This is book tv on cspan2. Today we are live from the savannah book festival in georgia. Now in its tenth year, the the festival is host to several authors and event throughout downtown savannah and book tv is live all day inside one of the larger venues, Trinity United Methodist church. From now until about four pm eastern you will hear from several authors including former cia officer doherty, jerry willis, dan slater and more. You also have the chance to speak with several of the authors as well. We will kick off our coverage in savanna with john tammany. He is the author of a new book, who needs the fed, what taylor swift, uber and robots tell us about money, credit and why we should abolish american central bank. This is live coverage from the book festival in georgia, starting now. The morning book lovers. Hopefully everything is working. My name is linda and i am delighted to welcome you to the tenth annual book festival. We are blessed to host such celebrated authors in the Trinity United Methodist church today which has been made possible by the generosity of donors and our members. Also individual donors who have made and continue to make saturdays festival free. Before i get started there is the traditional caveat. Immediately following this presentation, john tamny will be signing copies of his book. His is slightly different today because he has a short interview with cspan immediately following. That gives you time to get to the tent. We have a new policy this year. If you are planning for the next author presentation to stay here, please move forward so the venue and these and the ushers can determine how many seats they have for people coming in. Please, please, take this moment to turn off your cell phone. We also ask that you not use flash photography. For the questionandanswer portion, we are passing the microphone, so there is no lining up in the center aisle or some of the things weve done in years past. There there are lots of people around with microphones. The authors happy to take questions. John tamny is with us courtesy of paul and barbara paul. He is senior fellow at reason foundation, a senior Economic Advisor in research and trading and an editor of real clear market. Com. He frequently writes about the Securities Market along with tax, trade and Monetary Policy issues that impact those markets for a variety of publications including the wall street journal, investors business daily, financial times, national review, and londons daily telegraph. Please give a warm savanna welcome to john tamny. [applause] linda, thank thank you very much for the gracious introduction, and thank you to all of you for being here today. It is passionate book people like you that make it possible for me to get to do what i love and so i cant stress my gratitude enough. I also want to thank the savannah book festival for including me. As i look out at the other authors and other books being featured this weekend, i cant believe i am in such good company. These are authors whom i have read for years. Im kind of clicking my heels appear that i get to be part of this. I want to thank the excellent festival, kim for all the work she did to make it possible for me to be here. I would like to add to that letty mcadams. Its not in a literal sense, but i believe she moved mountains to get me in the position to be here today. I am am forever in her debt and also to her husband haul who is in the audience today. They are quite simply would not be a book called who needs the fed if not for haul. What he knows about banking and credit could fill many, many thick books and, over the past 13 years, he has taught me on normas amounts. He has been so patient in discussions in person, by email, over the phone about these issues, and if i had not discussed all of this with haul, i learned so much from him, theyre never wouldve been a reason to write who needs the fed and the first the first place. So a big thanks to haul. Before i get into the book, i will talk a little bit about my background. I was actually born in charleston south carolina, not too far from here. My dad was in the nuclear navy. He served under the great admiral rickover. Once he got out of the navy we lived in dallas and atlanta and we moved to boston for two years so he could go to Business School and then we moved out to los angeles. I grew up in pasadena california it was probably during grade school that i discovered, not knowing at the time when i would eventually be doing in terms of writing about economics and economic policy, there were these little childrens books in grade school about president s called meet thomas jefferson, meet ben franklin, meet George Washington and i would read them over and over again. I would kind of be off to the side in class reading these books and i went to my parents one night and i said im worried that im in trouble at school, im not participating in the other things. My parents went to the teacher and the teacher said no, we are thrilled that hes interested in these books, please have him continue. So it was probably signaled to something ahead. For college i went to the university of texas and majored in political science, but not for any good reason. It was just that it seemed like the most interesting major at the time. I cant say i learned a whole lot one way or another, i think most kids in school, thats, thats generally what they do. Their focus is elsewhere. After college i worked in sales for four years