest labor costs in the world. But our workers were the most productive because they had the most capital. They had the most tools and the most equipment. And our businesses had the fewest regulations. So it was freedom that made us prosperous. But all that changed and we began to live off the printing press because when the dollar could be just printed out of thin air and the world was gonna take it, we can buy all these products from our trading partners for nothing. You know, when the Chinese are making things for Americans, they need land labor and capital. People have to work hard in factories to produce stuff. What do we give them in return? Just some money that we ran off a printing press. And what do they do with it? Nothing, they can't, they can't even spend it. All they can do with it is loan it back to us and buy treasuries. And then what are treasuries? Just more dollars. And a lot of people again, they confuse this. They think that the Chinese are benefiting from this relationship, they're not gaining at all. We're benefiting, right? They get, we get all the stuff and they get all the work. Well, what good is to work without the stuff? See, we're trying to say, well, they get jobs. Well, so what? The slaves had jobs. Wasn't a good deal for the slaves, you know? These jobs are not a good deal for the Chinese if we get all the stuff that they produce, right? They're working. The whole idea behind exporting is not to create jobs. It's really to eliminate jobs. I mean, the reason you export is to import something else. Right, because you want to consume. And how do you consume as much as possible? Well, if there's something that you can do really well, that you can make more efficiently than somebody else, rather than try to make everything, you just make the things you make best and then you trade for the things that other people make better than you. But the whole reason to export something is so you want to buy something else. You don't export just so you can have a job. You're just wasting your labor. Now, what happens when we trade with the rest of the world, they send us stuff. And what we basically say is, well, I got nothing for you. But I got an IOU, dollars, well, you take the IOU and they take it because it's the reserve currency. And maybe in the back of their mind, or I guess in the front of their mind, they figure that one day they can use it to buy something. But meanwhile, what are they gonna buy? What are we making? Every year we make less and less stuff that they want. The stuff that the Chinese want to buy is all made in China. I mean, that's where the stuff that we want to buy is. And, but this whole thing is maintained. But now we have this entire bubble. We have this entire phony economy that is now predicated on Americans borrowing money that they didn't save to buy products that they can't afford and didn't make. And this whole thing is phony. And all of our economic policy is designed to sustain this. Nobody wants to allow it to be corrected because the correction happens in a recession. We have a lot of problems. The biggest problem in the U.S. economy is that interest rates are too low. Interest rates have to go up. We're never gonna have a recovery. We're never gonna have real economic growth. We're never gonna create productive jobs unless interest rates go up. But that's gonna be very painful because we're so overly indebted. What's gonna happen when interest rates go up? Banks are gonna fail. And they're not gonna be able to, that next time we can't bail them out. What's gonna happen to the housing market? Gonna go down more. It needs to go down more. That's part of the correction. Prices were too high. They're still too high. What about the government? What's gonna happen when interest rates go up? Well, the government is gonna have to dramatically reduce spending. In fact, they might have the default on the bonds they've already sold. Because the only reason the government can pay the interest on the debt is because the rates are really, really low. Well, what happens when rates go up? Well, they can't afford. We can no more afford to pay our bonds back than the Greeks can. For a while, interest rates in Greece were at record lows and the Greeks had no problem. But then interest rates went up and now you have a crisis. The same thing is gonna happen here. Now, there are people that think, well, that'll never happen because interest rates are never gonna rise. Well, that's just impossible. They have to rise. You know, what is the consequence of keeping interest rates artificially low? We continue to screw up our economy. Instead of allowing market forces to correct the imbalances, we make the imbalances bigger. The more we stimulate the economy with the toxin, because that's what the stimulus is. It's a toxic sedative and eventually you overdose on it. What is happening? If we keep interest rates low, nobody's gonna save. I mean, who's gonna save money that's depreciating in value? And so you're gonna destroy your savings. You're gonna destroy the ability of the economy to generate capital, generate growth or production. You're gonna create massive inflation. Now, the government can lie about inflation for a while. They can hide it behind these doctored up CPI numbers that are so mechanized or they're so manipulated. Not, you know, there's a conspiracy, but the formulas that they use to calculate prices going up are flawed. They're deliberately engineered to get a low number. I mean, that's how, why they're there. But of course, when they're measuring prices, they're not even measuring inflation. They're measuring an effect of inflation. But at some point, the inflation