Scott Horton Show - Just the Interviews - 12/3/21 Bob Murphy and Jon Schwarz on Whether Current Inflation Is a Good Thing

Episode Date: December 7, 2021

Jon Schwarz wrote an article for the Intercept last month that stirred up quite a buzz. In the piece, Schwarz makes the argument that, because it’s hurting creditors and shrinking the real value of debt, inflation should be viewed as good news for most people. Scott brought Schwarz on together with Austrian economist Bob Murphey to have a discussion about Schwarz’s argument and monetary policy more broadly.   Discussed on the show: “Inflation Is Good for You” (The Intercept) Understanding Money Mechanics by Bob Murphy Secrets of the Temple: How the Federal Reserve Runs the Country by William Greider Jon Schwarz is a writer for The Intercept, and has written for the New Yorker, the New York Times, The Atlantic, the Wall Street Journal, “Saturday Night Live,” and many others. Find him on his blog, A Tiny Revolution, or on Twitter @schwarz. Bob Murphy is an economist with the Institute for Energy Research, a research fellow with the Independent Institute, and a senior fellow at the Ludwig von Mises Institute. He is the author of The Politically Incorrect Guide to Capitalism and Choice: Cooperation, Enterprise, and Human Action. Find him on Twitter @BobMurphyEcon and listen to his podcast The Bob Murphy Show. This episode of the Scott Horton Show is sponsored by: The War State and Why The Vietnam War?, by Mike Swanson; Tom Woods’ Liberty Classroom; ExpandDesigns.com/Scott; EasyShip; Free Range Feeder; Thc Hemp Spot; Green Mill Supercritical; Bug-A-Salt; Lorenzotti Coffee and Listen and Think Audio. Shop Libertarian Institute merch or donate to the show through Patreon, PayPal or Bitcoin: 1DZBZNJrxUhQhEzgDh7k8JXHXRjYu5tZiG. Learn more about your ad choices. Visit megaphone.fm/adchoices

Hey guys, check it out December 8th in New York City. The Soho Forum is hosting a debate on the resolution. While vaccine mandates are an infringement on freedom, some are justified due to their big payoff in Livesaved. For the affirmative will be George Mason Law Professor Ila Soman, and for the negative, our friend Angela McArdle, chair of the Libertarian Party of Los Angeles County, and declared candidate for national chair of the Libertarian Party. The live debate will be at the Sheen Center, and of course, yes, they do have the vaccine restrictions at the Sheen Center, but they do not at Gene Epstein's apartment. They're going to have a live viewing party at Jean's House so people who oppose the mandates can watch the debate about the mandates. And so find out everything you need to know all about it at the Soho Forum.org. That's this December the 8th in New York.

All right, y'all, welcome to the Scott Horton show. I'm the director of the Libertarian Institute, editorial director of anti-war.com, author of the book, Fool's Aaron, Time to End the War in Afghanistan, and the brand new, enough already. Time to end the war on terrorism. And I've recorded more than 5,500 interviews since 2003, almost all on foreign policy, and all available for you at scott horton.4 you can sign up the podcast feed there and the full interview archive is also available at youtube.com slash scott horton show all right you guys introducing john schwartz and bob murphy now john schwartz you guys know he's an old friend of mine uh ever since the bush

years uh a lefty writes for the intercept and has a recent piece called inflation is good for you Bob Murphy, of course, is at the Mises Institute, is the author of the politically incorrect guide to the Great Depression and the New Deal and the politically incorrect guide to capitalism, both of which I love, but haven't read in a while. Anyway, so I love both of these guys. They're both really good guys and friends of mine. Obviously, Bob is, you know, an ANCAP. But before we get into the arguments, I wanted to give you a chance, John, to identify. where on the left-wing political spectrum you believe you land. So you're a moderate or a liberal or a progressive or a socialist or a communist or anarchosynicalist or something in there somewhere that I might have left out. Where do you put your thumbtack there? Yeah, you know, I don't know. The older I get, the more I have no idea what exactly I am. You know, I mean, I think all of us, all of us could agree on some pretty basic principles.

Like, it's bad for people in power to lie to us all the time. Sure. You know, I think that's a good place to start. That's a pretty radical point of view, but okay. Yeah. You know, once you start from that kind of foundation, it takes you to all kinds of weird places that generally are not spoken about in America today. So the answer, honestly, is I don't know.

I actually consider myself to be on a world spectrum, like, kind of concerned. You know, like I think that if you were to look at a world political spectrum is very, very different from the United States. And I would probably be on the, you know, I would be a sensible. I mean, I would have, I would have called you a progressive, right? You're to the left of the Democrats, but you're not a socialist who's for banning all private property and nationalizing all industry and agriculture and crazy things, right? Yeah, I would, I would consider myself a progressive, definitely to the left of most of the Democratic Party. But again, you know, the Democratic Party. party takes a lot of positions that I consider to be, you know, kind of, uh, uh, dishonest. They, they, they do not follow, follow, you know, under the principle of not line all the time. I'm just looking for, you're not a Hillary Clintonian and you're not a communist, but you're somewhere in there, in the middle of those at least. And yeah, just so people know what we're doing with here. All right.

