>> steve forbes and elizabeth ames trace our current economic troubles to the end of the gold standard in the 1970s and discuss what a weak u.s. dollar means for the global economy. they called for a return to the gold standard to help stabilize the economy coming up next on the booktv. >> we are very privileged to have with us this evening a very recognizable figure in the media and business world. steve forbes is of course editor-in-chief of forbes magazine, the nation's leading business magazine, and he is headed a media company that includes not only asian and european editions, but a number of web properties focus on politics, sports and financial markets. many of you will also remember steve's spirited campaign for the republican presidential nomination in 1996, and 2000, during which he promoted the idea of among other things a flat tax. along with the new social security system, medical savings accounts, term limits and a strong national defense. this evening steve comes to us as an author, which also is not a new role for him. is written or cowritten five previous books are kissed sixth and latest one, "money: how the destruction of the dollar threatens the global economy - and what we can do about it" him is every bit as emphatic, reasoned and clearly written as the earlier works. anyone familiar with this free market libertarian views will not be surprised to read his criticisms of central banks and existing monetary policies. with the fed that whiny doubt it's quantitative easing, steve sees an especially opportune moment everything our monetary system and ensure a more sound and stable currency by returning to the gold standard. he writes in the book, quote, creating a dollars from gold was supposed to make the united states stronger. instead, it is made the country weaker. something has to be done. ladies and gentlemen, here to explain what needs to be done, alonalong with steve's co-autho, elizabeth ames who is a communications executive, is steve forbes. [applause] >> thank you very much, brad, i thank all of you for coming out. as brad indicated, the book is about money, monetary policy. and money, particularly monetary policy, is one of those topics that seems to intimidate a lot of people for some strange reason, and as a result, the federal reserve, for example, it's less formal oversight from capitol hill, from congress, and do our intelligence agencies. and the thesis of this book is that, one, the topic of money is very straightforward and simple, even though it is shrouded in a lot of jargon, a lot of equations. the idea of money is very basic. we've gotten away from it. our policymakers do they know less about money and monetary policy than they did 100 years ago. since the early 1970s even though we have had booming decades in the '80s and '90s, overall our growth rate since we would of the bretton woods system, the old gold standard in 1971, the u.s. average growth rates are less than they were before 1971. if we had maintain the growth rates that we had for 180 years up to 1971, if we had maintain those growth rates after 1971, on average, the u.s. economy today would be 50% larger than it is now. 40 years compounding, in effect reverse compounding, adds up to a lot. saver for a moment having 50% higher incomes, what it would mean for the deficit from what it would mean for social security, what it would mean for a lot of the social divisions today. this thing over time adds up. it's a critical reason why, take two incomes and, to do what one income could do in previous generations. obviously, taxes are a large part of it, but the defacement of the dollar since the early '70s is a critical part of it as well. when this thing happened, when you don't have a stable currency, you end up with people not getting ahead the way they should. median incomes not going the way they should. and leading as my co-author elizabeth will discuss in a few minutes, a friend of the social fabric, reduction of social trust and more divisions. it's a process that not one in a million will be able to diagnose. and so that's why we wrote the book. now, since monetary policy doesn't usually get the hard beating a flutter the way some of the reality shows do, i'll il begin by just giving you an advanced reward, and that is to give you a travel tip. if you ever find yourself in an airplane in coach, middle seat, on the runway watching your life pass away, and you want a little bit of elbow room to your seatmates, start talking about monetary policy. they will cut you a wide berth. so as a result of the chaos that we've had, slow-moving for most of the time since the 1970s, the federal reserve has gotten up in terms of more and more power, but the thing is the more power it gets, the worse we are. take quantitative easing, which i will discuss in a moment, even though they are now taping thing, which is a good thing, it ended up contracting the economy rather than stimulating the economy. in terms of money the thing to understand about money is that it's very basic. it makes transactions, buying and selling, which is how we prove our standard of living, which is how we exist, makes buying and selling much easier. in the old days we have barber, which was very inefficient. so let's i sold an ad in forbes 3000 years ago. how would i get paid? perhaps with a herd of goats. i'm being a little facetious here but let's say i wanted to buy ipads for our writers. let's i went to the apple store 