and then went to Vanderbilt Graduate School of management to get my mba. While at vanderbilt, i decided decided to go the normal route, it was a blooming bull market in the late 90s so i decided i would get into equities just like everyone else and i took a job at Goldman Sachs. Thats where, what began, thats where my future career took shape. While other people were on the trading floor, passionate about equities, i would look around and watch cnbc on the different screens, and my focus was on the economist talking about the economy. That was what really had my interest. What intrigued me the most was there was this constant stream of commentary at the time in the late 90s saying if the economy grew too much, as people prosper too much and too many people were working and creating companies there was a negative downside, that it would cause inflation. I thought wait a second, i grew up in the 1970s, i know what inflation is. Its a devaluation of the dollar. Its when the treasury shrinks the value of the dollar and i thought inflation is something that occurs exclusive of Economic Growth. When economies are growing, investment surges and so the prices of everything drop. I would look throughout history, i remember the foes first mobile phone in the early 80s, motorola put it out. It was a brick and it had a half hour of battery and if you want to make a call from savannah to atlanta it would cost you a fortune and warming charges. Nowadays you can get them for a fraction of the price. Then i knew, from history that the first mainframe computer was created by ibm in the 1960s and cost over million dollars, even by the late 90s you could get a pretty good computer for a few thousand. Now we see we can get them for a few hundred dollars. I thought thats another example of the persistent drop in the price of everything, thanks to investment. Everything i looked rejected the common view of economics from economist that somehow broke that theres a problem that the fed and Central Banks had to plan to make sure we didnt prosper enough. I wasnt allowed to do this. Goldman sachs was full of immensely talented people and they were very specific that you did your job, that you didnt go outside what you were doing, but i secretly started writing for clients, commentary saying what you are hearing on cnbc, what you are reading the newspapers is belied by basic common history and common sense. I started thinking this is what i really want to do. Then by 2001, the stock market started to dive. What people referred to as the internet bubble, effectively pops. What i would say about that is i dont think there is such thing as a bubble. That runup in internet stocks was a beautiful thing, it was a sign of economic progress as was the decline of those internet companies. It is when economies, when theres lots of failure in the economy that you know an economy is progressing. You need that constant experimentation to get you to better place to people looked at that time. As a negative, but i looked at it as a time in which the world in the u. S. Economy were utterly transformed by advances that we could not live without today. The downside to this big drop in equity prices is particularly in the internet economy and suddenly Goldman Sachs wasnt as interested in my services as they had been a few years ago. [laughter] i will say that was rather devastating at the time. You start question yourself, you start question what kind of person you are, can i ever succeed again, am i doomed for failure, but in fact, it was the best thing that ever happened to me, because i had already caught the bug. I thought i want to be commenting on the economy. I will stress up front im not an economist and i wear that lack of phd with the pride. Im not a journalist either but i thought i have got to write about this. It would paint me to not be in the field of commentary in these subjects. So, the negative about Goldman Sachs ultimately forced me to figure out what i really wanted to do. I moved to washington d. C. Not as an economist or writer about economics but as a fundraiser for the cato institute. My plan was to pay the bills working during the day, meeting donors. That was how is going to pay the bills so i could write at night and on the weekends and thats how i met hall. I met people like all who utterly transformed how i viewed the world and made me even more determined to become an economic commentator and gradually i did. My initial online columns, that was the other beauty of the internet boom is that it made it possible for someone like me to have a voice where before i can have once i began as a writer for the washington d. C. No one wanted to have an association with someone like me but gradually i developed a reputation, and my reputation was one of basically working against, or contradicting the conventional wisdom about economics. I felt the economics profession has lost a way that it had become about charts and formulas and percentages rather than a beautiful story of human action. I thought people dont dislike economics, they just dislike how its been explained to them. My argument was if people can see the beautiful world around them they can understand sports and movies, television, famous people and businesses, they would understand all they would ever need to know about economics. That has been my style of writing for all this time. I first book, popular economics, which all which all of you should buy several copies of later