is gonna be so pronounced that it's, and its effect on prices are gonna be so great that the government is not going to be able to pretend that it doesn't exist. And then at that point, interest rates are really going to have to rise. And then it's all gonna hit the fan. And I said, that's when the banks are gonna fail. And, you know, the next time the banks fail, if the Fed is doing the right thing and raising rates, that means not only do the banks fail, not only do the bondholders lose money, but the depositors lose money. Because if the government is having trouble paying its own debts, how's it gonna bail out the FDIC? You know, where's it gonna get that money? It's this, so there are tremendous losses. All we're doing now, all of our policy is designed to postpone the day of reckoning beyond the next election. That's all Congress cares about. How can we get through 2012 without it hitting the fan? And they don't care that the policies that they're pursuing are just making all the problems worse. And when we look at the economy, and people say, oh, the economy is growing. Look at the GDP. Economy's not growing. We're spending more borrowed money. That's not economic growth. Look at the debt. In the last few years, right, since Obama's been president, look how much the debt has skyrocketed. It's grown by much more than the GDP. So all this consumption has been financed with that. It's not real prosperity. It's phony. It's like looking at half of a balance sheet. You're looking at the assets and you're ignoring all the liabilities. Or on an income statement, you look at the income, but you don't look at the expenses. We are not better off because the GDP went up. We're worse off. Where'd that money come from? We borrowed it. And what do we do with it? We spent it on consumption. We didn't invest it. We don't have more plant equipment. We blew it, right? We stood government-spent it. You know, the bubble that we had as a result of the cheap money that the Fed created in the 1990s, that inflated a stock market bubble. When that bubble burst, instead of letting the market correct the problem, we deliberately gave us more stimulus and that created the housing bubble. When that bubble burst, instead of again sucking it up, admitting that, gee, we really screwed up after the last bubble. Let's do the right thing now. Let's let the market run its course instead of doing that and taking a more painful recession, which was now necessary because we didn't take our medicine the first time. They did the same mistake and now they're inflating a government bubble. The government bubble is bigger than the housing bubble. It is bigger than the stock market bubble, you know? And it's gonna burst. It's no more sustainable than the previous bubbles. And you can see it in the bond market. You can see it in the currency market. But the real crisis that's coming, and then I know I've been talking, we'll take questions. The real crisis that's coming as a result of the fact that we no longer have sound money, that we've been printing all this money and running all these huge imbalances is a sovereign debt crisis, a collapse in the US government bond market, a collapse in the dollar on a much grander scale than what we see playing out right now in Europe. And if you remember, when the housing bubble first began to crack and the signs showed up first in the subprime market, all the experts, everybody, you know, from the administration down to Wall Street was on television reassuring everybody not to worry that it was all contained. It was just a subprime problem, tiny little problem, don't worry about it, the market is sound. Of course, at the time I was saying that that's not true. It's not a subprime problem, it was a mortgage problem. That we were just seeing the symptoms first in subprime, but the symptoms were there. And it wasn't even about contagion, about spreading. Everybody was already sick. It was just a question of time before the symptoms showed up. Well, the same thing that's happening with sovereigns. This is not an Italian problem or a Greek problem or an Irish problem. It's a debt problem. And we've got more debt than Europe. Just because we can print money and we have the world's reserve currency doesn't mean that we're immune from these laws. Right now I think is when this is a time in history where the sovereigns are being held accountable. You know, just like the Italians or the Greeks have borrowed more money than their citizens can repay, American. American government has borrowed more money than Americans can possibly repay. And, you know, we're not gonna pay the debts off by raising taxes on the 1%. Yeah, I mean, we can't even do it by raising taxes on the 99%, as if we can even extract all that revenue. You know, it's gonna have to come through a restructuring. It's gonna have to come through a default, one way or another. And there's two ways that that can happen. We can legitimately default. We can, Congress can level with its creditors and still if we're not gonna pay 100 cents on the dollar on these treasuries, it can level with people who are expecting a government pension or a social security check and level with them and still if the money's not there, we can't pay you everything that we promised. It will come up with some way of means testing that are doing something so that we can make do with less. Or they're gonna inflate the currency into oblivion. And it won't just be not worth the continental, it'll be not worth a Federal Reserve note. Because one way or another, the people who loan money to Americans are gonna lose. The savers are gonna lose, the creditors are gonna lose. Either they're