3000 years ago, my herd of goats, the apple store owners as i don't want goats. i want sheep. to forget how to swap the goats or sheep. maybe have to hire a sheepherder because the sheepherder, you know, you want the wolves to eat the she. a sheepherder wants to be paid in wind. i have red wine and he wants a white one. he becomes very efficient to imagine if we still have barber today. imagine trying to deposit a cow in an atm, just becomes very inefficient. so in essence what money does, most of the time does not have insurance about you unless you have old gold coins and the like. money makes transactions easier. in that sense money measures valley. that's all it does. measures value, the way clocks measure time, scales measure weight, rulers measure length. money measures value. so because it represents value, makes transactions easier, and in that sense it's a form of communications that lets you know information to do all the billions of transactions we do around the world each and every day. so money in and of itself is not wealth, but represents a claim on products and services. think of it as you would a coat check. a coat check has no engine technology. but in a restaurant if you get your coat in the closet, you get a coat check. it represents a claim on the coat. so the idea that creating money, money represents products and services that have already been produced. so it would be, so the idea if we stimulate the economy by printing of money it would be a like a restaurant saying if we great marcoux checks, that will stimulate the production of more coats. no, it does not. it's a claim. it represents a claim on a product or service, money does. so money works best when it has a fixed value. so just like a clock as 60 minutes in an hour, imagine what the world would be like, your daily life would be like if the federal reserve is a clock, to 2:00 what it does to the dollar. imagine floating a clock. you have 60 minutes in our one day. 48 minutes the next, 22 minutes the next, a dmx. you would have to edges and derivatives and futures to figure out in the hours are working today. let's say you're baking a cake. it says bake the batter 40 minutes to get to figure out is that inflation-adjusted minutes, real minutes? it makes life much were difficult. imagine what would happen if they changed the number of inches in a foot. you're building a bridge and suddenly you learn instead of 12 inches, a foot is now 10 inches. imagine building a house. it makes things much more chaotic. money works best and it has a fixed value and then the question becomes what's the best way to do it. even though it's absurdly out of fashion still in the economics profession, the way it worked in this country for first 180 years of existence is you fix it to gold. why gold? because more than anything else in the world gold keeps its intrinsic value. has for 4000 years. you can't destroy it. every ounce that has been mined is still in the world today. it's been point out that perhaps the gold ring you're wearing, certain rings going back to egyptian pharaohs. you can't destroy. it's hard to make but not too hard. so you don't get too much of it at a time. because you can't destroy it, you find a big gold mine, you don't get a glut of gold, including the california gold rush which was one of the biggest minds ever. only increase the annual supply but three of 4% and then tapered by county the average of one and a half or 2%. you don't get droughts the things i fit. you don't have to worry about storage, about my speed in the gold so whether you freeze it or keep it or vetoed that, you can't destroy it. it's got unique properties. it's withstood the test of time for 4000 years. people think if you mention gold, does that mean we have to gold coins and 100% backing in all of that? think of gold as you would the ruler. it's a fixed measure of value. so let's say we fix the dollar to gold at $1200 an ounce. all that would mean isn't the went about 1200 in the marketplace, $1200 an ounce, that means the fed is creating too much money so it creates less money. if it goes below 1200 innings you've got to greet a little more money. it lets the market place determine the needs of what's needed in terms of money. if you have a vibrant economy you're going to create more money. you don't have to ow on an ouncf gold to do. the british ran it. across the gold standard with very, very little amount of gold but they knew what they were doing. they respond to signals in the marketplace and to work right up until world war i which blasted that and a lot of other things. so gold in the sense is like the ruler. the fact that a mile has 5280 feet does not restrict the number of miles of highway bill. to give you a factoid you can use at a cocktail party to show brilliant you are, from the time of our existence can go back to the revolution of war in 1775 when we were a small agricultural nation, up to 1900, our popular increased 25 fold. we went from a small agricultural nation to a vibrant intellectual nation. during that period of time in out of gold mined in the world went up three and have full. the money supply in the u.s. went up 164th even though the dollar was fixed to gold. so gold just make sure the value states expect it doesn't restrict the supply. if you have a vibrant economy, these are the needs of the marketplace. if you have a stagnant economy, you don't created. so it's very, very, very basic. so when people