Now, John, you go first. Inflation is good for you. You don't say. Yeah, that's right. I mean, as I learned after writing this article, this is an extremely unpopular perspective with a lot of people. But it is actually fairly conventional among some people who follow these issues closely. And so that headline is kind of trolly and trolley on purpose. You know, nobody likes paying higher prices for stuff.

I do not enjoy it myself. But the truth is that for a lot of people in America, a lot of regular working people who have been getting regular good raises, even at sort of the bottom of the wage spectrum over the past couple of years. If you have debt, if you have mortgage debt, if you have student loan debt, things that are not inflation adjusted, and you're getting raises, the value to you, of the debt that you're paying off is going down. And so it is good for people like that. And it is very, very bad for people at the top of the U.S. society, because they're the ones who, on net, own that debt, own the mortgage debt, own the credit card debt, own the student debt.

And they do not like it when the value of their debt goes down. And that's why it has always been a conservative obsession with sound money, meaning hard money, meaning money that does not decrease in value. And so there are always unusual cases. Like certainly there are people for regular working people for whom, Inflation can be bad. There are fewer of them than people think. People always bring up retirees living on a fixed income.

But most retirees get most of their income at this point from Social Security. And Social Security is not fixed income. It is inflation adjusted. And in fact, it's going to go up in January next month by 6%. So it's a complicated issue, but it is important to understand that it is good for lots of people and it is very, very bad for the people at the top. Okay. Now, before I let Bob go, I want to point out that, just for the audience's sake, that this isn't simply a matter of, I don't believe, left versus right, as in John is here on the side of the wage earners and Bob is here to stick up for the owners, although there may be some of that, but I think it's a bit more complicated. What do you say, Bob? sure then thanks scott for giving us this opportunity to hash this stuff out so let me i'll make a

few brief points to not have like a sort of opening statement here and just because i know you probably want to keep this more conversational scott but it's i guess the fundamental thing i want to point out is it seems like what john was doing his article and you know his remarks here was just analyzing it as if prices were rising for you know who knows why it doesn't matter we're not going to investigate the causes. And hey, if some prices rise rapidly, then what are the impacts on creditors versus debtors without, you know, pushing it deeper and asking, well, but why are the prices rising? And so in the context of, for example, the United States, the reason prices, whenever you see prices rising rapidly, or often when you see prices rising rapidly, for example,

it's because there's a war. And so if you, you know, looked at a chart of the price level during U.S. history, all of U.S. history, you would see the most rapid increases were always when there was a war, certainly when the U.S. was on a goal and or silver standard that they would go off that, and that's, you know, during wartime. And so that, you know, so that's one obvious way. And I'm bringing that up first, of course, for your audience, Scott, is to tell people, be careful when, you know, you start thinking that, oh, maybe all this panic mongering over inflation really is just the creditors trying to protect their assets or, you know, their fixed income payments because there is that element. And so ultimately in the U.S., what's happening is the government is creating more dollars. And that's why prices are going up. And generally speaking, periods when the government and the central bank working in tandem are creating a lot more dollars, that's not good for the little guy. And it's helping not necessarily all of the 1%, but some politically powerful people who are in the 1%. So I would say that. the other let me just make two other quick ones um the so it's true and john brought this up in his

intercept article that it's if you look at the wage distributions there's some statistics around showing that oh hey over the last year you know that's actually the bottom quartile i think is the way they broke it up had the highest gains and they almost kept pace with inflation all right so even on its own terms i think it was like wages at the bottom level went up 5.8 percent versus the official CPI 6.2. So they didn't even, you know, tread water there, but the point was they went up more than the other income levels. But I just want to point out that, what that's really measuring, my understanding is, is if you look at people who are still employed, then that's what happens. But there's a lot of people who lost their jobs or who just, you know, stopped going to work

because of safety concerns and so forth, health concerns with coronavirus. And so I, it's not that they're getting plugged in as a zero wages or salaries, and that's pulling down the average. I don't think they're just, they even make it into the number anymore. So just keep that in mind. It's, I don't think it's the case that if you looked at everybody who was in the bottom quartile like two years ago, let's say, and then look now at those same group of people that they, on average, are earning, you know, a decent amount more. I don't think that's true.

It's because, again, those statistics are just measuring who still has a job and what's their wage payment. And then the last thing I'll mention is, and John, you know, he did anticipate that. when he was saying certain types of debt are not adjustable, but other types of debt are. So, for example, if you've got credit cards bill or debt rolling over, when inflation goes up, then interest rates go up too, and then, you know, your debt gets rolling over at a higher rate. So with a lot of this stuff, it's not just a creditor versus debtor thing.