today, was a book that explained Economic Growth through movies and sports and television. It got rid of all the graphs that had wrecked what is really informative and essential. Who needs the fed, which is the book im talking about today is another example. I explained central banking and credit and money through things that people can understand. That has been my goal throughout all of this that economics is fun, but people have taken the fun out of it. It led to the book, who needs the fed. What i want to stress up front is please dont be fooled by the title or cover. This is a very optimistic book. This is a book that argues that the fed was never nearly as powerful or influential as commonly assumed, and even better, that Market Forces are rapidly rendering the fed irrelevant right before our eyes. What cant be stressed enough about the fed is that it doesnt have any resources. He cant increase credit. It cannot shrink credit. The fed can only miss allocate the credit that we have already created in the real economy. The fed is large not because of the talented people there. It isnt active in the markets because the people there have a specific skill that the rest of the central bankers around the world dont have, lets remember there are Central Banks in nigeria, cayman islands, barbados, bahamas, Central Banks are everywhere. We have a large one simply because the American People are the most economically productive people on earth. The fed swagger is not its own. That is the broad point of my book, that when we talk about the fed, we are misunderstanding, it doesnt have the credit, it cant increase it. The fed can only miss allocate the resources we have already created in the argument i make in the book is that we vastly overstate just how much the fed miss allocates. It is just not that important. I am a big advocate in Market Forces and market signals. I think theyre full of information in the same way i think the electorate is full of information. There is lots of skepticism in the world about our central bank. I think there is some skepticism on a misperception and to based on a very real understanding that the world the fed lives in is not defined by reality. The misperception is rooted in the idea, popularized by economists, politicians and pundits that money and credit are one and the same. In fact, money and credit couldnt be more different. If they were the same, haiti and honduras would have every bit much credit flowing through their economy as we do in the united states. I would add that would mean counterfeiting would not only be legal but it would be broadly encouraged. In fact, credit is real economic resources. To paraphrase, when you borrowed dollars, you are not borrowing dollars, you are borrowing access to computers, trucks, tractors, desks, buildings, desks, buildings and most of all labor. We are the credit of the economy. We are the producers of the resources that when people seek to borrowed dollars, they are trying to attain. The fed has has no private stash of resources over here that it can release into the economy. We are the creators of it. The creation is somewhat separate. They read in newspaper, will the fed ease, will it tighten credit , they Say Something is wrong with this picture. That doesnt reflect the reality that we know. Apple computers most valuable company in the world, yet even it pays 3 to borrowers. Anyone who has ever started a business knows that to attain credit it cost more than 0 . Its higher and higher all the time. That is the broad point. While its easy access to credit , in the real economy we act as though the fed doesnt exist. That is a very positive statement about where we are. Thinking about hollywood, brian is the most talented movie producer in the history of the industry. We are talking about splash, parenthood, a beautiful mind, apollo 13. Apollo 13. We are talking about Television Shows like empire, 24 and arrested development. As he freely acknowledges, his attempts to attain credit to fund his movie and tv ideas fail 90 of time. For this person with a near perfect track record, hollywood, as he puts it, is the land of no. What about Silicon Valley. Its commonly assumed that if you have a startup idea in the valley that money sources will be the path to your door trying to invest with you. As evidenced by all the billionaire venture capitalist out in Silicon Valley, we know credit is incredibly expensive out there. You have to give up a big portion of your business to a venture capitalist and then you will give up even more of it in the form of Stock Options to lure potential employees. What about investment banking. One of the things that offends me most in modern times is how media members have made wall street a conjured of and it creates an inception that Investment Bankers are somehow bad people. I cant think of a more important profession than investment baking. One of the reasons they are paid so well has to do with the basic truth that in the real economy, the price of credit is very expensive. Its one thing to come up with an idea for a business or come up with an idea to expand your business. Its quite another thing to attain the resources, the credit necessary to build on your vision. Investment bankers are paid very well, properly so because they can do for businesses what businesses cant do for themselves. Many of you remember the name michael melton. The media, in a similar way demonized him. He spent time in prison for charges