The last theres been a lot of talk about over last generation, the last 40 years really highlights the challenges of measuring economic values. A lot of people take the view that there hasnt been much progress, much growth in incomes, economic stagnation over that period of time. And i often try to put the lie to that assertion by asking people to whether theyre low income, middle income, high income, raise your hand if you wanting to back to 1975 and there usually arent a lot of takers. But one think is undeniable is we have been living through a period of economic stagnation and im peter and joined the Cato Institution a year ago as president and over that time brink linsey has done a job trying to explore growth slowdown, one is understanding the growth slowdown and another is reviving Economic Growth. For the first time in my life we had gdp growth hasnt reached 3 and at the time i joined cato 13 months ago i was hopeful i was actually hopeful because when we lived through economic stagnation or contraction, its created a lot of pressure, tension and anxiety that often has been the em impetus and i realized i was correct that economic anxiety will create sturm oil and stimulate change. I was wrong because its not the change that i had anticipated. Clearly. Really lucky to have three gentlemen here today that i dont think really need much of an introduction but i will try to provide one. Between them i think theyve written more books than i have ever read. But i think its a great opportunity for each of them to comment on, you know, their views on how we are going to restrive economic in the United States and prosperity that we enjoyed for a long period of time. And they each have books that have been released recently that actually speak to this. I spoke with a donor to cato recently and he has a son who will be starting college in the fall and he told me that he was considering attending Cato University this summer so that his son can be inoculated to flearn economics professors in college before he attended. When i was getting ready for college i didnt need such inoculation. And during the summer between high school and college i read it. Capitalism and critics. I think things have changed. Some havent changed. I felt that in my classes we were able to engage in debate and disagree without fearing as many students do today that it can hurt their grades and their transcript and disagreement is not permitted. So i actually thank you, george, for providing such ammo for using against fraternity, brothers, others who didnt agree in the case of enterprise and free markets. The ammo started at cato. Thanks so much for that. Thanks so much for that. Georges book is the scandal of money and we are delighted, i think one of the idea that cato has promoted for a long time is the fact that our money system and the power of the Federal Reserve is a great threat not only to economic willbeing but our freedom and thats the reason why cato has held prominent annual monetary conference coordinated by Vice President jim and started in the direction of george, monetary financial alternatives to highlight these risks and to promote free Market Alternatives to our current system. Georges book is very important and timely. In addition, steves last book i believe was of similar topic, highlighting the threat that the lack of sound money poses to our country. So those are both tremendous contributions to the popular literature. I told steve earlier that i had not been affiliated with any major party and i registered republican so in 1996 connecticut primary i could cast my vote for steve forbes for president. Steve replies that he wishes a lot more people register to vote and voted for him but even in defeat he made great contributions to the case for freedom and flat tax and hes still at work. The book that he wrote with elizabeth, how repealing obamacare will restore hope and prosperity. He does a fantastic job prioritizing three key areas, particularly areas such as health care and money where many of the problems are created by Government Intervention and for some reason the prescription that many people is more Government Intervention. Finally, mark who is an economist, economics professor and author but many know as em empresarios, world of free minds which take place in las vegas, we are delighted to have mark here. I mentioned at the outset while we can agree that theres been income and economic stagnation of late the measurement problems reflected in our economic aggregates i think do fool us because there are many things that arent captured in gdp and i reject the assertion that americans really of any income level have experienced stagnation in the last 40 years. Mark has proposed and now has an updated version, at least last year, the structure of production and alternative to Gross Domestic Product as a measure of our economy and has proposed an alternative called gross output. I will let mark explain it because one of the reasons, rational for it being an improved and accepted version of measure of the economys performance is that its not published quarterly but government alistening with the gdp fig chuirs which is quite an achievement by mark and remind him that as libertarian we dont take action as endorsement so im looking forward to his remarks, explaining some of the work hes done in developing and promoting more effective measures of Economic Performance and we will proceed with the speakers in the reverse order by which i introduce them. Please join me in a warm welcome to mark. [applause] 3 growth and sometimes reminds me of this program that george w. Bush set up called the 4 growth plan and when i talked to the organizer i said, 4 growth plan, now did he mean growth of the economy or growth of government . She didnt appreciate that comment. Under george w. Bush never did grow 4 during the entire period of full employment, so its kind of unfortunate. What i would like to talk today is what peter mentioned, gross output. I think its a very important statistic and, in fact, my main thesis is that gross, output or go offers a better more comprehensive picture of the economy is a powerful Unifying Force between accounting, finance and economics. It linkses micro with macro and it appeals to all the major schools of economics. In many ways go is the missing piece of what