It has to do with whether it's anticipated. Because if it's anticipated inflation, well, then, you know, initially when you borrow the money, the creditors take that stuff into account. So it's true, you know, John's right that you narrowly just look at the issue of for debt that's fixed rate and to the extent that there's a surprise inflation that hits, then, yes, there is a transfer there. Oh, I'm sorry, let me just make one last one. One last point is the other thing to consider is what percentage of somebody's income is devoted to things like groceries and gasoline and such. And so, yes, it's true in terms of overall, you know, the value of your portfolio. it could be true for a lot of people that, you know, the, the people at the lower end of the

income scale don't have a lot of assets that might be carrying a lot of debt. And so therefore, they benefit from the wealth transfer to the extent of the value of the debt is eroded by inflation. But on the other hand, if milk goes up and gasoline goes up, that's not hurting the top 1% nearly as much as, you know, a working class household. Because, again, those necessities are a bigger portion of their budget. So let's start with that, John. What about that as inflation has a regressive tax where it's the cost of living is going up for people who almost their entire budget is just the cost of living rather than being able to invest or spend money on anything else. Yeah, I mean, I think that that's important to keep in mind. But again,

it is the case that, you know, over the past year, wage increases have kept almost completely with inflation. And the 6.2% is, you know, sort of the more volatile measure of inflation. The the regular, like, core measure of inflation is something like 4.2% over the last year. So, yeah, no, I mean, I think that that's a fair point, and it's important, you know, to keep in mind people who are the most vulnerable, for sure. But when you count up everything, particularly the COVID relief bills and the wage increases that people have gotten, almost everybody towards the bottom of the wage distribution is better off than they were, honestly, before COVID, like as rough as it's been, like just in financial terms, they are better off.

And so, as I say, worth keeping in mind, not the whole story. I also think, you know, it is a fair point to say that, like, while I think the official unemployment rate is now something like 4.2%, so very low, it is the case that some people have, some people have dropped out of the labor force that does have some effect on the wage measurement, but that number is really not very big. If you look at the like the prime prime age labor force participation, it was I think 83% just before the pandemic and it's now, you know, 81.6%. So it is almost back to where it was before the pandemic. So what about that, Bob, that, you know, actually unemployment isn't that bad and wages are

more or less keeping up with inflation maybe better than we would have expected so it's with the unemployment stuff so there's there's two different ways of looking at it so if you look at the unemployment rate it's true that that's you know not at a jaw-dropping height um however just looking at like total employment that it fell off a cliff going into COVID obviously and then it has not um at all recovered to its its former uh level and so it's so there are a lot fewer people employed now than there were before uh you know the pandemic hit um and so and there's a combination so you know why is there that mismatch because normally it's you know those things move in tandem that when the unemployment rates high there's fewer

people employed and you know vice versa um and it's so it has to do with things you know but a lot of people that they're they were getting paid high unemployment benefits and partly that was by design because the government didn't want people to feel, you know, a trade-off between, oh, gee, I want to stay home to keep my family safe and or if I get, you know, sick, I don't want to contribute to the spread, but I don't want to have to choose between that and feeding my family. So that's partly why they were increasing those benefits in it often, in many cases, paying more than people, you know, people got more to stay home than to go back to work. And again, that wasn't, you know, that was often admittedly by design. So that's part of what the mismatch is. So

Yes, it's the, from just looking at some of the statistics, you might get a bleaker picture of what's going on now than if you take into account all of these other factors. Again, though, I don't think it's correct to tell people at the lower end of the income scale, hey, don't worry because the government's sending all of you checks right now. And so as long as that keeps up, then the fact that things are a lot more expensive now than they were last year, that that's going to keep you whole. I don't think that's a very secure position to be in. And also, I think that goes hand in hand with some of the other elites and the 1% are trying to do is to move us towards a society where people are more dependent on checks from the government. And it's harder for people to support themselves in the new information economy. So it's true. Those checks help people in the short term.

But I think everybody would be a lot better off if they were earning everything for. from, you know, their own employment. Well, so what about that, John? I mean, that does make a big difference. As you're saying, people are more or less being kept whole for now by these checks, but that can't last, right? Yeah, well, so first of all, I would say I'm just looking here at the labor force participation rate for 25 to 54-year-olds.

So that's, you know, for people who don't spend their lives looking at statistics like this, weirdos, unlike the three of us, you know, the strange people who don't spend their lives looking at the Federal Reserve's website. It was 83% in January of 2020. And indeed, it did fall off a cliff. It went way, way down, as you'd expect, during the pandemic. And, you know, it's now 81.7%. So it has largely, not completely, but largely recovered. So down from 83% to, you know, 81.7%. So that's something. thing, but I don't think it has a huge impact on the statistics. You'd have to get a Federal Reserve specialist to explain to you in detail exactly what the effects are.

On the larger point about checks from the government and so forth, this is just a basic fundamental disagreement that is ideological and can't really be, you know, proven one way or the other. Like my perspective about the world is that there is no escape from dependency. We are all dependent as children. We're dependent when we get older on other people. We are dependent on the laws and regulations of society for our entire lives. And there's just no way to escape that.

