Transcripts For CSPAN2 Discussion On Economic Growth 20160523

Prison when you get out you can get out and transition soon in the healthiest way possible. So my challenge is always to be honest with the American Public and the likelihood of that happening is probably nonexistent but again thats what makes the book so important because you get an inside look whats happening in the system and what works. The idea is a bunch of nonsense to me. Host you are an inspiration. Oprah said after she talked to you after reading the book it was one of the most powerful conversations that she ever had. Thank you for writing this book and for all of the important work that you are doing now in the struggle for the better evolved criminal justice system. Reading this book made me a better person. Thank you for writing it. Guest thank you so much. I appreciate that. Your insight into the buck is amazing and heartfelt so id really appreciate it, the interview and thank you for checking out the book. We are going to get started with a lot of books dimensions of the picture i get them right. Sorry we are starting a little late. Thanks for being here and especially to the folks on the panel, mark, steve forbes, we are pleased you are here. We want to talk about over the last generation the last 40 years highlights the challenges of measuring economic values. A lot of people take the view that there hasnt been much progress for growth in incomes from economic stagnation over the period of time and they often try to put a lie to that assertion by asking people whether they ar are low income, middle income, high income raise your hand if you want to go back to 1975 and there usually are not a lot of takers. But one thing is undeniable the last ten or 15 years we truly have been living in the period of economic stagnation and i joined the Cato Institute a year ago as president and over that time weve done a lot of work trying to export the reasons for this growth slowdown. Hes published two books on his understanding of the growth slowdown and another is revising Economic Growth. For the first time in my life we have had a ten year period during which real gdp growth hasnt reached 3 in a single here. At the time i joined 13 months ago i was actually hopeful because during the period in my lifetime and economic stagnation or short Economic Contraction its created a lot of pressure and attention and anxiety that often has been the impetus for positive change on the policy front, and i think over the last few months i realized i was correct in expecting that economic anxiety would create some turmoil and stimulate some change. I was wrong because its not the kind of change that i had anticipated clearly. Really lucky to have three gentlemen here today that i dont think need much of an introduction but i will try to provide one. Between them, theyve written more books than i have ever read. But i think it is a great opportunity for each of them to comment on their views on how we are going to revive Economic Growth in the United States and thereby continue the course of progress and prosperity the nation has enjoyed for such a long period of time and if they each have books that have been released recently that actually speak to this. I spoke with a donor at cato recently and he has a son that will be starting college in the fall and he told me that he was considering attending Cato University this summer so that his son could be inoculated against what he was likely to learn from the economics professors in college before he attended. When i was getting ready for college i didnt need such inoculation. But in the senior care of my high school days, the book wealth and poverty was released in during the summer between high school and college i read it coming and they gave me no shortage of ammo to use against the marxist professors that i have encountered when i attended School Including such classes as capitalism and its critics. Some things havent changed. The philosophical makeup is about the same as it was at the time. But i felt that in my class we were able to engage in the debate and disagree without fearing as many students do today that it ca but it can hurr grades in the transcript and the disagreement is not. So against the Fraternity Brothers and professors and others who didnt agree with me on the case for enterprise and free markets. The book is the scandal of money and we are delighted i think one of the ideas that theyve promoted for a long time is the fact that the money system and the power of the Federal Reserve is a great threats not only to the economic wellbeing but our freedom and thats one of the reasons cato has held a prominent annual monetary conference coordinated by the week by the Vice President and that we started under the direction of the center for the financial alternatives to highlight these risks and to promote freemarket alternatives to the Current System so the book is timely and important and at the last boothe last book i a similar topic highlighting the threat that it poses to the country so those were tremendous contributions to the literature. I told steve earlier most of my life i had been affiliated withh each or defeat for either party but that in 1995 a registered republican so that in the 1996 connecticut primary i could cast my first primary vote for steve forbes for president. He replied he wishes a lot more people