not gonna get their money back or the money they get back isn't gonna have much value. But the problem is the longer we wait, the worse it's gonna be for everybody. And the more damage that we do to our underlying economy. Because the longer we allow these malinvestments to build up, the bigger the impact when they collapse and the harder it is to restore balance. And part of that would be going back to sound money, going back to a gold standard. I'm confident that the world is gonna go back on a gold standard. The question is how much longer is it gonna take and how high is the price of gold gonna be when that happens? But if we go back on a gold standard, then we will have discipline again in Congress. Because Congress won't be able to spend money unless they can extract it from the taxpayer. They're not gonna just be able to print money, we're not gonna be able to run all these trade deficits. If we wanna import, we're gonna have to export. If not, we're gonna have to settle our accounts with gold. And if we can't mine the gold, and so that is what's going to bring everything back into balance. The longer we wait to do it, the more mistakes we make in the interim, the harder it's gonna be. And the real threat to our liberty is that this real crisis that's coming, and the economic collapse that's coming and the financial crisis is gonna be much worse than 2008. The problem is all these problems result from government. They result from government meddling in the economy. All these distortions at the regulations and the subsidies and the money printing create. But the government is very successful at blaming capitalism for the problems that it creates. It mixes capitalism with socialism. And then it causes a problem and they say, you see, capitalism doesn't work, we need more government. And then they get more government, then we get more problems. Well, this is gonna be such an enormous problem that we might end up with total government and completely change the fabric of our country. So I think it's very important that as many people in Congress as possible, and that's where you guys can come in, understand the root cause of these problems. And it's not because we have too much freedom and too much capitalism, but the reverse. Capitalism doesn't work when government distorts it and interferes with it, when it tries to micromanage it. That's where all the problems come from. The solutions are gonna be in the market. It's not gonna be more government, it's less government. It's rolling back all these rules and regulations that are distorting the market and returning to sound money. And if we do that, we're gonna have real economic growth. We're gonna have real prosperity. We might have to suck it up and bear some pain. And just like you could swallow some bitter-tasting medicine, it might not taste good, but if it works, you gotta do it. But denying that you're sick or just exacerbating or covering up the symptoms while you get sicker is not the way to go, but that's unfortunately what we're doing now. Anyway, let me just open it up to the questions. Yeah. Yeah, I mean, obviously there's an economic truism that you're gonna get more of what you subsidize, you're gonna get less of what you tax. I mean, if you pay people not to work, people are gonna take you up on it. I mean, I did it myself. I remember the one time in my life I collected unemployment benefits, I did not look for a job until I exhausted my benefits. I was in my 20s and I was living in Southern California and the weather was great and I liked the beach and I liked that better than working. And if I could get paid for lying on the beach, as long as I got enough money for gas and booze, I was fine with me. And there are a lot of people today that do the same thing. I mean, it's not wrong, it's human nature. And if you can collect unemployment for two years, man, that's a lot of time on the beach. And people forget that leisure has value. I mean, people would rather not work, right? People save up so they can retire. Well, you can retire early now on unemployment. And a lot of people say, well, that's ridiculous. It's only $300 a week or $350 a week. Well, true, yeah, I mean, if somebody offered an unemployed person a $100,000 a year job, they'd probably take it. But what if the only job they're offered is $400 a week or $500 a week? Most people won't take it. They'd rather have unemployment because it's like a huge tax on getting a job. The highest marginal tax bracket is faced by someone who's collecting unemployment because not only does he have to pay taxes on what he earns, he loses all of his unemployment benefits. So the tax rate is enormous. And of course, what people forget is when you get a job, you don't get to keep all of your income. There's a lot of expenses that the IRS won't let you deduct. What if the job that you get offered is 45 minutes away from your house? What's it gonna cost you in gas money to get there and back? And maybe you have to eat in a restaurant. Maybe you have to wear a suit. Maybe you have to go to a dry cleaner. Maybe you have a kid. What if you have to put your kid in daycare? How much is that gonna cost? So it's so much easier just not to work. And so the more lucrative we make it, the more people aren't gonna work. And I've talked to plenty of people, small businessmen, who've told me they can't find people to work. And if they find anybody, they're only willing to work if you pay them under the table. Why? Because they don't wanna give up their unemployment benefits. There are people in my family right now that have told me, in my family, that are collecting unemployment. That's what, that's their job. They