And it doesn't bother me. I think that it is, you know, an instinct for independence, I think, is a good one. also one that taken to extremes is really kind of impossible. And so it doesn't bother me. It doesn't bother me for people to get checks from the government. I don't think that weakens are moral fiber. I think literally every single person, including people working for wages, are dependent on government and society in general. So as I say, it's just sort of an ideological perspective where it's certainly the case that I know that we all three would agree on that the richer you are, the more welfare you're on in this society, just as a matter of fact. And not in every single case, but

generally speaking. And also, I think that we're just going to agree to disagree about democracy and big welfare states on one hand versus libertarian individualism on the other. As you said, these are just different ways of looking at things. And it's somewhat beside the point here, although not exactly. I mean, people need to take into account the different arguments where y'all are coming from. But I'm just saying that's not one that we're trying to solve here today, whether to have a welfare state or not. But the question is, you know, about all this. inflation, and it is obviously part of the argument, but I got to put this to you, John, that, you know, in Austin right now, if you look at the giant housing bubble, which is going

to pop at some point, but part of it is caused by inflationary money and fractional banking. You know, you talk about rich people are mad that they're getting paid back in dimes for dollars they loan, but we're talking about banks that create money out of nothing when they make a housing loan, so they're not that sad. But anyway, and then you have people fleeing all the blue states to come to Texas to be relatively free and all these giant tech companies moving to Austin as well. So all these factors are playing together and the price of a house, a $300,000 house is now $500,000, $475,000 in the space of about a year, something like that. So that sounds to me like it benefits retired baby boomers and middle class people who already bought their

house 10 years ago or 20 years ago. But for somebody who's renting, their rent just went up 500 bucks, and they're in no position to buy a house until after the next economic calamity comes. And then hopefully the housing prices will go through such a disaster

that ruins all of these current homeowners that a poor schmuck like me might actually finally be able to get into one without having to move to Dallas. Yeah, you know, actually a big chunk of my family was in Texas.

and not just Texas, but Austin. And so I hear about this a lot. Yeah, I mean, like housing prices in cities are crazy. I don't think this has that much to do with, you know, the Federal Reserve and fractional banking, I think it has mostly to do with the way the economy works now, the way that zoning laws prevent people from, you know, building apartment buildings and stuff like that.

And I think that this is an area of American life where really we could use more free markets. You know, we could use the elimination of a ton of regulations about land use and stuff like that, where that really is a case where you see, you know, sort of the older, richer people using regulations to protect their wealth. You're not really just dismissing the role of cheap credit in people coming up and buying all these houses. And even Wall Street law firms, I mean, hedge funds coming in and buying up thousands of houses at a time and all this when interest rates are essentially nothing. All these Californians coming in, they're buying houses. They're essentially gentrifying the people of Austin out of Austin buying houses off the internet they'd never even seen before. Because if you're already rich enough and have the credit score, the interest rate is 2% or something. So that's got to be part of it.

Yeah, I mean, I, yeah, no, I agree. It is part of it, but I think a larger part of it is zoning laws and a larger part of it is, you know, why is this happening? Like, why is the U.S. economy working in the way that it is right now? Like, you know, I live in New York City and housing prices are berserk here as well. And so, I mean, and I think the answer is pretty clear, which is that we've set up an economy that works for big tech firms. It works for lots of huge corporations. And the basis for this, particularly for tech firms, but also for, like, big pharma, companies like that, is patent law and the way that everything protects their intellectual property. And you have, you have longer and longer patents and copyrights.

And so I think that that's, like, something that if people really wanted to deal with the core issues here, like we would weaken intellectual property laws. And that would be terrible for Hollywood. they would do everything possible to prevent that. It would be terrible for tech and pharma profits. But that would go a long way towards like sort of pooling off the crazy housing markets in the big cities in San Francisco and Los Angeles and Austin and New York. So I think these are deeper problems. And I agree, you know, the cheap credit is probably part of it.

No, wait a minute. Let me stop you for a second. I'm all for abolishing intellectual property stuff. and I'm pretty sure that Bob is one of those, too, on this question. We'll give them a chance in a second. But what exactly does that have to do with housing prices again? Well, it's just that's that we have created an economy where... Oh, I see. Because of... I got you. I got you. Go ahead. Go ahead.

Yeah, and that's, you know, I mean, that you see in all of the cities with the craziest housing prices. These are places that are dependent on these industries, on these industries that are in turn dependent on copyright. rights and patents and stuff like that. It's all intellectual property. It's incredible the degree to which, you know, sort of this new form of property, you could say, is the basis for the U.S. economy. Okay, but my question was sloppy, but the question was, isn't this all welfare for middle class and upper middle class people and not for poor and working class people, like in your argument here? I mean, if I get to refinance my house every couple of years and redo my granite countertops every couple of years, then Obama's right. I didn't build that. That's a

giant welfare check from the Federal Reserve, straight to middle class people. They don't call it an earned income tax credit. They get to pretend that somehow, you know, it's the free market at work. But as you said, nope, they're dependent on the central bank there. But then that means that a guy who's a mechanic can't buy a house. Yeah, well, I mean, sure, you can find individual cases of people who all their wealth is in their house. But usually the people who, you know, have big, fancy, expensive houses also have, you know, they're also creditors in addition to being debtors that are creditors in significant ways. And that's why they get so sad about inflation. Okay, Bob, jump in here and say some things. Okay, sure. So thanks, guys. Yeah, so I do agree with John

with a lot of those specific points. And I think, you know, you kind of anticipated that, Scott, that, you know, I follow the work of Stefan Kinsella, and I don't think that intellectual property is even a coherent concept. And yes, certainly, rich people have had influence in how regulations and the legal code works, and certainly, you know, the prosecution of white, so-called white-collar crime versus, you know, things that are more likely to be done by people who are politically powerless. And so given that we all, I think, you know, share a similar worldview on those matters, I'm saying the Federal Reserve is this engine that can literally create legal tender

money. You know, if your neighbor down the street had a laser printer cranking out $100 bills, that definitely helps him. And it helps his buddies and the people he spends his money on. It doesn't help poor people per se. That's crazy. And so why would you think that this same institution of the federal government that created all of this IP laws and all these other things that benefit rich cronies is they're going to use that engine of inflation in a way that's going to help the poor and hurt the upper 1% that you know just that's on the face of it's sort of implausible and you know so okay well what's wrong with the you know with the logic one thing by the way is i looked it up the total employment the latest numbers it's down like something like