the latest economist calls the prosperity puzzle, which is their latest issue, they talk about the problems in gdp which im sure will come up in this discussion, but in any case my argument that this is a unifying approach that its a more comprehensive picture of the economy, its a tall order and i would like to get started. I actually see it as a paradigm shift in the way we treat economics. We start off with what is gdp, what is it supposed to measure . Annual spending is one way of looking at it in the economy, consumers, government and business, theres a problem with gdp, theres a lot of problems with gdp but the i want to focus in particular is according to gdp statistics what drives the economy . And so what we find out that when you break down gdp and c plus i plus g you see that it breaks into Consumer Spending as the biggest sector of the economy, Government Spending second and business business a poor third. And what does that say in terms of policy implications, you see, thats the issue. And of course, because Consumer Spending represents twothirds basically of gdp, you get the med icons media creating a myths. You get it from wall street journal, Household Spending generates more than twothirds of total economic output says the wall street journal. So steady spending gains should translate to Economic Growth. If only consumers would spend more thats all it takes. And, of course, you 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 u. S. Economy. Consumers, not producers, not entrepreneurs, consumers accounting for about 70 of the economy. So you can see the problem thats inherent with using gdp as a statistic. Is this are we coming to accurate conclusion is our question . So we have to ask ourselves the question what is missing from gdp . Well, again gdp is c plus i plus g, 8. 6 trillion economy. 12. 4trillion investment, 3 trillion, in government 3. 2 trillion. What is missing in gdp . This is the surprise factor . The supply chain. Gdp does not measure the supply chain. It does not measure all the business spending, the b to b spending to bring the products to their final use, you see, gdp just measures the value of finished goods and services, your clothes, your shoes, the internet, all of everything that we are enjoying right now, the coup of water. Thats all counted in gdp but the spending by business to get you to the finished products is left out and that is, its a killie seal. Ive been measuring, the bureau of Economic Analysis, 20. 3 trillion, its more than Consumer Spending which is 12. 4. Its more than Government Spending, its more the i party is fixed investment. Now, who is gross output. Well, it can be for those who are economists and youre familiar with the equation of exchange, it measures total transactions. Its also a measure of high access triangles so this is taken from prices and production, this great book that Friedrich Hayek wrote in London School of economics and theres a picture of the triangle he used, its purely theoretical. It was pure theory and it has had a rough road of acceptance. But what im suggesting is that hayeks triangle is measured by the government. This is a fantastic break throw and i am pleased this this program is taking place in the hayek auditorium so appropriate considering the fact that the government is measuring hayekks triangle. We all know the background, i thought i would pose this up here and particularly hes known for the book and the constitution of liberty but also author of this Macro Economic work which form it had foundation of my own work and the structure production called prices in production published in 1931. I have a First Edition signed by hayek. Today ive come out or published in Business Cycle and asked me to write the introduction. But here is a modernday version of hayeks triangle, resources, production distribution and final output. You can see gdp is in there but so are the stages, the supply chain prior to that where we have stages one two and three. So this is a great way for students to capture what hayeks triangle, fourstage model of the economy. Every good in service that you and i use has gone through the resource states, the production states, the distribution or wholesale and retail stage and then to final use, which is represented number four by gdp. Well, the big news in april 2014, the bureau of Economic Analysis which puts out gdp statistics has now start to measure gross output and measure hyeks triangle. Gross out puts provides new perspective on the economy, and a powerful new set of tools and analysis and one that is closer to the way many businesses see themselves. Isnt that true . Business see themselves as producing, moving the product along the production process and thats what gross is measuring. Whenever the bea comes out with quarterly announcements release of gdp data which they did just recently, notice how they define, how they define gross, gdp, they define it in terms of gross output first and then they subtract out intermediate production. So gdp, plus intermediate input equals gross output or another way gdp is gross output minus intermediate input. Basically what theyre doing is getting you the audience, the consumer of gdp statistics to get used to the idea of what i call a top line of National Income accounting and a bottom line. The bea also for those of us who are austrians who look industry by industry and sector by sector, im delighted that bea has introduced gross output by industry which allows economist to desegregate the economy and based on stages of production. So based on this announcement i was i wrote a lead editorial comment air in april 2014 in the wall street journal. At last a better economic measure and it came out with a new third edition of my structure production. Basically my book the structure of production was had virtually disappeared, nobody was reading it, but suddenly when the government starts using this statistic it is come out of obscurity and now being used in being read and we have copies here for you to purchase after the presentation. What can we learn from the new go statistic, you may ask yourselves, so what, so what that theres a new statistic . Well, first of all, you can see the gross output from the statistic, its much more volatile, its a much better indicator of the Business Cycle. You can see here that gross output specially during the recession of 20082009 how it dropped. Is that accurate reflection of what happened during the great recession, not at all. You can see in terms of gross output but you can see what happened in the intermediate stages, there was a significant drop that is a better evidence of what is going on. So according to new model, new go model everything is in reverse. Remember gdp was number one and now suddenly business spending when you include the supply chain is nearly 60 of the economy Consumer Spending now down to 32 , instead of twothirds its only a third and Government Spending is 8. 