don't want, and you know, when I did it, when I had to do it, I actually had to go down to an unemployment office and pretend I was looking for work. And I remember, I used to actually go, because I was afraid that the government might catch me. So I actually went and met with, I dropped off some resumes. I remember walking and making a little log so I can at least look like I was looking for a job. But I didn't want one. I just wanted the unemployment benefits. But I at least had to pretend that I was looking. Today you don't even have to do that. You don't even have to look someone in the eye and lie. You do it all online. You can just be in South America collecting those unemployment benefits. Because they go a lot further. If you go down to Costa Rica, because the money goes a lot further if you're lying on a beach down there. So yeah, I mean, the whole thing is a racket. But yeah, the politicians love it because the unemployed, yeah, extend those benefits. Because they'll vote for whoever extends them. And of course, part of the problem, and then that's where you've got all these illegal immigrants coming in. Because who's gonna take these jobs if they can get unemployment benefits? So I mean, we shouldn't even have mandated unemployment insurance. I mean, if somebody wants unemployment insurance, let them buy it. I mean, you buy car insurance. You buy health insurance. You buy fire insurance. If you want to buy insurance against losing your job, just go out and buy it in the private sector. It'd be there if the government didn't provide. And at least then it would make more sense. You'd have market setting premiums and people who wanted it could buy it. And it would have different incentives. It would probably pay off in a lump sum if you lost your job, you know? But now we give people all kinds of incentives, not to work. And of course we pass laws that make it illegal for people to work. The dumbest law probably we've passed is the minimum wage law. But everybody in Congress loves it because they can pretend, oh, it's terrible. Nobody should have to work for $5 an hour. So let's make the minimum wage, whatever it is, $750. All right, well, what does that mean? That means if you're not worth $750, it's illegal for you to get a job. And it's not just $750. Actually, you have to cover all your payroll taxes, other fees, mandates, and of course, there's a lot of legal liability that comes with being an employer. So an employer has to assign that value because the minute you hire somebody, there's a million ways you can be fined or sued. If the government doesn't like the way you're hiring people, they'll sue you. They don't like the way they're firing people, you can be sued, all kinds. So it's very risky. The government has made it very risky to hire somebody. So a lot of people make a rational decision not to hire people or to hire as few people as possible. Or if you've got to hire somebody, hire them in another country. We don't have all these liabilities. So if we got rid of that minimum wage law, and we also got rid of all these unemployment benefits, a lot more Americans would have jobs. Now, how can it be? I mean, look at all the stuff that we're importing. Yet we have all these unemployed people. You know, what are the statistics that is ridiculous? We import 90% of our seafood, 90% of it. We're surrounded by oceans, we've got all these lakes, and we've got all these unemployed people. You don't think they can fish? I mean, you don't even just pick up a rod, go out there. But why aren't they doing it? They don't have to, right? So we got to get rid of all these rules and regulations that are making it illegal for people to work, that are making it expensive to hire people, because people forget where jobs come from. And I hired a lot of people. Why did I do that? Is it because I'm a humanitarian? I just want to create jobs? No, I want to make as much money as possible. And I figure I can make more money if I hire people. That's the only, that's the reason jobs are there, because somebody wanted to make money, and they hired somebody to make money. But the more difficult the government makes it, the more expensive the government makes it to hire people, the less likely it is that somebody is gonna do it. I mean, if I'm gonna hire people and I'm gonna lose money, obviously I'm not gonna do it. You know, so you have to have more profit, more opportunity, and of course, you know, the other thing that you need is capital. I mean, I can't hire workers if I don't have any tools to give them, if I don't have any equipment to give them. Where is that all coming from? That comes from savings. It comes from under-investment, from under-consumption. You know, when the government keeps talking about we have to raise taxes. We have to raise taxes on the wealthy because they're not the ones that are spending money. If we just raise taxes on the wealthy, they'll just have less money to save. Yeah, which means they have less money to invest, which means they create fewer jobs. We have a lower standard of living. So if the politicians that are saying we need more jobs, if they really understood where jobs come from, they would understand that they need to reduce the regulations and reduce the taxes on the people that create those jobs. Well, not at this price there's not. The gold price is just gonna have to go off, that's all. But the idea that there's not enough gold in the world is ludicrous. It doesn't matter how much gold there is. If prices are just gonna adjust to the level of gold that exists, money needs to be scarce. That's what makes it valuable. If it was plentiful, if there was all the gold that