lose sight of that, you wind up having what we have had since 1971. we lurch from one crisis to another. a terrible decade in the '70s. we got it see me right in the '80s and '90s, and boy, we moved ahead. but in the last decade we went backwards. starting, if this is not a partisan thing, started under the bush administration, treasury department, federal reserve started to weaken the dollar. they thought that would stimulate exports. that's how we got the housing bubble. anytime you undermine the integrity of a dollar, the dollar, people go into hard assets. from the mid 1980s to the early part of last decade the average price of a pair of what was a little over $21 a barrel. what is it today, 80, 9100? may not get up to 110. back in the '70s, none of you are old enough to remember the '70s, it's called pandering -- [laughter] tried it in politics, didn't work which is why i'm peddling books now. [laughter] but back in the 1970s, oil went from $3 a barrel, the last time we were off the rails, to almost $40. everyone thought we were running out of oil and going to go to $100 to then reagan came in with paul volcker. they kille killed the terrible inflation of the '70s. oil went crashing down to $10 a barrel an average 20-$25 per barrel. it's like putting a virus in the computer. you don't trust about of money. what it means is you get less investment, investment is less productive if you buy existing things rather than things in the future. investing is risky enough but if he don't know what it is you get a 100 cents a dollar for a fact it may not pay off for five years, seven years, whether you get back 80 cents, 20 cents combat at the more uncertainty which is why we have been stagnant, dead in the water by our historic standards. so that's why we wrote the book "money." educate about money. money represents value. and gold is the best way to fix that valley. if we understand that then we can move ahead and get back to the kind of growth rates we had before 1971. obviously, there a lot of other things we have to do, but experience shows us if you don't get the money right in terms of a fixed about you, you can get other things right, get taxes by, spending right, the regulations right there if you don't have the money right it's going to undermine everything else because the basis of transactions the basis of trust, basis of investment. and because when it works, we don't realize what makes it work. it's like air. when it's clean we take it for granted. when we have pollution, oh, my goodness, it is important, yes. so money is in the same way. the one aspect of money that gets overlooked because we always focus would think of money on economics and gdp and the like is social trust. we have a chapter which elizabeth will discuss in a few moments, a chapter talking about how be facing money defaces society, undermines the fabric, social fabric and in ways ago but simply gdp not an exchange neighbors. i will call up elizabeth but one thing to keep in mind is when money is stable and valley, brainpower goes for a productive use. one example before 1971 when currency didn't much fluctuate because we were fixed to gold, very low currency trading. now currency trading is a huge activity all around the world. daily volume over $3 trillion. tens of thousands of the best brains in the world focus on activity that would not exist if a stable money, brainpower that could be used for medical research, other things, productive things. so this thing has consequences that go beyond merely gdp and judy, and whatever other acronyms they throw out. with that let me say thank you and turn over to my colleague, elizabeth. thank you. [applause] >> good eating. it's good to be here. and i like to talk a little bit about that chapter, chapter five, which is money and marelli, how debasing money debases aside and people have found this chapter particularly thought-provoking, money. it starts out with a quote to see mentioned, a famous go from economist john maynard keynes and i will read it in its entirety. lenin was certainly right, there is no subtler, no surer means of overturning the existing basis of society and to debauch the currency. the process engages all the hidden forces of economic law on the side of destruction, and it does it in a manner which not one man in a million is able to diagnose. and we say in the book that unstable mine is a little bit like carbon monoxide. it's odorless and powerless. and you don't know the damage it's doing until it's very nearly too late. that's because people do not always aware when government weakens the courage and the only see the effects of it which is one reason why debasing money is so corrosive. people say money is about greed but, in fact, it's about trust. money permits strangers from all nations and societies at all walks of life to come together and conduct transactions based on a commonly agreed upon measure of value. money in this way promotes cooperation between people. it serves as an estimate of communicate should as well. it tells us what a society values. not just materially but what its priorities are. so we money is corrupted its ability to act as a facilitator of trust and cooperation is corrupted as well. unstable debasement undermines the vital relationship between buyer and seller, between lender and better. the philosopher john locke described this fisher that is produced at society score. and he wrote, you also buyer this as well, whether