registered. And voted for him but even in defeat he made great contributions to the debate and the case for freedom enterprise, money and a flat tax and hes still at work. The book he wrote reviving america how replacing the tax code and reforming the fed will restore hope and prosperity. And i think he does a fantastic job prioritizing the areas particularly such as healthcare and money where many of the problems are actually created by the government intervention. Finally, mark who we all know as an economist and economics professor and author but also many know from freedom fest which he calls the largest gathering in the free mind that takes place in las vegas every summer we are delighted to have him here. I mentioned at the outset that while we can agree that there has been income and economic stagnation as of late, the measurement problems were reflected in our economic aggregate fool us because there are many things that are not captured in gdp and i reject the assertion that americans have experienced stagnatio stagnatior wellbeing iand therewill beingd the last four years. Mark has proposed and has an updated version of an alternative to the Gross Domestic Product as a measure of our economy and has proposed an alternative output. Im going to let him explain it because one of the reasons he gives for this improved and accepted version of the performance is that its now published quarterly along with the figures which is quite an achievement but as libertarians we dont necessarily take the Government Action as an endorsement so im looking forward to his remarks explaining some of the work hes done in developing and promoting more effective measures of performance and we will proceed with a speaker in reverse order by way i introduced him so please join me in offering a warm welcome. [applause] your comments about the slow Economic Growth and the fact we havent experienced 3 growth in some time reminds me of this program that george w. Bush set up called the 4 growth plan. When i talked to the organizer i said 4 growth plan did he mean the growth of the economy or government. She didnt appreciate that comment but under george w. Bush the economy never did using standard gdp statistics never did grow 4 during the entire period of full employment so its kind of unfortunate. I would like to talk about today is the gros that gross output. Its an important statistic and my main thesis is that the output offers a better and more comprehensive picture of the economy and is a powerful Unifying Force between Accounting Finance and economics. It links micro with macro and it appeals to all of the major schools of economics. Its the missing piece of the prosperity puzzle which is the latest issue and they talk about the latest problems which im sure will come up in this discussion but in any case, my argument that this is a unifying approach in a more comprehensive picture is a tall order so i would like to get started. I actually see this as a paradigm shift in the way we treat macro economics. So, we start off with the basics. What is gdp, what is it supposed to measure. Annual spending is one way of looking at it. Consumers, government and business. Cig is the way they normally talk about it in classes and theres a problem with gdp. But the one i want to focus on in particular is according to gdp statistics, what drives the economy and so what we find out when you break down the gdp, you see that it breaks down to Consumer Spending is the biggest sector of the Government Spending second in the business spending third. What does that say in terms of policy implications . Thats the issue. And of course because Consumer Spending represents two thirds basically of gdp, you get the media constantly creating a myth. Its one of the most common myths and economics and this is an example from the wall street journal you get it from all the publications. Household spending generates more than two thirds of total economic output says the wall street journal. So steady spending gains should translate into Economic Growth if only consumers would spend more, thats all it takes. And of course you have the New York Times Consumer Spending makes up more than 70 of the economy and it usually drives growth during economic recoveries and finally another one from the wall street journal, consumers are the engine of the economy, consumers not producers, not entrepreneurs accounting for about 70 so you can see the problem inherent as a statistic. Are we coming to an accurate conclusion is the question so we have to ask what is missing from gdp . Plugin it is c. plus g. , 18. 6 trillion economy. So we break it down into consumption, 67 , 12. 4 trillion investment, 3 trillion in government, 3. 2 trillion. So what is missing in gdp, this is the surprise factor, the supplychain. The gdp doesnt measure the supplychain. It doesnt measure all the business spending to bring the r products to their final use. Gdp measures the value of the finished goods and services. Your clothes, your shoes, the internet and everything that we are enjoying right now, this couple of water. Thats all counted. But the spending by business to get you to the finished product is left out and that is the achilles heel in many ways. Look at the supply chain. Now the government is measuring into the bureau of Economic Analysis, 20. 3 trillion. Its more than Consumer Spending which is 12. 