we needed, then it would have no value. What makes it rare and valuable is that it's scarce. And if you look at historically, the gold supply increases by maybe 1% or 2% a year. That's it, that's pretty predictable, pretty consistent. And it works great. I mean, we had the Industrial Revolution on a gold standard. People that say the economy can't grow on a gold standard, our economy grew more on a gold standard than since we left it. If you look at the standard of living of the average American from, let's say, 1800 to 1900, and compare the way the average American lived and the way he lived at the end of that century, and then compare that to the changes that have made since we've been on the fiat standard, it's a much bigger difference. The standard of living grew a lot faster. And imagine how much wealthier society would be, how much less we would all be working, how much more prosperity and leisure we would all enjoy if we had continued on the gold standard for the 20th century. Instead, we went off it and we sacrificed a lot of economic growth in the process. Yeah. Right on the assumption, things just progress the way they're beginning to progress. How do you see events unfold? Obviously, you're alluding to a large financial crisis but how does that manifest itself in a world where you've got a Vendor and Anki and members of Congress who are determined to do their best not to let nature take its course? Yeah, well, eventually it just has to happen just because the numbers are so large. You know, we've got, just like the people who are buying houses using a teaser rate on the subprime mortgage, the problem was the teaser rates expired and they couldn't afford to hire payments. Well, we've got the same thing. I think about 40% of the national debt matures in the next year. That's a lot of money. I mean, that's what, $6 trillion or something with exact amount, but it's two to three times what the government collects in taxes. How can we possibly pay that off? Well, we can't and the idea is that we don't have to because we're just gonna borrow the money. Well, that's the same idea that Bernie Madoff had and it worked for a while for Bernie but it didn't work forever. You know, we're not gonna be able to constantly roll this debt over, not at near to 0% interest. Eventually our creditors are gonna wanna get paid and we can't pay. And then we're not gonna have the crisis until it's forced on. We're not gonna do the right thing until there's a crisis, right? So we're not gonna preempt it. But we had this phony crisis when we had the debt ceiling crisis when we refused to raise the debt ceiling. The real crisis is when the lenders won't raise the lending ceiling. And in fact, we actually admitted to our creditors, you know, how much trouble they're in because we said if we don't raise the debt ceiling we're gonna default. That's what we told them. We told them that we're running a Ponzi scheme. We didn't say that if we don't raise the debt ceiling we're gonna raise taxes so we can pay our debt or we're gonna cut social security spending or military spending so that we can honor our commitments. We said if we don't raise the debt ceiling we can't borrow more money. We're not gonna pay off the people that we borrowed money from. So we told our creditors that they're the little man in the Pulp Totem Pole. So they already know this but at some point they're not gonna be buying the debt. The Chinese are gonna wake up. They're gonna stop buying this. I mean, people think that the Chinese are gonna throw good money after bad indefinitely. That they've got two trillion in treasuries and they can't afford to lose so they're gonna keep buying. Well, pretty soon they're not gonna be thinking about the two trillion they have but the five or 10 trillion that they're gonna buy if they don't stop. And might as well lose money on two trillion then lose money on 10. So at some point they're gonna wake up and of course their economy is gonna boom. The minute they stop doing this, that's the biggest irony is you have American politicians beating up on China for manipulating their currency. But the benefactors of that policy are not the Chinese, it's the Americans. We get to buy stuff for cheap. We have all the stuff that the Chinese are sacrificing. If the R&B went up, the Chinese would be buying all this stuff, not us. They would get to have the fruits of their labor instead of just the labor and we get the fruits. Now long-term the Chinese aren't doing us a favor because they're helping to undermine our economy. But in the short run, we have a higher standard of living because it's financed on the backs of people in China working in factories and not getting the full benefit of what they produce. But where the crisis is gonna come, we can't borrow any more money. And the Federal Reserve has to print. They have to do QE3 or QE4, whatever they're calling it at the time or maybe they won't call it anything, they'll just do it. But, and then prices really start to rise much faster. I mean, I know prices are rising for food, for energy. Look, I just got my health insurance premiums from last year and then my initial increase was 19%. Now I had to shop it around to get my increase down to 12% but that's just in one year for the same coverage. But it's not, it's college tuition is going up. I mean, prices are going up. I mean, the only place that they're not going up is in the CPI. I wish I could buy the CPI. But unfortunately I have to buy real things. And they're getting more expensive but at some point they're gonna get a lot more expensive and the government's not gonna be able to pretend it doesn't exist. And the dollars is