the creditor is forced to receive less or the debtor be forced to pay more than his contract, the damage and injury is the same whenever a man is defrauded of his do. and during periods of unstable money you often see a particular scenario unfold. involved scapegoating, social unrest and often increasingly coercive government. in the worst cases they can unleash the force of political extremism that can lead to the rise of dictators. recently and investment strategist wrote a particularly good piece describing this classic scenario that's occurred throughout history, and he points out that monetary debasement has coincided not only with the persecution of the jews in pre-world war ii germany, but also with the french revolution's reign of terror, the salem witch trials and other bloody episodes through the centuries. but this kind of destruction of trust and unrest is not just a remote historical occurrence. it's taking place in many areas of the world today such as the middle east, europe. into a certain extent the u.s. analytics, a south african investment advisor house has issued reports called riot alert which predict the world's most likely trouble spots. the firm has been able to forecast unrest based on nations rates of monetary abuse, and syria which has suffered only 200% hyperinflation tops the list in february 2013 followed by argentina, south africa, egypt and india and turkey, all of which have been insulators. of course the our political causes for the sinners and it takes different forms in different countries but unstable money has been a catalyst. the rise again in the arab spring you may remember started over, you become increasing food prices. a financial crisis was very much a betrayal of trust which money helped create a housing bubble and then the fed pulled the rug out from underneath borrowers and this led to ultimately to the collapse of some financial -- excuse me, a wave of foreclosures which led to the collapse of major financial institutions and triggered the stock market meltdown of 2008. that set off a worldwide destruction of trust that ricocheted from one continent to the next. in europe bank account and bailout shook the confidence of global investors helping bring on the sovereign debt crisis over there. we all remember those days, and i'll read a quote from an economist for deutsche bank told "the new york times," in this day and age a bank run spread around the world not around the block. once a bank wins anyway doesn't matter anymore if you have good loans are bad loans, table is confidence in you. so that chilly obviously shows this is what about trust. this worldwide loss of trust very quickly turned to rage, riots and protests. we say in the book it went from balance sheets to the streets. in 2012 there was a poll by the pew research center that we cite in the book that said americans have been more polarized now than at any other time during the past 20 years, and what they basically said most of the increased polarization has taken place not just in the last few years, but during the presidencies of both george bush and barack obama, and both administrations were weak dollar administrations. it was definitely, this polarization coincided with the weakening of money. basically we money is weak and there's a sense of increasing unfairness, that the system is rigged, that you're being defrauded. people on fixed income, on salaries see the money losing value of the people are reaping what look like artificially and unfair windfall gains. the link between effort and reward a separate. that's why economies of unstable currencies you get more corruption and triggered a number of studies have found that inflation has a stronger connection, actually a stronger connection to crime than joblessness. crime rates in fact in the u.s. dropped immediately after the financial crisis when there was a serious deflation but they began to move up in 2010 during quantitative easing which sort of an interesting thing that we say in the book. these are just a few highlights from the chapter. both left and right agree today that this is a period of malaise, but we hope this book helps people put aside some of the finger-pointing that's been taking place in recent years and help them recognize the role of the unstable dollar as a catalyst and culprit. thank you. [applause] >> so, we now, and a. as brad said, if you'd come up to the microphone if you have a question. feel free to ask away. i guess, other than, rather than try to just trying to debate you on any of the ideas here of the concept of stable money and so forth, i guess i would just ask of this. why is it so many countries, including the united states, have dropped the gold standard? why is this sort of theory so unpopular? why is it -- you mentioned the fact, or you gave the quote from keynes said one in a million will correctly diagnose the problem. so that's kind of a hint that there's some basic fundamental reason why it's hard for people to understand this, and for other economist or whatever to accept the theory. why do you believe that there are so relatively few economists that accept your proposal? >> the reason that the gold standard lost the dominance that ahead in terms of intellectual circles was a result of two catastrophes. one was the first world war, which began 100 years ago this year, destroy the classical gold standard. and after that war, because the standard worked so well, they didn't