4. Now what is gross output . For those of you that are economists familiar with the equation of exchange, if measures total transactions. Its also a measure of the high access triangles and so this is taken from the prices and production for this great book from 1931 when he was lecturing at the London School of economics and theres a picture of the triangle that he used. Now it was purely theoretical. He has no breakdown or statistics. It was pure theory and it has had a rough road to acceptance. Thatbut what im suggesting ist it is being measured today by the government and this is a fantastic breakthrough and i am pleased that this program here today is taking place in this auditorium so appropriate considering the fact the government is now measuring the triangle. So we all know the background of frederick hayek. I just thought i would approach this. Particularly he is known more for his book the road to serfdom and the constitution of liberty but also the author of this macro economicmacro economic wos the foundation of my own work and the structure of production called prices and production published in 1931. I have a First Edition signed by frederick hayek. Today they published the essays and asked me to write the introduction but here is a modernday version where it shows the four stages of production and final output. This is a great way for the students to capture what i call the universal four stage model of the economy. Every good and service that you and i use has gone through the resource stage, the production stage, the distribution or the whole retail stage and then a final use this represented number four by gdp. The big news is in april of 2014, the bureau of Economic Analysis that puts out the gdp statistics has now started to measure the gross output for the total transactions depending on how you want to look at that and we have the pioneer as the director whos that gross output provides an important perspective on the economy and a powerful set of tools and analysis that is closer to the way many businesses see themselves and isnt that true businesses see themselves as producing and moving the product along the production process and thats what gross output is measuring. So whats really interesting a lot of people havent noticed this but whenever they come out with this quarterly announcement release of data that they did just recently, notice how they define a the gross gdp. They define it in gross output first and then they subtract intermedia production. So gdp plus intermediate input equals gross output or another way they define it, gdp is gross output minus the intermediate outputs so they are gettin givi, the audience, the consumer of the gdp statistics to get used to the idea of a topline of accounting and a bottomline. For those of us that are austrians who believe in disaggregating of the economy and looking industry by industry and sector by sector im delighted that theyve also introduced the output by industry that allows economists to disaggregate the economy based on stages of production. So based on this announcement, i wrote the lead editorial commentary in april of 2014 in the wall street journal for the better economic measure and came out with a third edition. Basically my book had virtually disappeared. Nobody was reading it but suddenly when the government starts using this statistic thats come out and now its being read and we have copies here for you to purchase after the presentation. What can we learn from the new statistic to. First of all, you can see that gross output from the statistic is much more volatile. You can see during the recession of 2008 and 2009 however dropped precipitously. The gdp hardly declined. Is that an accurate reflection of what happened during the Great Recession not at all but you can see what happened in the intermediate stage there was a significant drop that is better evidence of what is going on so according to the new model for everything is in reverse. Remember Consumer Spending was number one followed by government and business and now suddenly business spending is nearly 60 of the economy and Consumer Spending is down to 32 instead of two thirds is only 130 and Government Spending is 8. 2 so when you see the two models next to each other what did you see, essentially a pc that the business sector is by far the most important in the economy and about policy steve forbes was talking about in his book and what george is talking about in his book focus on the business sector, the supplychain, innovation, entrepreneurship, productivity. These are the factors and now we have a model that is consistent with the Economic Growth theory. Also says the monopoly will be broken as the u. S. Government will provide official data on the supplysid supply side of ty and its structure so we as supplysiders have our own statistic. I know a lot of you dont like aggregates that aggregates can tell you a lot and i love this quote by larry doe that not onea thousand recognized it, it is business, not consumers that is the heart of the economy when businesses produce properly they create jobs instead consumers can spend. Profitable firms purchase new equipment because they need to modernize and update their tools and destructors and software. So this is a new approach. And im not saying replace gdp but im saying its complementary. Gross output you know how in a Financial Statement you have topline and