 This is Mises weekends with your host Jeff Dice Ladies and gentlemen, welcome back once again to Mises weekends show. I'm your host Jeff dice We're very happy and pleased to be joined this morning inauguration day Friday I might add by John Tammany a name. I'm sure many of you know, but if you don't know You really ought to be reading and following him John is the editor of real clear markets He also writes quite a bit on political economy for Forbes magazine. He is a senior fellow at reason He also wrote a book a couple years that regularly put out That we carry in our own bookstore called popular economics with the Rolling Stones Downton Abbey and LeBron James can teach you about Economics and I think it was an attempt to bring home some of these theoretical concepts To real-world action and with that we welcome John Tammany. How are you doing today John? I'm great Thank you for having me on Jeff. Well, it is inauguration day I've seen you have written a fair bit about both Trump and some of his cabinet picks Give us your overarching thoughts. What do you what do you think of Trump pro and con? What I like about Trump is probably what many do He is not like other politicians. I like that he kind of says what's on his mind At the same time, I'm terrified by him Trade is the purpose of our work to import is the reason that we get up and go to work every day Trump wants to limit our ability He's bought into this falsehood that's confused thinkers for years that Somehow imports are what hurt us when in fact imports are the reward for all of our work It also terrifies me that he thinks you can devalue your way to prosperity Um, devaluation is the biggest enemy prosperity is ever known simply because it's the biggest enemy of investment And so I like the change. I don't like politicians in general, but it terrifies me He could really be bad if he gives into his worst instincts Do you think there's a difference fundamentally between his vision or view of global trade in markets and what? Hilary's might have been um Yes, I Legitimately do now I base this on the fact that her husband was a free trader and I feel like she ultimately would have been Guided by some of his logic I think Hilary moved against free trade simply because she thought it was politically expedient I think in Trump's case when you look at his commentary and you look at his commentary going back to the 80s We're talking about someone still living in the 1980s Who back then felt that Japan was the biggest threat to the United States and thanks China is today I would make the argument that if Japan and China didn't exist We'd have to invent them so good of both those countries been for US economic growth. So it concerns me I think Hilary would have been more moderate had she been all been elected That's not that's not me giving a preference to her, but I think on trade. She would have been better Well, there's also the the areas of nationalism and of course war and peace and as you well know one knock on Libertarians is that we're so focused on trade and economics and GDP and you know We'd sell our grandmothers for a few more Points of prosperity. Do you think Trump is less likely maybe to set the world on fire than Hilary would have been? You know, that's an interesting point. He says interesting things about North Korea as in that's China's problem and I tend to agree with that He tends to say that the rest of the world particularly the rich world needs to take on Or foot the bill for more of its defense. I think that is ultimately a peaceful concept I don't think the world is made more peaceful when the US is its policeman But you hit on something that's important to me that I'm preaching to the choir and saying it to you Guys like us love economic growth and free trade simply because we think that is the cheapest and best foreign policy mankind ever conceived and so when people criticize us for our love of Open trade and open markets. They miss why we think it's so important because we love peace more than anyone Yeah, it's interesting though that they also don't see tariffs and trade sanctions as acts of war and they don't see domestic aggression Citizens in the form of what I would argue aggression the form of regulations and taxes. They don't see that as as acts of war Amongst our friends on the left Yeah, I love how you put that. I think you're so right and and again between What we know is that when people are when individuals are trading with one another War becomes very expensive. It becomes costly because they're not serving one another's needs To bring in someone who's known for being of the left Joseph P. Kennedy always said to his son John war is bad for business and it is it staggers me that in economics profession Almost to a man and woman would say that that the World War two ended the Great Depression that war stimulates one of me Mises put that so well in his book liberalism That in fact war is the ultimate Depressive concept and but I love how you expand it to beyond the shooting Well, ladies and gentlemen, if you recall a few years ago the earthquakes in Japan Caused Honda dealerships across the United States to be short on both automobiles and parts for about six months So the idea that we're ever gonna have another war with Japan is a non starter But John, I'd love to turn to your articles in real clear markets a couple days called No, Mr. President like the dollar is not too strong and and I got to tell you I love this article because there's even a lot of good folks on the free market side I might throw out Larry Kudlow who talks a lot about King dollar Explain to us with you know this fetish this enduring fetish for exports over imports Why do so many of us believe this all I can think is that people still believe after all this time That when people are buying from you You're prosperous. Well, okay, that's true, but Really, why do we get up in the morning every day? Why do we work for dollars? We're working for all the things we don't have our goal from The day we start working to long after we retire is to import that's that is the source of our prosperity What we can command and return for our toil Yet somehow economists have turned that on its head and doesn't surprise me. I think it's a ridiculous profession economists believe that Imports actually hurt us and exports are what strengthen us. What an odd thing Well, but you get in in the article you get into how devaluing the dollar Simply devalues the the power of of average people's wages Okay, let me ask you this you talk about measuring in yardsticks and how these things don't really matter Would you agree with when Rothbard says we don't care about the money supply per se? Do you think that's correct? Oh? Absolutely how arrogant for us to presume what the money supply should be I think Mises put it it brilliantly in the theory of money and credit He said no and I paraphrase lightly no nation or individual need ever worry about having too little money And his point was if you're productive of a country's productive or an individual's productive Money supply is always going to