really realize what made it work. and so britain did not do it right trying, been trying to go back to it. that led to, for example, after the war they tried to ignore the inflation that the first world war created and try to re- peg goal to its prewar price. which is ridiculous if you doubled or tripled your money supply, recognized that at one time catastrophe. into a we evaluation. they didn't do it so that harmed the economy that way. keynes came along, and others, who said classical economics, it sounds arcane but it's a secret classical economists said the real economy is the production of products and services. the money economy is the symbol economy, symbol of products and services. keynes reversed that and said money is the real driver of the economy and it is the production of products and services that respond to the moon. so we reverse it, put the cart before the horse. so they got up with the idea that if you print of money that can stimulate the economy. it will certainly stimulate activity but all it does is go into activities that normally would not happen, like the oil boom we've had in the last 10 years. the oil from the had in the '70s. a housing bubble that we had. we had a housing surge in the '70s. that the catastrophism because the government wasn't quite as involved in it. but it's like putting the virus in the computer. you get activity but it's false activity. in the 1980s you had energy go through a depression, agriculture went through depression, commercial real estate went through a huge hit. we grew in the '80s but a lot of activities that thrive under false in funny money had to be liquidated in the '80s. you saw it in housing today. and who knows if we get stable money what other things, false investments we've had out there. so world war i and in the great depression. nobody knew what the depression came. it was something like a bolt out of the blue, and they were desperate for solutions. we explain in the book the depression was triggered by a hideous trade war that we triggered with smoot-hawley tariff. we blew up the global trading system. everyone retaliate. then every country made worse by massively raising taxes. for example, in the depression, as the depression was ongoing in the u.s. we raised the top income tax rate overnight, but it, from 25% to 63%. excise tax of us are of the sales tax were enacted on numerous items. and including a stamp tax on checks. it's, in the '30s you wrote a check to pay a bill, you had to pay tax to the government for using a check. so these massive tax increases in the u.s., britain, germany went berserk on new taxes so they deepened the downturn. so then they said, gosh, let's try funny money. so the brits started it by devaluing the pound. numerous other countries. and so one bad thing was done after the other. despite that experience we still got a gold standard after the war. the bretton woods system died in 19 -- designed in 1944, worked perfectly well but by then the idea of using monetary policy to guide a and economy, using the government to guide the economy was so prevalent that they did know how to preserve the system, which is why we blew it up in 1971 gratuitous late. and we have been floundering ever since but as i mentioned the '80s and '90s, gulf average roughly $350 an ounce. it was, had some fluctuation but give it a c+ for monetary policy. so we got growth from it but it was still not what we could've done. in the early part of last decade we went off the rails again and we still haven't dug ourselves out of that one. so two catastrophes, world war i, great depression. but now is beginning to reverse, still below the radar screen but a growing number of thinkers are saying hey, maybe this funny money which was tried before adam smith came along, he demolished the idea of funny money, maybe smith had it right. made we should read salmon things again. so this is what the book is contributing to, getting back to basics on money, getting the conversation going, so we can get back on track again. so the federal reserve, if it's doing its job right, should be no more important than the bureau of weights and measures inside the commerce department. and by the way, if you ever run into a federal reserve official, ask them in terms of assuming powers by the fed, ask of them, they say they want to, 2.5% inflation because they believed creating extra money stimulates the economy, that translates a typical family an extra $1000 a year of expenses. ask them who gave you the authority to tax an american family an extra $1000 a year? light is paying that extra thousand dollars a year stimulate economic activity? i'm would love to their death but i've asked it but i haven't gotten an answer. >> it just seems that even though, i believe you're correct that something is wrong with the money. i don't think it's a broad enough discussion both to really cover what's happening to us economically. it's so much more sophisticated now than it was, that i believe your analysis has gone. a few things i would throw out you. valley of gold changes, it fluctuates a great deal. a lot of the valley of gold was artificially created by legislating it as the center of the valley of money. so it had the reverse effect. in other words, but i mean, there are times in our history when we have made enough money, we had to expand. door panics in the 1800s. but the point is, isn't there in your thinking some more broader concepts of