bottomline. My business students love this so we have topline and bottomline Business Sales and revenue and earnings and now finally economists have caught up after 100 years behind the times theyve caught up with the accounting and finance professions and now we have a topline and a bottomline. The bottom line is gdp value added similar to gross profit in the Financial Statements and this is a quote from three great economists including the former director, and dale from harvard who is a gross output the natural protector while gdp is appropriate as a measure of welfare. Both are required in the complete system of accounts. So there is a general model of the economy where you see the production side reaching final use gdp and then consumption when it is used up and so again in my textbook this is a general model of the economy. I dont have time to go into that because ive run out of time but if you are interested in my powerpoint because ive gone through pretty quickly maybe we can send it to the attendees whatever. I would be glad to send you this powerpoint to give you my basic points. Geo is being integrated into textbooks. This is the sign of success so not just in mine which i have the economic logic but its also in the number one textbook in the country although greg disputes that, and we have it in john taylors textbook and roger leroy miller. So its in all of the textbooks. We will have a few quotes of what others are saying about it. Steve forbes has been very supportive in the magazine feeling that this is a Great National income accounting and George Gilder has suggested a vital learning accumulates through all the processes of production measured in gross output. So, i dont have time to read any of the other quotes that we have the academic economists, we have business economists and so forth recognizing the value of the structure of the production through my basic conclusion is the structure of production does matter. Thank you very much. [applause] we are going to wait for questions. Since you pointed out the government is now publishing stimulated the sales of the books im assuming that didnt have anything to do with your desire for them to publish it otherwise we would probably count that as rent seeking. Thanks so much. Please join me in getting a warm welcome to steve forbes. [applause] thank you very much peter and cato and congratulations on measuring the whole economy instead of just part of the economy. But no matter how you measure there is no way of getting around it. It just seems stuck in second gear you get one good report followed by disappointing reports. Business investment is and what it should become a business formations arent what they should be. The economy is in a rut and theres a lot of talk these days about the new normal that we must accept this below average situation. It talks about the secular stagnation as if an alien force has come along and theres nothing that we can do about it. Its all nonsense. The ruts thathe ruts that we ary has had profound implications around the world. Bad economies need to data politics and we see that everywhere around the world. It comes from mistakes. The nice thing about policy errors as they can be corrected. Those errors can be corrected. Thats why we wrote the book reviving america and focus on the big reforms. In terms of five years you do much better in this country than anywhere else in the world. Some say because there is too much demand we are older and we want more services there for the prices keep going up in the system goes down but just get back to ask yourself why is demand for health care considered a crisis when it is considered a great opportunity and cater institute is glad to help out. [laughter] is that good . Trying to make sure i get my free lunch afterwards. [laughter] and we can help you out if you want more cars we will convert your assistance. Summarize demand for health care considered a disaster when it is a great opportunity . We dont have real free markets of health care. It is all third party dominated Real Customers are government and Insurance Companies and employers. The patient is at the end of the line. Because we have grown up with that we dont realize how backwards it is. Here are uninsured or a lunatic. Insurance will cover it at the end but just be passive. The crummy is a motel in america would not put you in their room with a sick guest with a curtain in between as they do in a hospital. The robes that they give you look like they came from the Salvation Army dump the dumpster that humiliate you that cannot get around you. So with us a top down thirdparty payer system is to try to cure the problems with more regulations it is like walkable. And then filling out forms and practicing medicine why we have a doctor shortage medical costs are still going up you wonder if they talk to each other or the specialists until they cannot have this medication and give it to for any way. And deductibles under the health care changes. But it is more affordable than ever with 500,000 deductible. But it is out of reach. The i patted the iphone comes along and samsung has a better improve the but the vice you dont get that in hospital. With Breast Cancer. You are supposed to have mammograms but it turns out if she has dense breast tissue the mammogram and the improvements dont discover it italy over time there is a new treatment called imaging for