gonna collapse. I mean, right now Europe is temporarily buying us some time but it's gonna be very expensive time because it's enabling us to go deeper and deeper into debt. But again, where is this debt going? It's going to finance more government. The government bubble is worse than the housing bubble. It's worse than the dot-com bubble because at least in the dot-com bubble we got a couple of companies that had value. At least the housing bubble we got houses. We might have spent too much money on them but they're there. You know, the crazy thing is guys like Alan Greenspan argued for burning them. He wanted to destroy them so we would have no benefit whatsoever from the housing bubble. At least we got houses, right? But what are we getting from the government bubble? More bureaucrats. I mean, we're getting more consumption, more spending. So this is the biggest bubble of them all and it is going to unravel. And the question is what's gonna happen when the dollar really starts to collapse and prices start spiraling out of control? What are we gonna do? Are we gonna do what Nixon did? Are we gonna put on wage and price controls? We probably won't need wage controls because wages probably won't be going up. That's the one price that probably won't rise. But the price of everything else is gonna go up which is gonna be particularly problematic. You know, a lot of economists, they make the incorrect assumption that you can't have inflation without rising wages. Oh yeah, you can. It's just a lot more painful when the wages don't go up. But employment costs go up. Maybe not wages but other costs associated with employment. But people working doesn't create inflation. In fact, people working helps bring prices down. It's people not working that help make prices go up because prices are a function not just of demand but of supply and people working create supply. When they're not working, you have less supply. And also what happens is when the dollar crashes, supply of goods in America goes down because we can't afford to import it. In addition, we export less. So what happens is capacity comes down. But you can see that now in the airlines. The airlines are raising prices even though fewer people are flying. How are they doing that? Because they're reducing capacity and they're gonna have to reduce it a lot more. And air prices are gonna rise dramatically in the next few years even though fewer people are gonna fly. Fewer people are gonna fly but they're gonna pay a lot more. Same thing's gonna happen. We're starting to export more refined gasoline now. That's more and more, that's gonna happen. So even though Americans are gonna be using less gas they're gonna pay a lot more for the gas they use because the supply is gonna be less because a lot of the gas that used to be here is gonna be filling up a car in China. And that's gonna be even more dramatic once the Chinese R&B goes up. Now once the Chinese let their currency go up everything goes on sale in China. So the Chinese buy more of everything. But where are they getting all this stuff? It's the stuff that we used to buy but that we can't afford anymore because when the prices go down for the Chinese they go up for Americans. So this whole collapse is coming and if we wanna do anything about it we have to recognize what the fault is and then we have to start dealing with the real cause of the problem which is the big government, all the regulations, all the taxes, all the spending and we can't just talk about cutting taxes. We gotta cut spending, that's the tax. The cost of government is measured by what it spends not what it taxes because all government spending has to be paid for one way or another and either they're gonna pay for it through taxation or through inflation. Now temporarily they can borrow but that either means they're gonna have to raise taxes in the future or raise inflation in the future. So ultimately they can either tax or inflate but that's it. So that's the cost. So when people talk about we'll cut your taxes but they have these huge deficits they haven't cut our taxes at all. If government is more expensive we're paying more to support it one way or another. The politicians can lie about it when they run a deficit but ultimately we're gonna have to pay. So we're gonna have to shrink that government dramatically if we're ever gonna get out from under this mess because the only reason this phony economy works now is because we can borrow the money to sustain it because the world will take our paper for their stuff. But when that stops, we can't function. This economy cannot function with this level of bureaucracy. We're gonna have to make some deep-rooted changes and they're obviously gonna have to come from here. Two part question. First, it's good that the Austrian school is starting to get more attention nowadays but for a long time it was more in the public to do a sort of intellectual battle between Keynesians and the Chicago school. So what do you say to the suggestion that the Chicago school could be very, very dangerous because they essentially preach free market except when it comes to currency and debt. And then when something goes wrong, the Keynesians say, well look, if we market it more. Yeah, I mean it's a bad comparison. Say, you give capitalism a bad name when you preach it but don't really practice it, that's what happened. I think that you really have to start to look at the Austrians who have a much better explanation for what's happening, a much better understanding. But the problem is in the reason that Keynesism is so popular here on the hill is it's exactly what the politicians want. The Keynes gives them a reason