that had never been prosecuted on anyone before. I would argue that he is one of the greatest capitalists who ever lived, and his insight in the 1960s and 70s was that unless you are the glue to the bluechip businesses you were largely set shut out of the credit market. The banks did not regard you as a reasonable credit risk. His genius, the source of his fortune was the highyield bond. It was his way of finding more expensive credit to really promising businesses. Time warner, cnn, Golden NuggetGolden Nugget hotel, the list is long of the great businesses that he attained credit for, and the broad point is his fortune was a function of the fact that while the feds never decree and easy credit, he found it for very difficult credit sources. Unless you are bluechip its very hard to attain credit in the real economy. All of which brings us to our 45th president , donald trump. I like to sell books and so i like to have stories about people who are famous. I feel like that will drive more people to buy it, as as all of you should. Thinking about donald trump, and many stress this is not a political statement, many of you remember that he reached his height as a real estate mogul back in the 1980s. Thats when he was viewed as the developer who could do no wrong, the man who had the vision for what the future of Tall Buildings would be. Whats interesting about trump is as early as 1990 he was already viewed as a major credit risk by u. S. Banks. In 1990, i tell the story in the book, he flew out to los angeles to visit with security pacific bank, which at the time was the 50 largest u. S. Bank. He wanted to borrow 50 million in borrow 50 million in order to fund the revitalization of the ambassador hotel. As you can imagine, from modern times, trump arrived at the meeting for confidence and swagger about his amazing Balance Sheet of assets, full full of some of the best properties on earth that were easily highly liquid. He was the best lending option you have out there, you probably should give me 100 million million dollars. The bankers had an entirely different view of his assets. They didnt trust them. They looked at them as highly illiquid, that that if he iran into difficulty paying off his debt is would necessarily be easily sold. They refused his request for 50 million loan and they ultimately loaned him 10 million million dollars. They wanted to be associated with his celebrity and they ultimately live to regret that decision two years later they wrote down the loan in total. He didnt pay a dime back. Its been wellknown ever since the early 90s that u. S. Banks generally have not touched donald trump and he was viewed as toxic. He had a very bad credit reputation with u. S. Bank. Let me stress, thats not a political statement, statement, but it is a statement about credit. While the fed is once again over here decreeing zero rates of interest, in the real economy, Interest Rates flowed up and down as though the fed doesnt exist. Again, that was a hugely positive statement about the u. S. And Global Economy that i would add. If the fed were a fraction as powerful as commonly assumed, we wouldnt be the richest nation on earth. The fact that the fed is just not that consequential is a signal that we are an incredibly rich nation. It just doesnt influence the flow of credit nearly as much as people think. Only among academics and economists, untouched by reality and untouched by the real world is there such thing as easy credit. In the real economy, it is price set by Market Forces and that the very positive thing. The question in the book becomes, do we need Federal Reserve. Do we need a central bank . As you can probably guess, my take is that we dont need one. My argument is if the fed were shut down tomorrow, few would notice. The fed began 100 years ago in 1913 as a lender of last resort to solvent banks. If you were a very wellrun bank with Excellent Assets on your books and you iran into a nearterm cash crunch, the fed existed as a source of a loan just to tide you over until some of the cash came back in. As weve seen over the past 100 plus years, its unheard of for a solvent bank to go to the fed for a loan. Too do so is an omission of bankruptcy, and thats the case because there are a myriad myriad of non fed sources of credit always willing to lend to a wellrun bank. What this meant for the Banking System overall is that the fed has existed to weaken it. The fed has become a lender of last resort to insolvent banks that did not rate alone in the real economy. Imagine that in Silicon Valley, if there is always a Central Authority that can bail out your weakest companies. That means the globe. Com, Silicon Valley would be a very run down impoverished place. Its wealth is a function of the fact that its bad businesses regularly die. The fed has weakened the Banking System by virtue of it, propping up over the years the weakest at the expense of the most successful banks. The fed is also a Bank Regulator my argument, and this will offend a few, is that what a laughable presumption. If you are working at the fed, thats usually a signal you couldnt get a job at at a bank in the first place. [laughter] youre asking those of lesser talent to police those who have much more talent. I would add that with regulators and regulations, we are we are asking the impossible of them. We are asking something of them that even the smartest bankers in the world could not do. We are asking them to see into the future, to