4.1 million i think from the the pre-pandemic peak so So that's the number of people right now, you know, fewer total people working, you know, about four million or so now versus back then. And so I think, you know, Scott, you were raising the point. So it is true. And, you know, I don't want to minimize a point that, yes, on fixed rate assets, you know, things that pay off the dollar denominated and that don't adjust in the face of inflation, yes, that just by itself, unexpected inflation, you know, helps the debtors and hurts the creditors.

But, like, for example, the S&P 500, the latest number, it's up about 30% year over year. So that far more than compensated for the 6.2% rise in consumer prices. So, again, you know, it's the rich speculators are the people who are able when they see a change in monetary policy can go invest in soybean futures and do things with derivatives. They're the ones that can go make a boatload of money. it's the people who are earning a fixed salary who have to wait and go ask their boss for a raise after a while. They're always left behind when there's an unexpected rise in prices. So I think those are some things we need to keep in mind.

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support good anti-government stimulant suppliers go to lorenzotti dot coffee today on that last point i'm going to throw in there that i'll never forget green span i saw him do this two or three different times uh in his day back when i watched tv more um in his testimony he would say you know if there's any more upward pressure on wages that could cause inflation and that's our real worry and so the people on the lowest end of the economic ladder who are last in line to get a cost of living increase compared to the executives they work for, et cetera, they get the blame for causing inflation when they're the last person to catch up with the rise in the cost of living. And that always really bothered me, you know, and that, you know, is, I guess, usually the

ideological capitalist side with the owners, but not me, not necessarily anyone. way, you know? Well, that's, you know, it speaks well of anyone who pays attention to that kind of Greenspan testimony, because that's exactly right. Yeah, that is the role that the Fed has usually played, is they get concerned when unemployment gets too low. And so they hike interest rates to slow the economy and throw people out of work. And Greenspan definitely did say that. I think it's important to say that with all the terrible things that Greenspan did, like letting the housing bubble grow to the gigantic catastrophic level where it almost destroy the entire world economy.

Like after Greenspan did that, he said that in testimony for sure, he was unusual in letting unemployment fall far below where people used to say it would become inflationary. So his actual policy in that area was fairly good as much as... As if that's what caused the housing. bubble, right, is they inflated too long, and that was what led to the massive correction later. Yeah, I really don't think that that's true. That's another subject that we could argue about for a long time. Well, let's argue about that. I mean, in the George, in the W. Bush years,

they would say unemployment, I mean, pardon me, price inflation is low. And I would say, and look, I'm a real amateur here. I just listen to Bob and Ron Paul and people like that. But it seemed to me like, wow, if you measure the price of stocks, inflation is high. And if you measure the price of housing across the country, inflation is high. And if you measure the cost of fuel and therefore food on the grocery store shelves, inflation is high. But somehow they add all these other things into their market basket and say that, no, that doesn't count. But then, but that's kind of the point, right, is we didn't have widespread price inflation. The inflation went to certain sectors that created those giant

bubbles and then those massive corrections, right, or not, John? And then, well, I don't know. That's a whole bunch of stuff together. But I would say this about the housing bubble specifically, is that the Fed did not really need to change its monetary policy to destroy the housing bubble. Like, believe me, if Greenspan and all the other big honchos at the Fed had gone to Congress and gone on TV and said there's a huge housing bubble. Housing prices are way, way, way too high and it's going to collapse. It would have collapsed. You know, it would have deflated. It would never have gotten to the heights that it got. Like, just people really do pay attention to what the Fed says about

this kind of stuff. And they didn't need to change monetary policy to prevent it from inflating in the first place. So I don't, you know, I mean, there are tradeoffs in any policy, but I don't really think that allowing, you know, allowing unemployment to fall to the lows of the 1990s was, you know, sort of the cause of the housing bubble. Anyway, okay, but all right, I'm sorry, because that's my fault in, like, poor language because I was, I didn't mean to say letting the unemployment get that low was what caused it. I just meant the inflationary policy of that time that helped to get unemployment that low was the same. inflationary policy that led to the housing bubble, which is different and not the same thing at all. And I know Bob, I know this about Bob and you can address this, that I know that you don't think that if unemployment is low, that causes inflation and that causes bubbles and

that's the nature of the problem here. That's not the Messessian case at all, is it? Yeah, exactly right. So let me just point interested people to look up I have a new book that's just out from the Mesa's Institute called Understanding Money Mechanics and one or two of the chapters

gets into did the Fed cause the housing bubble and I give a bunch of evidence and some of the things we did in real time. So I've not been a fortune teller. I thought price inflation was going to be worse

after the Fed started doing QE so I did miss that one. But I would I was saying in, let's see, October of 2007, right, so that was 11 months before the financial crisis hit, I was warning at the mesas.org pages that it might be the worst recession in 25 years. Okay, so, and I was using what's called Austrian business cycle theory. And you're right, Scott, there. The idea is when the central bank and the current context, you know, pumps in money,

artificially lowers interest rates that gives the wrong signals to people, and it causes you know, mail investment. It causes people to invest in the wrong things in the wrong lines because interest rates are prices and they help coordinate economic activity. So when the Fed screws up those prices by pumping in money that's in a sense created out of thin air to use the popular expression, that's going to have negative consequences. And so when there are these wild booms and busts, it's typically the poor people who get hurt the most in those, you know, roller coasters. So there's there's that element. And again, this isn't just us after the fact saying, oh, well, this housing crisis must be the Fed's fault because that's what our ideology tells.