to do what they wanna do anyway. To just, you know, because it's so easy to just spend government money and if you can argue that that's gonna grow the economy. And of course, you know, where you can often, you know, destroy their arguments. Like they're saying we have to extend unemployment benefits because it's gonna help the economy. And how is it gonna help the economy? They said, well, because the unemployed people are gonna spend the money. Well, if just printing up money and giving it to people to spend, rue the economy, why just limit it to the unemployed? Why not give the benefits to everybody? Then we'd have even more growth. And if, why not double the unemployment benefits? Then we'll get double the growth. Why not triple it, quite triple it? You know, why not give everybody a million dollars? No, and of course at some point they're gonna say, well, that's too much. Well, then what about if we do a dollar less? Is that too much? So it never works because whatever money the government gives the unemployed, it has to take it from someplace else. The government has nothing. All it does is redistribute. And so it's not gonna help the economy. It's gonna hurt the economy. You know, apart from the fact that it's subsidizing people not to work. And so the economy is deprived of the labor and the output that otherwise would have accompanied that work. Instead somebody is idle. But when you transfer money around, you're less in economic growth. The deficits that we create to pay those unemployment benefits are gonna do more damage to the economy than whatever benefit you get from spending those unemployment checks. So it's easy to critique that, but the Keynesian view is the more politically popular. And that is the problem. Everything that we need to do, all the things that are good for the economy are bad politics. And everything that's bad for the economy is good politics. Even among a lot of the people who understand that government is the problem. A lot of them still want their social security benefits. They want a lot of stuff from government. And they don't realize that the government doesn't have the money. Yeah. I think we've gone over time so I don't wanna keep people here who need to go. But if there are more questions that wanna be, that you wanna ask, please feel free to stay. So when this collapse does occur, is there any country around the world that's out there better? Or how will America fare relative to other companies? Yeah, I think the countries that have the most to gain are the countries that are bearing the lion's share of the burden of supporting us. So if you look at the countries that are amassing enormous foreign exchange reserves, particularly in dollars, countries that have these huge sovereign wealth funds, these are the countries that have the most to gain because they are paying the lion's share of the subsidy. This is what America gets a huge subsidy. A lot of people will be able to concede that Americans live beyond their means, right? We buy a lot of things that we didn't produce, we borrow, and we spend. So we live beyond our means. Well, that's only possible because other people are content to live beneath their means. Well, the people who have been living beneath their means when they don't do that anymore, they're gonna see big gain. And so when, let's say the Chinese, for example, when they allow their currency to rise, all of a sudden, the Chinese are gonna be able to afford to buy a lot of things that today are out of their price range. And so the Chinese are gonna see a big increase in their standard of living. At the same time, we're gonna see, of course, buying decline in ours because now we're not gonna have those things. And if an American wants to buy something made in China, maybe he's gonna have to pay three or four or five times as much money, you know? And then as an individual, is there anything you can do to lessen the blow for yourself? Well, yeah, I mean, as an individual, you can recognize that the dollar's gonna lose value and so you don't save dollars. And that's part of the problem, right? We need savings to grow the economy, yet, but you'd have to be a fool to save dollars. So therefore we can't get the savings that we need if we're chasing capital out of the country. But you can buy gold, you can buy silver, you can invest overseas, you can have foreign currencies, you can have stocks abroad in the economies that are gonna improve when this dollar at the center of the global monetary system comes to an end. You know, this is the problem. We have polluted the entire global economy. We export our bad monetary policy because the dollar is the reserve currency. Everybody is trying to maintain a parity, a relationship with the dollar, but instead of being a force for good and stability, we're a force for instability and recklessness because it's a race to the bottom, right? And so it's disrupting the entire global economy. We are at the epicenter of these massive global imbalances that are the real root cause of the problems and the booms and the busts. But, you know, when that ends, you know, the world, you know, collectively can breathe a sigh of relief. But it's gonna be very difficult in America to get used to actually having to live within our means because then we're gonna have to acknowledge how dramatically our means has been diminished over the years. And as I said earlier, if we're going to restore our economy, we can't do it with all this government. And we never could have produced the wealth that we once had if we had all this government. It's the absence of government that allows us to be productive. It's freedom. That's what we need