2 . So when you see the two models next to each other what you see, essentially what you see is that the business sector is by far the most important sector in the economy and policy that steve forbes is talking about in his book and what George Gilder is talking about in his book focus on the business sector, supply chain, innovation, entrepreneurship, productivity, these are the factors and now we have a model thats consistent with Economic Growth theory. Its also a support steve says, monopoly will be broken as the u. S. Government will provide official data on the supplyside of the economy and its structure, so we as supply siders austrians, we have our own statistic,ia know a lot of you dont like aggregates but aggregates can tell you a lot and i love this quote by larry, not one in a thousand recognizes it, it is business, not consumers that is the heart of the economy. When businesses produce profitability they create incomeproducing jobs and then consumers spends, period of profitable firms purchase new equipment because they need to modernize structures and software. This is a new approach. I call it and im not saying replace gdp, im saying its complementary. Gross output, you know in a Financial Statement you have top line and bottom line, those of us in accounting, my business students love this. So we have top line and bottom line, top line is sales and revenue, bottom line is earnings, now finally economists have caught up after a 100 years behind the times, have caught up with the accounting in finance professions, now we have a top line and a bottom line, our top line is gross output revenue in sales and bottom is gdp value added. Similar to gross profits in Financial Statements. And this is a quote here from three great economists including steven former bea director and deal from harvard, net output gdp is appropriate measure of welfare. Both are required in a complete systems of accounts so theres a general model of the economy where you see the production side, the make economy reaching final and gdp and consumption when its used up and so this is again in my textbook a general model of the economy, i dont have time to go into that because i run out of time but if youre interested, by the way in my powerpoint because ive gone through pretty quickly, maybe we can send it to the attendees or they can give me your card or whatever, i would be glad to send you this powerpoint to give you my basic points. Go is being integrated in the textbooks, thises the sign of success, so its not just in my textbook which i was economic logic but also in the number one textbook in the country, although greg disputes that, and we have it in in john taylors textbook and roger leroy miller, and David Colander so its in all of the textbooks developing to be in all of the textbooks. Well, i have a few quotes here. What others are saying about it. Steve forbes have been supportive in Forbes Magazine feeling that its National Income accounting and george has suggested that vital learning accumulates through all of the processing of production measured in gross output. So i dont have time to read any of the other quotes but we have academic economists, we have business economists and so forth recognizing the value of the structure of production so my basic conclusion is simply the structure of production does matter. Thank you very much. [applause] we are going to wait for questions until the end, although i will say, mark, since you pointed out that the government now publishing go stimulated sales of 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. It saves a lot of supply, creates demands. Thats what i [laughter] mark, thanks so much, please join me in giving a warm welcome to steve forbes. [applause] thank you, thank you very much, peter, thank you cato, congratulations, mark on measuring the whole income instead of just part of the economy. But no matter how you measure the economy theres no getting around it today it sucks. [laughter] it just seems stuck in second gear, you get one good report followed by a disappointing report. Profits arent what they should be. Business investment is not what it should be, business formations are not what they should be and the economy is is in a rut and theres a lot of talk about the new normal that we must accept belowaverage situation, larry summers, former treasury secretary, former harvard president who knows what itll be if the democrats get in again talks about stagnation if some alien forces come along and nothing human beings can do about it. The rut that we are in today which is having profound implications around the world, bad economies lead to bad politics, we see that everywhere around the world, it comes from mistakes. The nice thing about policy errors is they can be corrected. Those errors can be corrected. And thats why we wrote the book reviving america, we focused on three big reforms, obviously there are a lot of other things that have to be done but you have to have priorities. So we prioritize on health care, on a new tax code and getting Monetary System back on track for the first too many in almost half a century. Healthcare is an obvious once. 20 of the economy but also the most personal thing possible. Much more than taxes and the like, health care for us for our families, our friends, our loved ones, so this leads to the question why do we have a crisis in health care, its not the quality of health care in this country over all its the best in the world. You can see it in cancer survival rates, western has many fine medical institutions but in terms of survival rates that is 5 years, i had it several years ago. In terms of five years, you do much better in this country than you do anywhere else in the