the put a tracer in and it will find it that is why she has a mammogram you are great in than one month later there is set to read the size of a baseball because this new way of discovering Breast Cancer called imaging which male and a handful and others to say this is the way to go. No. If you have one insist on mbi or you may miss it. It to get the patient in control for the first time ever. We to price controls government is it due to a duet with philosopher the irs made attacks ruling to have a crazy system today and with free markets turning scarcity in to abundance you know, the first ones from motorola with cell phones they were made like the brick with a 40 minute battery life now there are billions around the world the almost give them away with your plan. Scarcity into abundance how do we get that in health care . Nationwide shopping instead of the state cartels with hundreds that compete and equalized tax treatment of the selfemployed in business get a Tax Deduction why shouldnt he individuals . Transparency having hospitals post prices for all services so foreign charges in 2000 the other 350. What about how many patients die from infections after theyre wedded to a hospital . No restaurant could get away with that into pulque to a huge hit at chipolte thousands of dying in the hospital what about the ignition rates are choices of insurance i dont need Pregnancy Services by an forced to buy that and it is crazy and safety nets and you can have a more effective safety net and 60 net put aside how foods diems r and bestired nobody needs to start with the banks in then we would all be starting with no more obesity in the she worked for the government but that is what happened in russia and china. And taxes is raising revenue the biggest abomination is a federal incometax code. Abraham lincolns gettysburg address 272 words in the constitution over 7,000 the bible to centuries to put that together. Federal incometax code over 10 Million Words and rising. Nobody knows what is on it the hotline they will lyons river to be the wrong answer money magazine did a survey hypothetical families and 46 people were considered tax back they have 46 different returns than 46 different estimates 46 of liability answers. We have to junk it ended is beyond repair isis the we should bury it better not they would allow that now. [laughter] with the epa because it is so attacks toxic. [laughter] have it thrown out with exemptions for children and tell the first free of federal income tax no tax on savings no death tax and do the same thing on the business side reduce the Business Trade as 17 reduce Capital Expenditures and just do it. Why not throw them the ball with two or three tax rates . No. Learn from 1986 with a little bit of simplification and the guy down at 2 percent to rates when you put that together it is like putting to rabbits together they breed and multiplied and then you saw what happened so go to a single rate. [laughter] forty countries in jurisdictions have done this and the real thing is it is moral. Think of the opportunity cost. Spending 6 billion hours a year filling out tax forms were to 300 billion in dealing with this. Go back 20 years old of brainpower fed is useless in this activity with new products and new services new medical devices how much better and richer our lives would be. Except corruption that brings out the worst. Number three is Monetary Policy. Not 50 shades of gray or naked in the jungle or exciting but crucial. This is how we make progress in the world many makes that interaction and easier rather than try to barter. If you check your you get up piece of plastic that is worthless but it is the claim on a real product in money is a claim on products and services. Based on trust. The way scales measure weight and so what works best is when it has value. Imagine the Federal Reserve was in charge of the time 60 minutes one date 48 the next day that would be chaotic imagine if you go to the supermarket for a pound of cheese it changes each day or gasoline you assume it isnt cheating each day. Imagine baking the cake is that nominal minutes for 30 minutes or a mexican that it . It is chaotic investing is risky enough you dont know what you will get back. It is the key to future prosperity. And that is too fast or too slow neither will help you very much. As we try to control Interest Rates and money. As if donald trump would say a disaster. Save o Interest Rates. You know, what brent and price control can do to a market. They make a very easy for government and Big Companies to borrow i will give you one statistic. The past five years covering grew at 37 it is absolutely pathetic and it is very difficult for Small Businesses to get small lines of credit why apple with 200 billion cash barraults tens of billions in the bond market because it is cheap exxon borrow 12 billion to buy stock and pay dividends not the best use of capital. We have to go to a Gold Standard because it keeps the Intrinsic Value better than anybody else we saw it it holds steady 180 years. It is like a ruler 60 minutes is the our so have a fixed value like 60 ounces in a pound this economy will prosper. That will take a lot of intellectual work even though we did 180 years so have real Interest Rates again. Instead of bureaucrats sitting them let them be priced by the people it reduces the Federal Reserve obscene portfolio the bases from the economy