We were a warning of that in real time when a lot of people were laughing in our faces. So Robert Blumen wrote that. Robert Blumen wrote that at Mises.org in 2005. He was first, I know. Yeah. And Mark Thornton also had a really good one to bus called like housing too good to be true. And so anyway, I do want to say that. But you're right, Scott. And John is correct, too, that given the current paradigm, and I would say it's a standard Keynesian case. So certainly this shouldn't be laid at the feet of free marketeers. They think there's a tradeoff between price inflation and unemployment and all of the central bank has to choose. And if the labor market's getting too hot, well, then we got to tap the brakes and so forth. And when you're thinking like that, then yes, that leads you to believe that, oh, wow, if workers

are getting too much wage gains, then, you know, things are heating up and we need to tighten. And that's, no, that's not a standard Austrian hard money view. If you have, like, for example, under the classical gold standard or if you had, you know, in our time, just free markets and money and banking, then there wouldn't be that ostensible tradeoff. Once everybody knew the money was going to be stable and that what the money, you know, buys today, you could predict very well what it was going to be able to buy 20 years from now, then the rationale or the reasons for that tradeoff aren't there.

So, I mean, because partly what happens is under the current paradigm, if they do dump in a bunch of money that's unexpected, you know, then business revenues go up and people think it's prosperity when really it isn't. So they start bidding workers away, you know, they hire the ranks of the unemployed, but it's partly because they've been fooled. And so it's when the money is unstable, it can lead people to these erroneous boom bus cycles where if you just had a solid foundation and everybody knew what the money's purchasing power was going to be in the future,

that would be one less area of uncertainty. And, yes, the unemployment rate would naturally fall to what I would say would be a natural level, and it wouldn't be getting jostled up and down by the central bank. All right. Now, let me just say here real quick before I go back to you, John, I know that I don't know what you have already ever studied about the Austrian business cycle theory, and I don't expect you to just accept Bob's point of view on all of this now or whatever. not the point but i do think it's an important point and i think you might agree that under the current

i guess paradigm hate using that kind of jargon the current way of doing things there very much is sort of this left right worker versus management um you know um kind of argument that certainly from your point of view you're taking the side of the working guy and saying more inflation and if is wages go up. Well, good. That's not wrong. Let's just keep going with that instead of panicking and tightening, where Bob is saying that this is an unnecessary conflict, that if you have high employment and stable money, that doesn't cause inflation. Again, it's the cost of living increase on the part of the wage earners that is keeping up with the devalued cost of the money, or, you know, value of the money, who are then getting the blame after the fact for causing it

with their upward pressure. And so maybe it doesn't have to be that way at all. Yeah. Well, here I would suggest to people listening to this to read an extremely long book about the Federal Reserve. And I bet you may both be familiar with this book. I bet Bob is. It's called Secrets of the Temple by William Greider. Okay, great. Well, Well, I mean, to me, he makes a convincing case that the idea of money being stable over any kind of medium or long term is a utopian and impossible goal for human beings. And it has never happened in human history, and there's really no reason to think that it ever could happen. And so maybe in theory, like, you know, in theory, it would be a good.

good thing if we could remove this source of instability and uncertainty from human life. But in practice, as I say, it's never happened, and it's very hard to imagine, for me at least, that it ever could. So, yes, I mean, if such a thing were possible, probably it would be good. It's just that such a thing is not possible. And there's just, you know, like attempting to make it possible has never really worked out. And, you know, part of the history of the gold standard is causing, you know, extremely intense depressions. And I think that anybody who takes sort of economic history as a warning should understand that, like, having, you know, stable money attempts at creating stable money generally cause periods of significant deflation. And these are

disastrous for society. And to me, this kind of utopian attempt to have sound money is really what led to the development of like hard left ideologies like communism is because people could not live under regimes like that. And they were like, we need to throw everything about this out and come up with something new. And so, again, this is an ideological perspective. It's an issue that can't really be settled, but I would suggest that history has some

pretty strong evidence on this point well i mean i disagree about that last part i mean i i know that bob has a different perspective and i know what it is and i share it um although he's much more the expert than me for sure um so uh but i think it is a matter of you know a preponderance of the evidence and maybe best arguments made and i often feel john i think you could probably sympathize um like our the capitalist side gets the red herring that like maybe you only uh ever heard the Chicago school's best guy on this and not a solid Rothbardian like Bob because I know well go ahead Bob is it the the gold standard or the lack of it that causes these depressions or how does that work? This isn't just ideological I think it is a historical question that's been

tackled from obviously different ideological directions but still yeah so um ironically the professional economists of the three of us is the one who hasn't read I've heard of that book but have not read it. So there you go. But yeah, I don't know exactly what John meant by that claim, but there are long stretches. And again, you know, instead of the long book, I can just point people to the short one, the understanding money mechanics that came up. I know I have some statistics. I think there's a chart on this to show that in the real world. So this isn't like me saying, oh, if they had just done it right. But no, in the real world, over very long start, like I want to say a century that, you know, what $100 or what $10 could buy you, in terms of goods and services, stayed roughly the same.