detect trouble spots within banks well before problems arise. If they could do that, they would be earning billions in the private sector. They would quite literally be the richest investors in the world. Even the smartest investors in the world fully admit that the majority of the time they are late to a problem. Its very inexpensive and achieves less than nothing. It just weakens the Banking System even more. The fed famously targets the rate at which banks lend to one another overnight. An Interest Rate is a price like any other. You dont need the Federal Reserve for that, banks banks could easily set that price and do on their own. The fed targets, it doesnt set anything. My argument is we should and what serves no useful purpose. If we ended the fed few would notice but i fully accept that my view is a bit on the outside. If you talk to most economists, they would say the economy quite simply couldnt function without a central bank. What are you talking about. We would be in a nonstop depression mode if not for the Federal Reserve. Dont you know . I. Out that John D Rockefeller became the richest man in the world before the fed. They constantly rejected the very idea that we dont need a central bank. The arguments are many. The school of economics makes the broad point about the fed that we needed to increase credit in the economy during recessionary periods to basically prop up an economy that is weakening or in freefall. This theory fails in two very important ways. One, it cant be forgotten that recessions are incredibly healthy. As agonizing as they are and dispiriting, as as much as they kill our morale, they are the bullish signal of the massive economic boom on the way. They signal an economy cleansing itself of all the misuses of labor, of all the bad habits and the bad things that were holding the economy down in the first place. Recessions take hold and that the exact time you want government to do less than nothing simply because recessions, if left alone signal the boom on the way. You dont want a central bank acting, trying to allocate credit. That means the private sector has less credit to allocate and it means Bad Companies are being propped up at the expense of what would be much greater future growth. Period simply as instantaneously misallocated resources that would otherwise be pushed to a higher use the usually misallocated to what already failed to the economys broad testament detriment. The school of economics is a different view. In fairness to a more limited view of what the Federal Reserve should do. They argue the fed should control the money supply, that should oversee a set increase in the supply of dollars in circulation on an annual basis. The late Milton Friedman, Nobel Laureate and freemarket here extraordinaire most associated with this view. My comment in the book is this is an example of Milton Friedman explicitly promoting central planning. The reason for that is basic. Money supply is never a problem where there is productivity. To paraphrase, no nation or individual need ever worry about having too little money. Where there is enormous amount of productivity money and credit are everywhere. Where there is very little productivity money and credit are always scarce. To get into specifics beverly hill never has a money supply problem. Greenwich, connecticut, never has a money supply problem. The fed couldnt keep money supply and credit off of the island of manhattan on his best day, there are too many productive people, they are a magnet for credit and the money used to obtain that credit. Lets imagine a city that is suffering economic problems, a poor city like baltimore maryland. Lets imagine the fed believes it can stimulate Economic Growth with its monetary policies, imagine the fed decides to stimulate baltimore and proceeds to buy up treasuries from baltimorebased to increase funds, such a scenario would fail between breakfast and lunch because banks cant stay in business lending to individuals, businesses who lack the means to borrow back so any increase in supply of dollar credit, would leave baltimore from those banks outside the city and probably outside the state of maryland itself. At modern times economists always look for new ways to aggrandize themselves and add to their importance, always looking for solutions, if left alone, will do fine so the latest in the past years economists talked about helicopter drops of money. They are not talking literally about the fed dropping helicopter money into cities but their idea is lets produce money and people will consume and it will lead to Economic Growth. The fed has an air force so imagine a drop of billions of dollars into the city of baltimore. Lets imagine something even more realistic, citizens of the city would pick these billions of dollars up and spend them right there so lets assume that. Such a scenario would fail is increasing money and supply in banks and it would simply because even if they spend every dollar in baltimore no business will expand based on a helicopter drop so they bank the windfall and the money will once again be rapidly lent out well outside baltimore. Economists say you are not an economist, Central Banks focus on countries. Lets focus on a country. Several years ago when greece ran into economic trouble, the answer is for the European Central bank to increase the supply of euros. Same scenario applies. Economic inactivity increase did not rate increased money and credit. Any increase