world. Some say say its because theres too much demand. People like me are getting older and want more Healthcare Services therefore the prices keep going ut and the system goes and step back for a minute and asking yourself why is demand for health care considered a crisis where as demand for anything else in the country is considered a great opportunity. People want more enlightenment, cato will be glad to help out. Peter, good. [laughter] trying to make sure i get my free lunch after this and in terms of apps, you want more apps, you want more cars, detroit manufacturers, glad to come to your assistance. Why is demand for health care considered a disaster as demand for anything else is considered a great opportunity. Is answer is we dont have real free markets in health care, its ad thirdparty dominated. The Real Customers are government, Insurance Companies and employers. The patient is at the end of the line. Proof of it is because we have grown up with the system, we dont know how peculiar it is. You go to a hospital and get a strange look, one or two things, either youre unsured or lunatic. Whats is it to you . Be passive about it. The proof of it, another proof of it is the motel in america wouldnt dare you put you sick guest with a curtain in between as they routinely do in a hospital, robes, you go to a hospital, they look like the robes they give look like they came from Salvation Army dump, dumpster that these things that humiliate you, you cant get around and you see, and so the problems when you have the top down system, thirdparty payer system, they always try to cure the problems with more regulations. One problem comes up, you whack it and other problems, whack, whack. They spend more time filling out forms than practicing medicine. No one is happy with the system we have today. Medical costs are still going up. You go to a hospital, now, thats bad enough but people, vs. Unsatisfying experience, they talk to each other, specialists talk to each other and they cant have this medication, they give it to her anyway. Its an unsatisfying experience. Deductibles under the socalled Obama Health Care exchanges, you may get the its not quite that bad but become out of reach. Normally in free market best practice are quickly imitated. Iphone and samsung comes along. You dont get that kind of thing in hospital. I will give you a quick example. Breast cancer, you are supposed to have mammograms. If the woman has dense tissue, they dont discover it, they only discover it onefourth of a time. Theres a new practice called molecular breast imaging where they put a tracer in and many times a woman has a mammogram, youre great, then a month later they find out they had a tumor the size of the baseball, why didnt they find it . Something like this way of discovering Breast Cancer, handful of others pushing quickly imitated and say this is the way to go, if you have a mammogram insist on nbi because otherwise you might miz. The other key thing is getting the patient in control for the first time ever. The system came about because of world war ii, they couldnt pay people because of labor shortages because everyone was going in the armed services, young people. They had to pay people in kind, government said you could do it with benefits rather than cash and after the war in the 50s irs made a tax ruling that embedded the thing, so we have this crazy system today and so the thing about free markets as you know always turns scarcity into abundance, you see it in cell phone. The first one from motorola, weighed like a brick, 40minute battery life. Smartphone, 100, about to go down to 50. How do we get that in health care, we outline some of the basic reforms . Would be nationwide shopping for Health Insurance instead of having the state cartels. Why shouldnt patients and individuals have it or equalize it. How about transparency, hospitals post pricings and clinic pose prices. Have transparency, how about requiring transparency an how many patients die from infections after admitted to a hospital . Its a national scandal. No restaurant could get away with that. Chipotle didnt kill anyone, thankfully but the stock and company took a huge hit. Thousands of patients died unnecessarily in the hospitals. How about readd mission rates . How about choice of insurance . I dont need pregnancy services, thank you very much, im forced to buy them. Do away with the employer mandates an safety nets you can have more safety nets, we have it in food, put aside how food stamps are administered but no one needs starve in this country. You have food stamps, food banks, but thankfully doesnt run it. If the government ran agriculture we wouldnt have more obesity, we would all be starving. It would happen if you worked for the government. Thats what happened in russia and china. Taxes you all know, second big reform, price and a burden, thats just raising revenue, overtaxed and federal income tax code, litany, abraham Hillary Lincoln address. The bible took centuries to put that together. Federal income tax code and rules and regulations over 10 Million Words and rising, nobody knows whats in it. As you know you call the irs hotline or they give you the wrong answer. Money magazine did a survey and give finances, numbers to 46 different taxpayers people considered experts in the field, they got back 46 different returns, 46 different estimates of the familys tax liability, thousands of dollars of difference. The answer is we have to junk this thing. It is beyond repair and we use to say we need to bury the thing but im not sure it allowed to be buried and replace it and replace with a simple flat tax and throw the whole thing out, plan we outline in the book first 50 of family of four, 800,000 of a salary, free of federal income tax, 17 above that, no death taxes. Do the same thing in the business side, reduce the rate from 35 to 17, expensing of Capital Expenditures and just do it and people say, why not just throw them a bone and have two tax rates or three tax rates, some of the republicans propose . No you dont. We should have learned from 1986, 28 , 15 . Ladies and gentlemen, when you put two tax rates together its like putting two rabbits together. They breed and multiply. You see what happens with that. Lets just go with a single rate. The real thing is this is a morale thing. Think of the opportunity