and bases those assets let the bonds mature and have the people determine where the capital goes for future prosperity for all of us. Thinking very much. [applause] i know when people start to discuss with the topic you say go to sleep or read the group leave the group so youre schumer and common sense is a great i think that helps a lot of people get the message. Please help me to offer a word will come to george. [applause] is great to be in the auditorium. The application at the beginning of the scandal of money is from a hijacked and says the root and source of all monetary evil is the government monopoly and control of money. and that is part of the message that steve forbes just a band at the heart of the message. Read that definition of Economic Statistics shows anything deeper than what he is fully explained. His key pieces that goods and services are not final products. It is a human being in the image of his creator and those of the final products. They are measured through information theory has knowledge. Wealth is knowledge. A professor at m. I. T. Recently some did that better than i did and said with the expensive car crashes into a wall, all the value disappears. Even though every atom and molecule remains value is information the car is knowledge and i say all wealth is essentially knowledge. To limit your Material Resources that we have today with the stone age is entirely the increase of knowledge. But this gives a further insight if wealth is knowledge what is growth in . I have been studying business progress for years through the leading consultants i spent a lot of time where they have documented their incursions from aids to insurance policies or transistors or software codes. So those learning curves that there is say approximately 20 or 30 of production and cost. That is ubiquitous so the wealth of knowledge grows is learning and that is what it is these are the real final products it is knowledge and learning and its not happen in the consumption of day and burger hamburger but in the consumption of transportation or clothing all endowed human beings with the capability to create an expanded knowledge and wealth. This is what it represents a ball that learning and every step of the process. It is not restricted to the final output through the entire economy of learning and knowledge that. Growth is learning and knowledge is well what is monday eckhardt . In this has been an enigma for some time and i have been distracted by commodity theories of money is the value of many monday. It is vital because it is really jewelry. He said no it is really money. And why is money valuable . Because it is time and represents time in the economy. When you have zero interestrate its essentials lee using a route out time. Everything slows down. Throwing away the clock in a basketball game nobody scores. Everything slows down with the value of Interest Rates are zeroed out. Money is time to allocate to without Interest Rates everything can go forward because with infinite time everything is possible and this is the vision that governs the fed. This is why the return to gold is so critical and it is really time by happenstance throughout history advancing as the technology the goal is more widely distributed so it essentially to extract the gold and has remained reasonably constant for centuries. And this is the heart of what money is for it is time and what we have experienced is a war against time conducted by the Central Banks of the world. With a great slowdown of growth that began with the abandonment of brian woods in 1971 when we enter the malaise decade and everything began to slow down that was critical and rattan and a measuring stick it was a magic want a magic wands for the government and you cannot have real Growth Without knowledge and learning and that depends on real information for this serious manipulations that the fed has tried to fool entreprenuers to make prudent decisions. But when we say going to the Gold Standard is it going back to anything that with the Global Economy is uniquely powerful new element in this transforms for global money. And for security that network is a Central Nervous system of our banks. In debt was packed 60 million extractive bangladesh. That centralized model of security is bankrupt and it doesnt work anymore than a centralized bottom of money and not through concealment but through transparency and distribution wicked have half of the computers in the world so now we can integrate a Gold Standard with the big point bit coin and with the reduction of the internet to a public utility of those aggregations of lawyers converged to specify prices which is the meaning so that if we preserve the Global Internet and allow it to prosper at a Gold Standard canny golf even if we can go back to their camp of cambridge Gold Standard legislation that was introduced 1984 that was the last great hope to between gold and the dollar. Money is time and time is real. It can be worded or redistributed it is what remains scarce and it becomes abundant. But that abundance is from what governs it that process of knowledge and learning so bad introduction model is crucial because not so much that it shows consumption but human creativity drives the economy and that is a tremendous insight and a tremendous advance. [applause] i have to paraphrase one of your quotations it is a paradox. So many that see