in the supplies of euros would boomerang back to germany and other more economically predictable locales almost instantaneously. Lets reverse the scenario and think about Silicon Valley, a place known for enormous wealth and productivity. In this instance the fed believes up to the top that Economic Growth causes inflation. You heard me say that already but it is something i am passionate about, the very people charged with planning our economy which they cant do but people actually believe prosperity has a downside. The fed forever believed it must neuter Economic Growth essentially putting people out of work to slow down the Economic Growth that would otherwise cause inflation. The fed sees Silicon Valley, says we are going to start selling bonds to Silicon Valley bank to decrease the supply of money there. Such a scenario would fail between lunch and dinner, almost instantaneously, because we reside in a Global Economy. There are savers and investors around the world desperate for exposure to the most economically productive people on earth so the fed shrinks the supply of dollars in those banks that would be made up instantaneously by savers around the world. The broad point is that the fed quite simply cannot increase money and credit inflicting locales where there is not a lot of productivity and they are struggling economically as a result. Much the same in productive locales there is no need for the fed. Money and credit sources around the world are fighting to have exposure to them. The fed quite simply cannot do what its critics and its supporters say it can do which brings us my book is an explicit tribute to ludwig, the theory of money and credit. Despite that, in the book i am critical of what i term modern austrians who made the argument that the major us economic moves of the 20th century, 1920s, 1990s were a creation of an easy Central Bank Creating excess credit and putting the economy on a sugar high. They also argue chinas modern rise was a function of an easy central bank in china once again printing and creating easy credit. My point in the book is this is an example of the austrians embracing the keynesianism they despise, that they run away from. They correctly make the point when they talk to keynesians, another way to stimulate the economys for government to spend with abandon and austrians make the point governments can only spend and so far as they extract the resources from the private sector first, negatives are instantaneous when governments presume to spend because politicians, this is true of republicans or democrats, allocate resources in disciplined fashion, the spending is immediate in terms of negativity for growth. My response is how our Central Banks different, why is it governments cant allocate as politicians cant allocate resources, why do we believe Central Banks can. When Central Banks seek to influence credit markets and seek to direct credit in specific locales or countries they instantaneously injure the economy because resources are being allocated in noneconomic fashion. There is not even a nearterm move from Central Bank Point nations as a will, when they act, less resources for the private sector to locate. In terms of excess credit there is quite simply no such thing. Once again when you borrow money you are borrowing resources, trucks, tractors, computers, the fed cannot multiply them. Getting back to my examples from hollywood, Silicon Valley, investment banking, donald trump, what we find and this is a happy story is the fed is not that influential despite all the efforts to make credit easy, in a real economy the price of credit flows at rates that reflects reality. That is a positive statement, it is not that important, we give it so much attention, its influence over the economy is not that great. The response i get to all this is something about quantitative easing. What i usually get from people is interesting theory you have here, but what about quantitative easing, from 2008 until 2014, the fed oversaw a Major Program that not only stimulated the us economy but stimulated a major stock market boom. What is your answer . By answers you need to check your assumptions because what you believe is belied by basic common sense. About quantitative easing lets talk about what that is economically first. That was the fed borrowing 4 trillion in banks with long rates of interest downward and also buying up mortgages to stimulate the Housing Market so lets get one thing out of the way right here, quantitative easing had enough to do with Economic Growth, as a rule it weakened the economy and that is the case because governments once again cant spend us to prior prosperity, they can only miss allocate the wealth we already created. As for housing, it is not a driver of economic activity. When you buy out your purchase of the house does not make you more productive. It doesnt open up foreign markets. It doesnt lead to cancer cures that elongation life, doesnt lead to Software Innovations that make us more productive, doesnt expand time. Housing consumption that reduces the amount of capital available for entrepreneurs and businesses to expand. It was an economic depressants, not a driver of growth at which point, stimulated the stock market boom, you have to believe the deepest markets in the world, the us markets populated by the most specific investors, tripped by someone plainly inimical to Economic Growth. The very idea offends what we are all about. These guys