cost, the irs estimates we spend 6 billion a year filling out tax forms, experts estimate 200 billion conforming with this, go back 20 years, add up all the tens of billions of dollars in this corrupt complex activity and think if it had gone to new products, new services, new medical devices, new cures for diseases how much richer our lives would be instead of corruption that brings the worse in everyone. Its not 50 shades of gray. Its not like going naked in the jungle. Its absolutely crucial. Why is it crucial because this is how we make progress in the world, interacting with each other, buying and selling with each other. We do it billions of times a day. Money makes that interaction easy, the process easier to achieve rather than trying to do barter. Think of money like a claim check. If you go to the restaurant, check your coat and piece of plastic, claim on products and services. It works because its based on trust. So money measures value the way clocks measure time, rulers measure space and so the thing is it works best when it has a fixed value. Think of it, imagine the Federal Reserve was in charge of the time bureau and they decided to float the clock. Imagine if you wanting to to supermarket to a pound of cheese, the pound changes each day. You assume the amount of gasoline do not changing each day. So imagine baking a cake under this new regime, it says bake the batter 30 minutes, you have to figure nominal minutes, inflation adjusting minutes, are they dc minute, new york minute or mexican minute. You dont know what youre going to get back, it hurts investment which is a key to future prosperity. And so the fact the dollar may be going up or down is a clock watched thats either too fast or too slow, neither one is going to help you very much. The Federal Reserve today and we outline is acting the like the soviet union. It has been as donald trump a disaster, take zero Interest Rates, take zero Interest Rates, thats price control, you know better than anyone else what price controls do to reform a market. They have done it to the credit markets, very cheap for Big Companies to borrow, Small Business and households, one statistic, the past five years between 20092014 accredited government crew 37 , corporations 32 , credit to Small Businesses and households 6 . Absolutely pathetic. On the environment with hyperbanker regulation, apple, 200 billion cash goes out and borrows tens of billions in the bond market, why because they can, its cheap. Great for apple shareholders but not use of capital. Exxon. Gold keeps value better than anything else. We did it for 180 years when you see the price fluctuate, thats the dollar fluctuating not the value of gold. Gold is like a ruler, 60 minutes an hour, have a fixed value, 16ounces in a pound youll see the economy prosper. In the meantime since thats going to take a lot of intellectual work, in the meantime lets have real Interest Rates in the market again instead of the bureaucrats setting Interest Rates, let the price be set by people, free borrowers and reduce the Federal Reserves obscene portfolio, return that, let that flow off as these bonds mature into the Financial System and have people determine where the capital goes and creating future prosperity for all of us. Thank you very much. [applause] thank you, steve. Steve i heard you say that Monetary Policy is crucial. And ive also heard you say that when people start discussing the top that you signal for folks to go to sleep or leave group. And your position with humor and common sense is really great and i think it helps a lot of people get the message. George, please join me in offering a warm welcome to george. [applause] well, thank you. Its great to be in the hayek auditorium, the quote at the beginning of the scandal of money is from hayek and it says the route and source of all monetary evil is the government monopoly and control of money. And this is the heart of the message steve just gave and its the heart of the message of the scandal of money and mark redefinition of Economic Statistics goes deeper than even he has fully explained, i think because key thesis is that goods and services are not final products. The final product is the human being in creativity and the image of its creator, those are the final products and they are measured through information theory as knowledge. Wealth is knowledge. A professor at mit recently summed it up better than i did, i think, he said that when an expensive car that hidalgo is his name, when an expensive car crashes into a wall, all its value disappears even though every atom and molecule remains. Value is information. Its another hayek point. The car is knowledge. And i say all wealth is essentially knowledge. As thomas put it the neatherdal had and the difference between our age and the stone age is the entire increase of knowledge but this gives us a further insight because if wealth is knowledge, what is growth . Ive been studying business progress for years through the leading consultants in boston. I spent a lot of time with bane and company and they have documented learning curves all across the economy from everything from eggs to insurance policies, software code. And learning curve that with every doubling of total units theres approximately a 20 to 30 reduction in cost. So learning curves are ubiquitous. These are the real final products. Theyre knowledge and learning and the knowledge and learning does not happen only in consumption of a hamburger, the consumption of the hamburger, the consumption of housing, the consumption, transportation, clothing, whatever it is all endows human beings with the capability to create, to learn, to expand knowledge, to expand wealth, so this is the this is what go represents, go represents all learning and every step in the process. Its not restricted to the final output it proceeds through entire economy of learning and knowledge. But if learning is growth and growth is learning and knowledge is wealth, what is money . And this has been quite an enigma for me for a long time and ive been somewhat distracted by various commodities theories of money that money is really the value of money stems from its value as jewelry, you know, gold is valuable because its really jewelry, money is valuable because its really jewelry. My friend said no, jewelry is valuable because