find that individual Beverly Hills and Greenwich and Manhattan never have a money supply problem Because there's lots of productive people in those places And so you never worry about money what you worry about is This measure because that's all it is is it stable? Because how awful if you're working for money and per Mises once again, you're not working for money You're working for what money can be exchanged for How cruel if suddenly that ticket that you're working for is Devalued because that's the sole reason you're working to get what you don't have to import if they're devaluing the currency They're defeating the sole purpose of your work because suddenly the dollars you exchange your toil for by less Well, do you think that stability in and of itself is a goal in other words if a currency is volatile relative to other Currencies are relative to the goods people want to buy that that means that Workers have a harder time knowing what they're going to be able to afford and it means business owners have a harder time knowing they're You know budgeting their future costs. So is a is a rapidly or widely fluctuating currency. Is that a bad thing in and of itself? Of course, it's a bad thing because it deprives money of its sole purpose Bringing Adam Smith into the conversation the sole use of money is to circulate consumable goods I would just add to it the other sole use of money is to facilitate investment What are investors buying when they commit capital to new ideas? They're buying dollar or currency income streams in the future Well, so if the currency is volatile or if it's constantly being devalued you've reduced a great deal of incentive to Commit resources to the future or to delay your consumption of resources. So stability is essential I'll point out here my views are evolving historically I've said the best way to do this markets happened up on gold long ago is a great way to measure value of currency I'm still for a gold standard given the choice between what we have now a floating currency and in gold I think Mises got this right too in the theory of money and credit that if governments didn't create money obviously market Actors would create money very quickly because it facilitates trade among producers I'm guessing JP Morgan Walmart and Visa would do a much better job of creating stable money that we'd all want to earn in Exchange with then does the US Treasury? Well, if stability is good and wild fluctuations are bad isn't slow erosion bad too in other words the feds what you know the Fed has an expressed policy of You know about 2% inflation targeting per year. Isn't that crazy too if we think about it properly? Oh, it's completely nutty because I don't have to tell you that if your goal is 2% inflation What you're trying you're going to do is double the price lever or devalue the dollar by name the percentage over 36 years The only thing I would say about the Fed is the Fed doesn't view inflation in the way that you and I do You and I view inflation as a devalue of the unit of account in our case the dollar Where it where it just it is devalued the Fed views inflation as too much economic growth Which is really strange because if you look throughout global economic history in Economic growth is the biggest enemy of rising prices mankind has ever known. I cite the original mobile phone was four thousand dollars the original laser printer was seventeen thousand early flat-screen TVs cost twenty five thousand plus Economic growth pushes down the prices of everything the Fed thinks and it's infinite on wisdom that economic growth drives up prices It staggers me that people take those people seriously But even the financial journalism world does Europe you're an economic and financial Journalist are you ever shocked at what you read about the Fed in mainstream financial publications? Jeff I'll one-up you on that that is the reason I write about this stuff I used to work on Wall Street. I'd watch CNBC and read the newspapers and I'd read about how growth causes inflation and All these other non-sensical concepts and I thought I've got to get into this because I grew up in the 1970s I know what inflation is an economist and journalist who Who claim to be experts on this and the people who report on these experts do not have a clue about what inflation is So it made it it that's what got me into the field. I'm in Well, we only have time for one more question So I'll ask you this given the current reality and what most people probably believe about trade about the Fed about the dollar Etc, you know, what are some small things a Trump administration could do either in the Treasury Department or at the Fed itself? We know he's at least spoken to John Allison the former Cato head About a position to make perhaps vice-chair at the Fed, you know, what are what are some? Realistic things that Trump could do conceivably over the next four years that that would would make John Tammany happy Well, this is where people will disagree with me. But I think if you look at history, you don't need a central bank to devalue the currency We were devaluing the dollar long before we had the Fed I think the dollar is a is a treasury concept, which means it's a president concept Presidents get the dollar they want a Reagan and Clinton largely wanted a strong dollar. They got it Bush, Jr Carter Nixon wanted a weak dollar. They got it What Trump could do is just be quiet and tell his Treasury Secretary and those officials to be quiet to stop complaining about China and the value of its currency That quietude would signal to the markets that we believe in the importance of a strong dollar That's that's what I'm that's the most I can hope for in my perfect world They legalize private money because I do think just as market forces bring us Computers socks and shoes of all shapes and sizes. I think market actors would bring us much better more stable money That we would much prefer earn over what the US Treasury issues, but that's an idealistic dream of mine Yeah, but I like the idea that you could legalize competing currencies right alongside The dollar let the Fed keep doing what it's doing let the Treasury keep doing what it's doing But simply allow people to use other forms of payment both in private business and to pay their taxes without putting them in jail for it Absolutely, imagine what that would do that kind of competition I would be very happily earn a Walmart dollar or a visa dollar I think many other others would too well ladies and gentlemen our guest is John Tamney from real clear markets And also a great writer at Forbes I really recommend you check him out. He is that rarest of rarities He is a financial journalist who actually understands economics and and he brings to mind Sort of a modern-day version of Henry Haslett in that sense and that he writes in a very accessible way rather than an academic style John we're so happy that you joined us. We appreciate your time and ladies and gentlemen have a great weekend Subscribe to Mises weekends via iTunes you stitcher and SoundCloud or listen on mises.org and YouTube you