could trick the slightest markets in the world . Lets be serious. I get all the responses. One of my favorite ones came from an economist in austin, texas, you are not an economist, you dont understand. The fed in conducting quantitative easing signaled to investors that if you buy equities we will protect, keep those markets propped up and that caused the stock market rally and he added i learned from a Nobel Laureate economist, great point, but if what you say is true can you explain to be japan because japans central bank is poised to know less then 11 qes since the 1990s with no corresponding stock market rally. Janet yellen and ben bernanke utterly confident the way central bankers dont have a clue. Response you get from that is you dont understand, what the fed did is push down the qe pushed down Interest Rates across the us such people got into equities, only place they could get reasonable yield. An interesting theory, i hope you will explain japan because it had lower Interest Rates across the yield curve for decades but the stock market is half of what it was in 1989 and also, why didnt stocks rally in 20002001 when the fed was aggressively pushing down rates yet went into freefall, did it not work . Was Alan Greenspan maybe not as skillful as ben bernanke . They dissemble and say you dont understand. What actually happened is the fed in conducting quantitative easing drove down yields on bonds so much that equities became the only game in town. People rotated out of low yielding bonds and again, very interesting fear he but if what you say is true there would have been a massive correction in bonds from 2008 to 2014 that would have reflected this rotation but it never occurred. The only major correction in bonds occurred after donald trump was elected. I dont see your argument. You are not getting it, the fed created 4 trillion that had to find its way to the stock market, had nowhere to go but the stock market. I say didnt create 4 trillion. If you want to believe that, that is fine but for 4 trillion to enter the stock market, by definition it must exit. In this netherworld inhabited by economists and academics there are only buyers. In the world for a buyer to express optimism the seller must express these week will amount of pessimism. For a qe excited optimist to express that deal in the stock market a qe skeptic must address equal amount investment. In markets there are populated buyers and sellers. For a boot to be optimistic a bear must express equal amount of pessimism. These things equal each other out at which point the basic truth about markets themselves. They quite simply do not price in the present. They always price in the future. The official program of quantitative easing ended in 2014 but telegraphed its end as early as 2011. If in fact qe had been the driver of the stock market rally logic dictates stocks corrected for good long before 2014 to reflect the end of the program and stocks continue to reach new highs. There is simply no evidence, despite what we are told, that the fed created a stock market rally but there are lots of people who believe that. Most economists tell you that. He doesnt know what he is talking about. Read morgan stanley, regularly puts opeds in the wall street journal saying we on wall street realize the stock market boom was a creation of the fed and you welcome that point of view, i agree i am on the outside of this making a different argument, but if you believe the fed despite all evidence and logic is the source of the major stock market rally for the last several years, what you must then acknowledge is in creating the stock market rally the fed robbed us of something greater and the reason for that is fairly basic. Recessions are once again healthy. They signal and economy cleansing itself of what it doesnt work, economies gain strength from their weakness in the same way stockmarkets gain strength from their weakness was when markets crack precious resources are redirected away from poorly run businesses to better run ones, so infant in fact that was the source of the rally it kept precious resources and lousy marginal companies at the expense of better ones thus robbing us of a much healthier and higher stock market. That is the purpose of my book, my book is to unmask the fed is not that important, not that consequential. I say end what is an offense to common sense because we dont need the fed. I have no illusions, the fed will never be entered, no politician, no congress will ever end the fed. That is the bad news. And prisons to increase the economy for the Banking System, the us Banking System represents 15 total credit, that number is in freefall because banks are being suffocated before our eyes, that number is going to drop with the decline of banks, so declines the feds power. Market forces end the fed for us, we dont need congress to do it. I believe it there. Thank you very much. [applause] we dont have a lot of time for questions. For that i apologize. Please join me again in thinking john. Upon exiting this venue our wonderful volunteers will enthusiastically accept your donation to the savanna book festival. It is because of your generosity that we keep it free. Thank you for coming. [applause] you are all convinced. [inaudible conversations] [inaudible conversations] took your questions away. [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] booktv on cspan2, live coverage of the 10th annual savanna book festival. A few minutes