it. If we want to help people, we need to give them more opportunity and more freedom. And we're not gonna get that by passing laws, but we get that by repealing laws. I thought you just raised your hand over this. That was you? Yeah. I have a question about converting sort of the explanation for us to leave in the gold standard is that other countries, particularly France, converted en masse, are dead in the gold. Can the United States, if we go through sort of a more organized default rather than letting the market tear us apart, be the only economy that switches back to the gold standard if there's that risk of convertibility? If the dollar skyrockets, how will we export? Well, just the way we exported before. I mean, if you have a strong currency, it doesn't mean you can't export. In fact, if you have a strong currency, it diminishes your capital costs. You have more savings. You have more investment. It diminishes your raw material costs. It makes the imported components less expensive. It means you don't have to give wages because your workers are getting wages just in higher purchasing power. They don't need a nominal increase, so there are a lot of benefits. But yeah, I mean, if we were to be proactive and admit right now, okay, the country is broke and let's restructure on our own terms, let's figure out what we have to do. Because I said, we need higher interest rates, right? That is the only way we're gonna solve the problem. But we have to acknowledge that if we give, if we let interest rates go up, this whole phony thing collapses, which of course is a good thing because the sooner it collapses, the sooner we can rebuild something real in its place. But everybody is so afraid of the short-term consequences that they wanna postpone it as long as possible, which means it's not gonna be on our own terms. It's gonna be a crisis that hits us from abroad. If we do it ourselves, if we preempt, it's still gonna be painful, but it's not gonna be as painful. And it'll be a lot better. And of course, a lot of the pain, it's not gonna be uniform. The pain is gonna be felt principally on the people who are living off the government. The people who are getting a check from the governor are gonna have to get smaller checks. Or in some cases, no checks at all. We're gonna remove the burden off the backs of the American public. So it's not gonna talk about austerity. Okay, austerity for who? Not the people paying the bills, the people living, the people riding in the wagon are gonna have to have some austerity. Not the people pulling it. They're gonna get some relief, which is what they need. But some of the things that we could do as far as getting government out of the way will have such immediate benefits. If we got the government out of education and out of student loans, tuition would plummet. All of a sudden, college wouldn't be at such an insurmountable expense. Families wouldn't have to worry about saving for college because it wouldn't be that expensive. And maybe not all their kids would go. I mean, now everybody goes to college, even if you have no attitude for it whatsoever. What's the point? It's the point, setting a kid to college so we can party it up for five years, get drunk, and then graduate with a lot of debt and no skills, no knowledge. If we get government out of healthcare and all of a sudden, medical costs collapse. I mean, didn't that gonna be a good thing? If it doesn't cost so much, they go to the doctor and it's gonna cost so much if you get sick. So there are a lot of things that you just get governed out of the way and you get free market efficiencies in. You get an immediate benefit. Now, who has that hurt? Well, yes, someone's gonna hurt. When tuition has come down, some overpaid administrators at universities are gonna earn less money. Oh, well. And some people working at universities are gonna lose their jobs. Okay, well, they didn't need those jobs. But they'll have to do something productive. And if they do something productive, we're all gonna benefit. The more people employed productively, everybody benefits from that productivity. The more people that we have doing things that they shouldn't be doing because of some government subsidy, we're all made poor as a result. So it's not gonna take that long. If we do all the right things, it's like ripping off a bandaid. If you just rip it off, it doesn't really hurt that much. But if you peel it off slowly, then it hurts. So if we just get rid of all this government and bring back freedom, there's not gonna be a lot of suffering that long. Some people, sure. People who thought they were gonna retire on Social Security, okay, well, they're gonna find out that that's not gonna happen. They gotta work. They gotta save their money. But they're not gonna get Social Security anyway. So why don't we, let's deal with that now. Instead of paying them off at worthless money, what good is that gonna be? Because that's the end result. But not only don't the politicians have the integrity to do the right thing, most of them don't even know what the right thing is. So hopefully if we can educate people, there's gotta be some of them in Congress, other than Ron Paul, that actually cares about the country. And a lot of times when the Congressmen don't think, well, I can't do that. I mean, it's too big of a risk. Well, what's the risk? That you don't get reelected? I mean, what's so terrible about that? You know, there are people that risk their lives on a battlefield for the country. You can't risk not getting reelected, anything to do. So people have to understand, you know? And this is, you know, this is a very pivotal point in our history.