distribution of wealth and income? i mean, it just seems to sense light in this complicated situation that we are in. >> the key thing is to recognize, by is a measure of value. just like clock is a measure of time. if you grasp that, you see that gold does not influence the money supply. it just make sure and when the dollar is created in the marketplace it has a fixed value. if you take your point on the fluctuating price of gold, that is less about the intrinsic value of gold and more about the markets valuing of the u.s. dollar. now in fears or hopes for the future. so when people thought the world was coming to an end in 2011, remember that crisis, default and everything else? gold shot up to 1900. the world did not come up to in the now it is about 12 or 1300. in 1980 it looked like the worms come to him end and a quickly shot up from 300, the 8-under $7 announced before going back down again after the election of reagan. that's more about the perceptions of the valle valleyf currency about the intrinsic value of gold. as legislating a value, the reason gold rose up was not bank is getting together and saying let's do this. it rose out of the marketplace. governments quickly went into the minting business, couldn't keep their hands off of it. but money was out of needs of the marketplace. people doing transactions with each other. so it was a spontaneous thing. what isaac newton did 300 years ago with britain and gold was to in effect codified what people thought needed to be done. the dutch had done a. holland, for example, in the 15, 1600, small country under constant attack on spain, lousy land. they are underwater literally. small population. but because of it's found money, led to the rise of sophisticated couple markets. they became the financial center of the world before london did, even though on paper this country had nothing. britain became the financial center when it fixed the gold, even though it was a second tier power before they did this. had a lot of things going for it but having stable money brought it all together. so the marketplace, as i said over 4000 years, this is the way to do it. as a result economies always get more complex as you get more and more growth. that's what adam smith talked about, the division of labor and jobs rise up. no one, if he's an absolute years ago, is that short for applications for college? what are you talking about? ipod, is not a remake of a movie about monsters, ipod people? things rise up that you can't even imagine. it's just a fixed measure of value. makes measuring transactions the way we improve our standard of living more and more trading, more and more specialization where we can focus on what we do best so we don't have to spend all our time growing food or hunting macedon or things to survive. we can focus on what we are best at, and that's what you get with fixed money. you can do those things more easily. >> given the dependency of the markets on monetary policy and their willingness to create money whenever they feel like it, what is the return to the gold standard look like for the markets and for the street? >> i think that if we decide to do it, and i think we will come i hope it's not a result of a crisis but a result of people saying we've been drifting on and off for 40 years, we're not doing what we did historically, let's start it. and by the way, there's a congressman, representative brady, kevin brady who has reposted commission, bipartisan, to examine monetary policy. i think that's a good start to get this going. buby going on a gold standard, l it would mean over time is you would have a much bigger economy. [inaudible] >> no, no. there's a lot of myths and we discuss them in the book. there's a lot of myths about gold that causes deflation and bad times for farmers and all this kind of thing. no. what it does is allow the humankind to surge forward, and it changed you get in the economy, it was not gold that led to the hard-pressed agriculture. the fact we learn to grow more food and we're still learning to grow more food. just take a corn for example. popped in my mind, corn. right now, you know, in the '30s a typical laker of corn produced 27 bushels. today it's 150. we wrote about a fellow in iowa who is now about to invent breakthroughs in corn better going to lead to 300 or 400 bushels per acre. so agriculture today, 2% of our economy. 100 go into the 60, 70%. railroads for example. after world war ii railroads employed 1.2 million people. today they employ less than 200,000 carry about 10 times as much right. so economies are always adjusting. the key thing is you want to be adjusting upward rather than what we have now where it's stagnation and people wondering, am i going to get ahead? is my 50 year-old son ever going to leave the house? [laughter] >> thanks are coming out. i am probably part of the minority, but, unfortunately, i can't really afford gold at all right now. it's about $1600 for a coin. i always carry silver with me, an ounce of silver. it's kind of weird. but anyway this is a $1923, it's worth about $20 today. to more interesting things i've realized after learning over the past two or three years that gold, some analysts have issued by the same amount of gasoline today with this dollar as you could have before 1964. and i guess before 1964 all quarters, dimes, half dollars and dollars were made out of 90% silver. that was just like a mind blowing fact that although this is to 1 dollar, you go to a coin shop, it's worth $20 because it's made out of silver. use of this dollar for $20, you go out with your $20 bill and you can buy same amount of gasoline, 45 gallons to you could have 1964. so what the judge is the price of gas has stayed constant in relation to gold and silver, whereas the price today of gasoline rose not because the price of gas necessary, because your purchasing power of the dollar has gone down. the second most interesting mind blowing fact i've learned is that 10 times is exactly the same weight as this quarter. i'm sorry, 10 times is exactly same weight as this silver dollar and four quarter exactly the same weight as a silver dollar, and to have dollars is the same weight as this dollar. so before your times are smaller than your quarters for a reason. 