themselves that is incredible. And to convince people i think it will help the cause. You will open the questions to the presentations but to have an opportunity to rest questions so please me as considerate and the concise please wait for the microphone state your name in affiliation. Ag for your comments. Aicher e that transparency is important and outcome is equally as important to the care of particular patients in hospitals so the question that i have is some of the pair private Insurance Companies are promoting without interfering the clinical precision of doctors. Ended you phrase the question of the patients in a true freemarket and find out where best care is available and that should be created over a particular outcome said with Breast Cancer is a scandal in terms of people dying in hospitals because of infections that our avoidable there is an absolute scandal. Rather than hoping the insurers get the white like electronic records every business in the world has had electronic records even my dry cleaner over the last 20 years because as a thirdparty payer they did it sovietstyle onesizefitsall. So far do we power information to make more decisions and providers will quickly here to it instead of the top down to have outcome oriented markets because health care is so personal. With one example there was ted chain in the pennsylvania code several years ago wiggly they cannot call a warranty but if they botched the knee operation the next one is on them. Under the normal system repaid that even if it wasnt done right the first time how many chains have pleaded limited warranties . You can count on a single hand that would be quickly imitated you would not get the customers so get the patient in charge. Electronic records end Better Outcomes are desirable and it would happen naturally because it is about them. The only warranty is if they amputate the wrong are they will not do the other one. [laughter] currently in economic adviser with ted cruz. In your book that was the most interesting parts of the financial was asian of the u. S. Economy ended wall street and main street so could you talk about that . The ultimate scandal of money is the alternative to the Gold Standard. That is floating currency and that would be a new accounting from the bureau of International Settlements in the latest estimates are 5. 2 trillion mrs. Global gdp 73 times all the global output of goods and services. And has 10 bags with 77 percent of the currency trading. And they refuse to float as a chinese to enable their miracles of Economic Growth we have created a closed loop economy between the Obama Administration and the fed and essentially to start off Small Businesses main street has been pushed aside and 62 percent of the money creation goes back to the treasury and the other twothirds most of it goes to the carnival of the Big Companies buying up their own securities of for the stock market cosmetics or to buy at their rivals. Now there are twice as many ipo in china as there are in the United States. It is a real catastrophe and why we need a big change right now. Whether those concrete policy steps that need to be taken . Stepbystep and then the other thing and that is why we brought to the system for the job of we manipulate money began easy prosperity. So you start right away with free Interest Rates they say that will disrupt the market brokerages already disrupted just remember the late 40s the economic director of occupied germany overnight he propose to do away with rationing they said that is the disaster and he replied my advisers tell me the same thing. He did it anyway and within days special started to fill up with products and the german miracle began. Free Interest Rates. Also make a bet is positive to get the credit markets starting to work again. And bring down the feds bloated portfolio going back into the economy so people can determine where they should go. With the Gold Standard by date certain we will fix it pickup price. Pick a price to make it clear pulling away regulation if you try to make alone you have to justify six ways to sunday if we deregulated the Transportation System under the democrat we have to do the same thing with the banking sector. Trumpet call a beautiful the is happening when the courts ruled in favor of metlife and all those regulators had to leave those three officers offices that they would harass met life said we need to do that with the economy great big reserves it isnt multiplied bridges sterilize. And also will remove the barriers to the regulatory barriers so the government starts to misbehave and then you can lock it in leaded unleash if i knew i would be on the forbes 400 list of rich people. [laughter] but let and unleash it isnt complicated. Just doing and we will be pleasantly surprised how quickly become backlight watering the garden. You are already at the top of the list. Have a like to make a comment from the practical point of view setting a specific price would not work. I do disagree with steve a little bit of this bourkewhite think it should be used as an indicator as to whether we are to inflationary or deflationary bell with Monetary Policy you want to provide basic stability and Milton Friedman said with that goal in mind and in fact, they have been moving relatively stable throughout the financial crisis of 2008 which is interesting. And that could be too much inflation one of the