its really money. And why is money valuable . Money is valuable because its time. It represents time in the economy. And when you have zero Interest Rates, for example, you are essentially are zeroing out time. Everything slows down. Jim grant describes it as throwing away the clock. Everything slows down. Nobody scores. Everything slows down when the value of Interest Rates are zeroed out. Money is time. Its what forces entrepreneurs to allocate to prioritize, to invest in one thing rather than another. Without Interest Rates you have just everything can go forward because with infinite time everything is possible and this is really the vision that currently governs the fed. So this is why the return as we say to gold is so critical, because gold is really time. Throughout history, the as mining gear has advanced, as the technology for extracting gold has advanced the gold has become more widely distributed, more deeper and so essentially the cost, the time to extract the gold is remained reasonable constant for centuries, so gold has thus become the source of time in the economy measured through time and this is really the heart of of what money is. Money is time and what we really are experiencing today is the war against time, conducted by all the Central Banks of the world. And it explains the great slowdown in growth that really began with the abandonment in 1971 and everything began to slow down because the signal of where hayek insisted upon was critical, price signals conferred by money were rather than a measuring stick as eteve describes it it became a magic line. All these magic lines for the government and you cant have real Growth Without knowledge and learning and knowledge and learning depends on real information rather than on the manipulations of the fed who try to essentially try to fool entrepreneurs into making imprudent decisions. So when we say going to the Gold Standard, we arent necessarily speaking about going back to anything. This is going forward. The Gold Standard in conjunction with the new Global Economy opened up by the internet is is uniquely powerful new element in the history of the world. The bit coin block chain transforms not just as a potential for global money but also the potential for innovation insecurity, you know, the Swift Network got cracked, got hacked, the Swift Network is the Central Nervous system of our banks. And it got hacked, 60 million extracted in bangladesh and the centralized model of security is bankrupt, it doesnt work anymore than the centralized model of money can work. The coin block chain in part security not through concealment and centralization but through transparency and distribution. You either have to have computers in the world to take over the block change and change the public ledger of transactions and now we can now integrate a Gold Standard with a bitcoin standard which is explicitly based on time and they converge and provided that he win it is fight, reduction of the internet to pathetic public utility where agregations of lawyers, which is the meaning of title two internet, it provided we preserve the Global Internet and allow it to prosper. I believe that Gold Standard can evolve even as we cant go back to the camp Gold Standard legislature that was introduced in 1984 in which was the last great hope of enacting connection between gold and the dollar. So money is time and time is real and time cant be manipulated. It cant be redistributed. Time is what remains scarce when Everything Else in capitalism becomes abundant, but the abundance of capitalism is contingent on integrity of information that governs it, the knowledge, processes of knowledge and learning and embody it. I think all this introduction of the gross output model is crucial because not so much because it shows that consumption doesnt drive the economy, human creativity drives the economy and i think that is tremendous insight and tremendous advance. Thank you. [applause] thank you, george. One of the quotes in your book, i have to paraphrase, a paradox that puzzled many of us that so many that see themselves adherence to free markets accept Central Planning in the monetary realm. Its really incredible and to the extent we can convince people of that paradox i think will help our cause. I want to open it up for questions. Often when im at presentations at cato the moderator says theyre going to invoke the first question, im not going to do that out of consideration to the audience, i would like you to have the opportunity to ask question. Those of you who ask questions, please be considerate of fellow audience members and please wait to be called on and recognized and wait for the microphone so the folks up here can hear you and the folks on the internet can hear you as well. State your name and affiliation and offer a concise question thats actually in the form of a question. So why dont we start right here in the front . Thank you. Thank you all for your comments. I want to talk about health care, my name is lue and im adviser to the group and i agree with you that transparency of prices is important but frankly outcomes is equally important and frankly more important in my view to the care of patients in particularly hospitals. So the question i have for you and some of the things that we are seeing that actually some of the payers, private Insurance Companies are actually promoting and sending patients to where the best care is given without interfering with the clinical decision of doctors, believe it or not, so the question i have for you is could you comment on the fact of outcomes measures being important to the decision as to where we send our patients for care . I think the way that you phrased the question where we send patients, in a true free market patients would quickly have the information on where benefit care is available. Metrics would be created to give them more sophisticated information on particular outcomes. What happens with Breast Cancer is a scandal. In terms of people dying of infectionses at the hospital are avoidable. Rather than insurance to getting the light like we did with electronic records, every business in the world has electronic records, your local dry cleaner for 30 years, the reason for thirdparty payer you didnt get any health care and now they did it soviet style, one size fits all and