2.5 dines is the same weight as a quarter. you talk a lot about gold i guess my question is would you see silver plane, coming into the picture of your ideal society? >> will come in terms of ideal society, society is never ideally human beings. but going back, in essence going forward doing in this is what we did for first 108 years of existence from george washington and alexander hamilton that ethics the door to gold but up until nixon blew up in 1971 with most economists and experts. your point on gasoline from just about 13 years, 12 years before went off the rails again big time. instead of smalltime. a gallon of gasoline was 1 dollar. imagine what life would be like today if you could pay a buck for a gallon of gas in the that was only 12 years ago. now what is it, three and have, for? to be a part of the country are in. in terms of silver, for centuries, gold and silver were roughly had the same relationship. 15 ounces of silver was usually worth one ounce of gold. 15, 16 ounces. what happened in 1870s, starting in 1870s was people started to use more and more paper money. coins, small coins were of convenience, starting with hamilton wanted people to get accustomed to a money economy. but with the rise of paper we did need coins as much. the demand for silver filled out by the mid-1890s was 30 to one. today it's about 6 61. so in that sense gold has held up better than silver. but your point that the money had a constant value and certain things like oil or your gallon of gasoline have remained constant. you make a very, very, very fundamental point. a lot of what we see and think of as rising costs, like energy, is really the devaluation of the dollar and fears of future devaluation of the dollar. a very good point. by the way, with a silver dollar you have, he just lived on the table you had a nice loud sound. that's how we got the phrase sound money last -- [laughter] >> thank you very much. >> thank you. >> what are your thoughts on the concentration in the banking industry, consolidation and concentration of deposits? >> the question is what about the constant consolidation of the banking industry. it's one thing to get consolidation as a result of natural force of the marketplace. you get efficiencies and the like. quite another when it's a result of regulation and fiat. the first part of our history, we have a lot of extra banks because of regulation. not because of the nature, politicians would allow the banks to combine. windbag america, the original bank of america in the 1920s started, starting in california, when you took the bank across state lines using a bank holding company to get around restrictions that if a bank in wednesday you're not allowed to own a bank and another, and so he had a bank holding company, congress passed an act to stop him from doing it. once upon a time when too many. today dodd-frank had the implicit purpose of driving small banks out of business. the reason they're doing it, you talk to a small blanket and a will to you it's not the economy that's killing them. it's regulation that's killing them. the reason they're trying to do that is it's easy for government to control that a lot of small entities out of the that's why they make it impossible by the way for single practitioners and health care. you spend 90% of time filling out forms instead of practicing medicine to they don't like you having so many doctors out there. they want you to be part of the collective in the hospital or big company. user to control the easier to regulate. that consolidation is as much artificial more than it is the nature of changing marketplace. the other danger of the feds grasping for power, they're now putting their in the insurance industry. after the elections they will go after mutual funds and money funds, equity funds, hedge funds, anything that moves they're going after to reduce risk. what it means is when you reduce risk the way they want to do this you will get no innovation. they never would've allowed 40 years ago the rise of money funds in those days the regulated what banks could pay for interest. in those days, money funds blew that up. so it's a bad thing and it's coming about by fiat rather than by nature. that's a bad thing because one of the virtues we have in this country is our vibrant and innovative capital market. they went off the rails in the last few years because the fed went off the rails. but over history we've always developed numerous ways for people to get capital. by contrast in europe, it's all banks oriented which is why they get very few new big companies because they don't have a system that nurtures companies from being