problems steve, with the fixed price if the price falls below then you should be accommodating in the fed should be a stationary but gold is constantly overshooting city become expansionary been called goes above the market price then you are restricted to move it back down hopefully would come to was stabilizing point of view but the problem is it is overshooting the problem with gold it isnt directly tied only to the dollar but other currencies so the volatility is a problem with setting a specific target price. It is a moving target. Is a moving target with an on Gold Standard in floatingrate you did have that problem with the classical Gold Standard or bread was behaving by the rules. The reason effectuates theyre misbehaving which is why under the classical Gold Standard when they saw how well the was working forest of brits all adopted their own version so theres very little volatility known before currency trading so the volatility comes from the lack of having the specificity and in terms of trying to control the money supply i think it is preposterous or the restaurant period economics he thinks it has more coat checks i will stimulate the production of more coats than more people come to the restaurant. That is backwards the money reflects producing goods and services not the other way around. Just look at the velocity of money. All over the place so get that fixed like 60 minutes in the hour in the hour will not fluctuate. Now what is the viscosity of money. That is friedmans big feet bought. He did think velocity was nonsense and it only works with the assumption that the turnover can be predicted to produce general output and that cannot be controlled by the fed. By the way with a gross domestic expenditure read his paper which gets the growth the standard. With my new introduction into the structure of how they take a vantage of that. Dirty University Economics department my question is here at cabo to be no fanned fan of centralized monitorial third the but even if you set strict constraints you have Serious Problems with the Fiscal Authority to be relatively unconstrained and he lays the problems of the European Central bank to precisely this issue so given the you impose the constraints upon the Monetary Authority to suggest you were carrying a symptom and not the underlying problem which is prophecy but europes problems are structural and regulatory with batf that idea of manipulating money like the number of minutes in an hour will cure those problems is preposterous they cant take the word greece and translated to english you get illinois. [laughter] nobody suggests they left the dollars shown it would be cured to have the illinois peso that would compound it those are structural problems although the role has been mismanagement it in itself is not the problem but trying to use it to overcome the structural problems not to mention the 88 tax increases is the real problem having a stable measure of money that will not overcome the problems you have with hyper regulation and over taxation and all the antigrowth talk about the republican war on women what about the war on prosperity from obama and that is the real problems of having a steady measure will not cure the very real structural problems that others refer to. Also there is a very good point the euro is acting like a Gold Standard so it is causing greece and other countries that were fiscally irresponsible to suffer as a result to get their act together that is what it does when you overuse your debt and tax system in the euro is the Gold Standard so a lot of economists argue that they note the countries that went off the Gold Standard first recovered more quickly and interesting argument that is worth looking at and that is what agrees is thinking we can go off and recovered more quickly than is the basis of that argument. By the way thinking of the steady many works asked brazil how well that works for argentina or zimbabwe. The countrys of steady currencies to better over time than those who dont. Not to get into a discussion of the depression but those who would cheapen their money all they did was get a bigger policy going where they all laidoff their currencies in the 30s was a miserable decade you can sheet and then others follow in your back to where you were. Is a mistake to think the key function of money is to register inflation or deflation but to give signals of information and the euro is a manipulation and currency dominated by a socialist regime so of falsifies the information that is why it doesnt work not because it will misjudge the low level of prices which is almost impossible to compute anyway. Get the price of oil in the 70s when we went off the rails because prices going up people thought we were running out we had huge investments of the Energy Industry in the 80s it will crashes at 10 the beryl texas goes into depression and stable money with the decade is like a virus in the computer in disrupts the information. We will leave it there. I usually eat lunch at 12 00 so now it feels like a meeting on the 75 minute hour. [laughter] but starting off with what he said in his remarks to reject the idea that somehow we have to get used to a reduced level of growth and prosperity because the fact that we live through this difficult time really is a result of serious policy errors that are related to reduced level of freedom so obviously something we believ