has been a disaster. All the propose we should make how do we empower to be able to make more decisions and providers will quickly add here to it and if they dont, people wont go there, they dont have to go there, they dont have to be directed there, and that is truly the way to go instead of a top down, okay, lets have outcome oriented. Markets will do outcome oriented because health care is so personal. I mentioned about Breast Cancer. Theres a chain in pennsylvania, several years they put in equivalent of a warranty, legally they cant call it that. Under the normal systems we have today we go back to paying even though it was not done right the first time. One time Cato Institute employee, in your book, one of the most interesting parts was the financial decision of the us economy and what that meant to the triangle, wall street, mainstreet and silicon valley. Could you talk about that a little bit please . Be change the ultimate scandal of money is what is used as the alternative to the Gold Standard, floating currency. Floating currencies today, there will be a new accounting in the next month or so from the bureau of international government. The latest estimates are 5. 3 trillion a day. This is 26 times all of global gdp. 73 times all global output of goods and services. It is a scandal and it is all conducted by 10 banks. They conduct 77 of currency trading, it is 90 speculative, just a complete failure, the chinese are accused of manipulating currencies because they fixed on the dollar, enabling their miracles of Economic Growth. What is happening is we have created a closed loop economy, between the Obama Administration and the fed. Essentially startups, Small Businesses, mainstreet has been shoved aside and 62 of the feds money creation goes back to the treasury. The other two third, most of it goes to this carnival of Big Companies buying up their own securities for stock market cosmetics or buying up their rivals. There are now twice as many ipos in china as there are in the United States. This is a real catastrophe and this is why we need a big change right now. Gentlemen near the rear. Peter ferrara. I want to hear from steve forbes and George Gilder about the concrete steps, policy steps that need to be taken to restore the Gold Standard. You were advising the president of the United States what needs to be done stepbystep. First thing is they want to do it and the other thing is will they know how to do it. That is why we wrecked the system and calling for the false god we manipulate money we can get easy prosperity. You start right away by freeing Interest Rates. You say that will disrupt the markets, the market is already disrupted. In the late 1940s, the economic director and occupied germany. Overnight proposed doing away with rationing, they said it was a disaster, he replied my advisors tell me the same thing, he did it anyway, freed up and within days the shelves of german store started to fill with product and food and the german miracle began so free interestrate are the beginning. The other is to announce and make it the case that that is positive for the economy because then you get credit market starting to work again. Second thing is start winding down the feds bloated portfolio, let those resources go back into the free economy where people can determine where they should go rather than the fed determining where they should go. On the Gold Standard you could say we are going to fix it, pick a price, 1100, 1200 and make it very clear that by pulling away regulation. Right now of banks, you try to make a loan to do you have to justify it 6 ways to sunday. We deregulated the Transportation System in this country in the late 70s begun under a democrat, that would do the same thing in the banking sector. One of the most wonderful things that happened recently was when the courts ruled in favor of metlife and all those regulators who had moved into metlife had to leave their free offices, harassing metlife saving us from their depredations, we need to do that with the rest of the economy. When the fed Bank Reserves dont get multiplied under the old monetary theory, just get sterilized so start with those and announce that Interest Rates, going to gold and in terms the other thing they can do is remove the barriers to alternative tax currencies, regulatory barriers, if the government starts to misbehave you can do it and if somebody comes up with Something Better the government cant block it. That human ingenuity get unleashed and who knows what will happen . If i knew what would happen i would be on the forbes 400 list of rich people. Let the thing unleashed, remove the barrier so the faster the better. It is not complicated, just do it and we will be pleasantly surprised how quickly we come back to life again, like watering the garden, plants grow when they have water. You are already at the top list with your knowledge, steve. I would like to make a comment on that. From a practical point of view setting a specific price for gold would not work. I disagree with steve a little bit on this. I think it should be used as an indicator as to whether we are too inflationary or too deflationary. The idea in Monetary Policy is to provide stability, you want to provide basic stability and Milton Friedmans rule was with the goal in mind, what is the money supply, that was the biggest problem because with deregulation, pretty much decided on into. It has been moving relatively stable throughout the financial crisis of 2008 which is quite interesting. The biggest problem. I like to see gold as an indicator. You use it as an indicator. If it is drifting upwards that suggests too much inflation, you need to pull back but one of the problems with the fixedprice is that then if the price falls below the price you should be accommodating and the fed should be expansionary. The problem is gold is constantly overshooting one way or another so you become expansionary and gold goes above your market price and shoots way above it and you are restrictive and you move it back down again, hopefully you come toward a stabilizing point of view but the problem is the overshooting problem with gold, gold is not directly tied only to the dollar. It is also tied to other currencies so the volatility of gold is a problem with setting a specific target price which is unfortunately a