Now, there were ups and downs. That's true. So if that's what all that book meant was that it wasn't literally constant year to year, that's true. But I think, you know, you anticipated what I was going to say, Scott, when you go and investigate and say, oh, under the classical gold, and also the dollar was tied to silver for long stretches in the early history, too. It wasn't just gold. And say, what was it that caused the, you know, the dollar to lose its purchasing power

and then to regain it? it was typically when there was a war. And then, you know, the government would relieve itself and or, you know, the banks from redeeming paper notes in terms of gold or silver species. And so that's what allowed for the inflation because that's how the government paid for the war. And so it's true, you know, John's right, that they inflate to pay for the war because if they just try to do it, you know, quote honestly through taxes or borrowing and kept the money on a stable footing tied to gold and silver. then the people would have seen the full cost of the war and they wouldn't have tolerated it. So again, for anti-war listeners,

it's really going off gold, freed the government's hands to spend more on the war than they otherwise would have been able to get away with. In a sense, though, Bob, he's right about what he says about the communists, right, that Marx looked at not just price inflation, but he looked at the boom bust that came from the inflation from the war and said, what a disastrous way to run an economy.

You got a warehouse full of goods and an unemployment line full of people. This is ridiculous. But it wasn't the market that it created that situation. It was the government intervention in it or not. And also you can attribute it to common or attribute communism. You could also, you know, a lot of people think the rise of Hitler ultimately was, you know, because of what happened to Germany after World War I. And again, it was the same pattern that going into World War I, all the major belligerents

except the U.S. went off gold to pay for the war. and then they tried to go back after the war ended. And that was, yeah, so there was massive inflation and then deflation to try to go back to the pre-war parity. And that was crazy. So I agree with John there. That does hurt, you know, the average person that wild up and down. And so I'm, you're right, Scott. What I'm saying is don't just focus on, oh, gee, really what it was.

You know, the inflation was fine. That would have been fine for all the poor people. It was just then trying to go back and maintain the purchasing power. So we can all agree that that wild up and down is not good for the little guy, but I'm saying to just focus on the inflation, you can't just keep doing inflation. If you do that eventually, the currency collapses. So hyperinflation doesn't help poor people either. And so I'm saying, you know, it's not realistic to say, oh, let's just keep pumping in money because inflation's good. It's just when you try to stop it, that that's when the pain sets in, you know, again, that's like going on a drinking binge and saying so long as you don't stop, you're fine.

You know, but that's not really a recipe for health either. Well, and what about that, John? I mean, is there a limit on this? Or they should just send us each a stimulus check for a million bucks. So we can finally buy a house and live comfortably here and not have to worry about living check to check this way. Yeah, there definitely is a limit on this. And why, though? I mean, what will happen if we don't obey the limit? Eventually, inflation would get to a point where it would be more destructive than constructive. Like, there are, you know, of course, there are many, many examples of that in history of inflation getting too high. But my perspective on this is generally, you know, like my perspective on eating food. Like, is it good for people to eat 500 calories a day? Like, no, that is not good for people.

It's much better if they eat like 2,500 calories per day. Like, does that mean that people should eat 25,000 calories per day? Like, no, like neither one of those, neither the 500 per day nor the 25,000 per day is a good idea for people. But there is a happy medium, and I just don't think that we're out of the happy medium at this point. And I also think that we can rendezvous in a year and see if I'm right about this. I think inflation is going to be much lower a year. I don't think that it's going to be a situation where it's just increasing and getting out of control. So that's my perspective on it in general.

Like there really is a happy medium. And I have seen those charts about the stable purchasing power of a dollar over a period of 100 years. But as Bob says, there were wild ups. and downs often thanks to war, not always thanks to war, by any means. And I do believe in what Kane said about people talking about in the long run. Like, oh, yeah, that's true, over a hundred years. But in the long run, we are all dead. People don't live in the long run. And people cannot live with the sort of like wild swings, especially the deflation, which crushes debtors. And so that's just an issue where, would it be nice if we could?

could remove this source of uncertainty from human life like wait wait it would be good but wait on that last point though i mean it's almost like you didn't hear him i mean would you address the idea that it wasn't the gold standard that caused the wild swings it was when they abandoned it inflated and then tried to go back to it again and schemes like that it was the political intervention in the currency to pay for these giant government programs like wars that caused those disruptions rather than having stable money causing them. Is that possible or that's just, I mean, look, I went to Austin Community College and I learned the Democrat version of this, but I'm just saying it seems to me like there's some pretty

big holes in it and that Bob seemed to have identified some of them here. Well, what I was saying was like, like, were these wild swings sometimes caused by wars and people, you know, the government purposefully, you know, undertaking policies? that they knew it would cause inflation. Like, yes, that is true. Sometimes that was true. But by no means all of the time. There are lots and lots of examples of kind of wild swings where war was not involved.