babies to adolescence, so they become big and go public. they don't have it. one statistic, what they call commercial and industrial loans in this country, bank lending commercial and social, about 1.5 trillion. in europe equal the number when you take your together, about the same population, a little bigger when you add up all the economies, about 4.8 trillion. they are way over dependent on banks which is a very fragile, suffocating and dangers system. so you bring up a good point. we don't want to go that way. >> thank you very much. i want to go to the core of your argument and ask you whether, in fact, you're not forgetting the way people really are. forgive me for simple find but -- >> we can cure that. >> may be, yes. hopefully. you are developing to some extent moral our unit that inflation is bad and, of course, everybody has heard about the development in germany in the 1930s, the way inflation has indeed destroyed the fabric of society. but things don't always work that way. people dream, people do foolish things. having go through the history of sovereign countries you'll see, i mean, a lot of dreams. i mean, constantly look at the economic history. devaluation. it's the way to bring things in order, bring them back without -- so to some extent i mean, one could strongly develop the argument that inside, it's a contrary to what you are saying. [inaudible] you have an adjustment at some point in time. >> gold standard is not going to change human nature. that's not going to change, period. utopian societies only try to change human nature by ending up crushing people, killing them. so it doesn't change human nature so you're always going to get like in the early part of the last century, everyone realized automobiles were a big thing. we had about the christian of two to 3000 auto manufacturers to how many of them survived quick you can count them on your fingers. some of you are old enough to remember you may remember the early '80s when we had the first pc boom. you got a shake out there, apple. apple survive but atari, commodore, texas estimates were in the business and by the wayside. that is normal. the market always, that's how you move it. you don't know it's going to work into to try it. 15 years ago, no one would have pashtun google was once i think a number. these two kids challenge microsoft in search and beat them at it. that they are the big, bad guys, google. so this is constant. all told does, the standard does is make sure that money has a stable valley. it does not prevent people from getting giddy. it does not prevent people from getting depressed. it just make sure that when you'd do a transaction, the money is fixed in value. just like when you order a gallon of gasoline you assume it's a gallon, it's not two-thirds of the talent or 1.3 gals. you know what you're getting. in terms of the rest of human nature, but what it does do because it has a stable valley is you do get more risk-taking. you to get more people investing in the future. most don't make it but that's a you find a what works and doesn't work is that constant experimentation in the marketplace and even fairly. remember henry ford have to painful bankruptcies and almost a third before he figured out how to make a car that could sell. trial and error. that's what you want. if you don't have that stable money, things stay the same. >> every weekend tv offers programming focused on nonfiction authors and books. keep watching for more here on c-span2. and watch any of our past programs online at booktv.org. >> welcome to booktv's live coverage of 2014 national book festival. started by first lady laura bush in 2001. we've got a full they of autho authors. you can find the full schedule at booktv.org, and we will be sending out schedule updates all day long on twitter, twitter.com/booktv as well as posting on a facebook page, facebook.com/booktv. joining us here on our staff outside the history and biography room at the conventions it is jennifer gavin who is the project manager for the national book festival, and the point of the library of congress. we are in a new location to why are we down on the mall? >> well, peter, the national park service which is the steward of the national mall is working on the grass down there because that's something they've been asked to make nice and they have indeed done a very nice job with the portion they have completed. the part left we camped out on in the past is under construction this year. we looked at tried to go on to the new grass, kind of late in the year, and the cost of the elites in immediate estimates we had seemed prohibitive. we had to make some decisions around january of the weather we would be having vicious book festival and we decided to move indoors and se so kind of fun we could have with that. >> tell us. we are here at the washington to consider downtown washington in case you're in the area and want to stop by. but how many authors will be your? how many people do expect? do you expect? >> one hundred authors. we are expecting a decent crowd considering it's labor day weekend. we're in a new location and a new day. so tens of thousands of people as they always do. we have a great deal of new material to offer people because we have three new pavilions. science, picture books and culinary arts. will have live cooking demonstrations they with five different shifts. we're also going to

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