moving target, it is a moving target when you have floating rates and nonGold Standard, never had the problem and the classical Gold Standard, never had the problem when they are behaving by the rules, you fix the thing and currencies fluctuate because they are misbehaving which is why another classic of the Gold Standard when people saw how it was working for us and the brits fail adopted their own version of it so there was very little volatility, no need for georges currency trading so the volatility comes from lack of specificity and in terms of controlling the money supply i think it is preposterous. What you might call the restaurant theory of economics, a Restaurant Owner notices a customers checked codes which means there are more customers still feels if he creates more code checks that will stimulate production of more coats and more people come to the restaurant. It is backwards, money reflects peoples producing products and services not the other way around. That is where keynes was profoundly wrong. Look at velocity of money. All over the place. Get it fixed like 60 minutes in an hour, the hour wont fluctuate anymore. Now the viscosity of money. This was friedmans big error. He did believe velocity was essentially a constant and monetarism only works if velocity turnover of the money can be predicted. But turnover is controlled by us, all those gold people producing general output and that cant be controlled by the fed. By the way, in terms of an even better thing, gross domestic expenditure, you should read his paper on it which get some of the flaws of the Gold Standard, dde is even better than geo in terms of measuring. A new introduction to the structure, i go into how to take advantage of that. The gentleman in the front row. George Mason University economics department. My question, the gentleman at cato has no fan of centralized Monetary Authority opines that even if you set strict constraints on Monetary Authority you can have Serious Problems with Fiscal Authority relatively unconstrained, and down to that issue. Given that you impose the constraints of Gold Standard upon Monetary Authority. And the underlying problem which is fiscal europes problems were structurally fiscal and regulatory and the idea that manipulating money, manipulating the number of minutes in an hour will cure the structural problems is preposterous. They cant. And get illinois. No one suggests seriously if illinois left the dollar zone that its problems could be cured. Those are structural problems, nothing to do when they were mismanaged. Trying to use the euro to overcome structural problems not to mention the idiot tax increases they put in in greece and elsewhere is the problem. In this country, having a stable measure of money, to overcome the problems of hyperregulation, overtaxation, obama talks about republicans war on women. How about president obamas war on prosperity which is the real problem. A steady measure of something making it unsteady is not going to cure, what was referred to. I will add in spain, made a good point about this the euro is acting like the Gold Standard, fiscally irresponsible to suffer as a result of this, that is what the Gold Standard does when you overusing the debt and tax system, and the Gold Standard. And note that the country went off the Gold Standard in the Great Depression recovered more quickly. It is an interesting argument worth looking that. Off of the euro, and that is the basis of the argument. Unsteady money works, just ask brazil how well that works, zimbabwe, that has worked. And steady currencies do better over time and those who dont have steady currencies. Not to get in a discussion of the depression, and all that did, neighbor policy going, and their currencies, and 30s overall is a miserable decade. You can cheat, get a leap forward, and back to where you were. It is a mistake anyway to think that the key function of money is to register something called inflation or deflation. To give signals of information. In europe, the euro is manipulated currency dominated by a socialist regime. Falsifies the information that guides entrepreneurial it is not because it will misjudge collective level of prices that are impossible to compute anyway. I you have to look at the price of oil, nominal price of oil in a 70s when we went off the rails from 3 to 40 a barrel and the price is going up. And Huge Investment in the energy industry. And oil crashes down to 10 a barrel, texas and the agricultural economy goes into it depression. Unstable money is like a virus in a computer, it corrupts the information, georges point. I usually eat lunch, my stomach feels like im living on the 75 minute hour referenced earlier. Something steve started out with, reject this idea that we have to get use to a reduced level of growth or reduced level of prosperity. The fact that we are living through this difficult time really is a result of serious policy errors that are all related to reduced level of freedom. Obviously something we believe very strongly here at cato. I want to especially thank those in the audience responsible at cato, your generosity makes our work possible, and i think three presenters today all of whom have books available for purchase. I encourage you to do so. Thank you so much for being here. [inaudible conversations] you are watching booktv on cspan2 with top nonfiction books and others every weekend. Booktv, television for serious readers. This weekend on booktv, we are live tomorrow with author and publisher steve forbes. Mister forbes will talk about his books and answer your questions. On afterwards, Senate Majority leader Mitch Mcconnell discusses his life in politics. 60 minutes correspondent leslie stall looks at the changing role of grandparents. Also this weekend, late author and journalist Hunter Thompson remembers his father. Former state Department Official on your email you will report on the growing influence of china and india. Booktv visits las vegas to talk with local authors and tour the citys literary sites. That is a view of the authors on booktv this weekend. Booktv, 48 hours of nonfiction books and authors, television for serious readers. Republican president ial candidate donald trump talked about books he is reading this summer. And klein, former editor of New York Times magazine taking a look at democratic