And so, as I say, I just think it's a utopian ideal that cannot exist in, like, actual human life. And even, you know, if you're thinking about gold and silver, like, just the simple fact of, like, having a currency based on these things, like, makes it clear why this is a utopian ideal. because there is no way for human beings to control, like, how much gold and silver are mined, like how much of those things exist. And so there is no solid foundation on which you can base the value of money. It just, it doesn't exist. It's impossible for human beings to create that. The best you can do is for people to think about these things seriously and try to create

monetary policy to create a sort of band of levels of inflation with which, human beings can live. And that means no deflation for sure, because that's extremely destructive. It means no hyperinflation for sure. That's also very destructive. But I'm arguing for a happy medium and that it is something that can be created and maintained to some degree by human beings using their brains. And I don't think that we can outsource that to precious metals or some other system. I don't know, Bob. It sounds like he might be on something there. This is the big William Jennings Bryan said that's gold standards killing all our farmers with their incredibly high interest rates and unforgivable loan arrangements. And so we need free silver.

Why? Because it's inflationary. And so can you at least give us free silver, Bob? Or what do you say to that? Cross the gold for us all? Yeah, right. So let me just mention some notice. And obviously, this is, of course, going to happen when two people start out and they say their opening statements and then they go back and forth.

polite civil manner. I'm just mentioning, though, that, like, if we're having read John's original piece there, it's, hey, inflation's good for you, and it hurts creditors and helps debtors and it's not, you know, oh, but if it got to be too much, then it really would be disastrous. I'm saying so, just someone who read his first, his original article would not be aware of any of these nuances and realizes that, you know, if inflation just straight up is a transfer of wealth from the rich to the poor, you know, how is that going to help poor people if you do too much of it. So I'm just observing that.

But one difference there. And so, yes, back in the late 1800s when they wanted to have the free coinage of silver, there you could make a stronger case because farmers were selling agricultural products and they had mortgages on their land. And so there, yes, it would make sense. If there was more inflation by allowing the free coinage of silver, then prices would rise. So farmers' revenues would immediately go up and they would still have just the fixed interest payments making to the bank for their mortgages on their land. So you could see how that would help them.

Again, I wouldn't say that would have been good for the economy in general and, you know, the average person per se because it would have been volatile. But you could see that. But again, here, when, you know, the Fed announces an unexpectedly inflationary policy and you see commodities instantly shoot up, it's not that wage rates instantly shoot up. So I think, you know, even though, yes, William Jennings, Brian's core market their target audience would have benefited in the short term from unexpected inflation, I don't think it's correct to say to the average working person today, all things considered you're going to benefit from unexpected inflation. And as even, I think John is agreeing, if you did too much of it, we all, you know, it would be bad. So John's saying, oh, I think, you know, a little bit more is fine. And I'm saying, I think it should be less. But we all kind of agree too much inflation is bad, even for four people.

Hold on just one second. Be right back. So you're constantly buying things from Amazon.com. Well, that makes sense. They bring it right to your house. So what you do, though, is click through from the link in the right-hand margin at Scott Horton.org. And I'll get a little bit of a kickback from Amazon's end of the sale.

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Follow through from the link in the margin at Scott Wharton.org for Tom Woods' liberty classroom. Yeah. It sounds like maybe, you know, in the largest sense, the only real disagreement is whether inflation causes the boom and bust or whether it's a side issue. But and then as you're saying, the degree on the dial, you know, is essentially the argument. Is that right? You're talking to me, so? I don't know. Either are you. Yeah, well, I'll jump in. Obviously. Right. So what I'm saying, yeah. I'm saying. I'm, yeah. Obviously, John can correct me if I'm miscarriage of it. But I think we moved from inflation is good for you that he was saying. And I'm saying, no, it was bad for you.

And when we say you, we mean like the average worker. And now it's, I think, more nuanced and we're disagreeing merely about the levels. And I think we all agree that, yeah. Yeah. And Bob, I think you agree with John about at least in some circumstances. These are the people that benefit from it. And they're not all arms manufacturers. Some of them are regular schmucks who own a home, for example.

and are paying off with depreciated dollars. Right, yeah. So somebody who already owns a house, yes, and even if they go to work and they have a decent salary. And so, yeah, the fact that milk goes up, if their house goes up to and they keep paying on their 30-year fixed mortgage, you're right, that sort of person might prefer a slightly higher inflationary regime to less of a one. But I think that is sort of a knife hedge case.

And, again, though, if it does cause the boom bus cycle, and so I can see what you're saying, Scott, that's kind of an important thing. It's not just an aside. Then even the person whose house goes up a year after year during the boom period, but then crashes, you know, those games were transitory. And their transitory is for real. Yeah. And then, of course, the property taxes, boy, those assessors run out to eat up any increase that you got anyway, but a separate issue there. So, all right, on that question of just how close we can agree or are agreeing here at the end of the day, John, what do you say? Well, first of all, I really enjoyed this.

So thank you, Scott, for setting this up. I mean, I think it was really interesting and productive. And what I like about America is that weirdos like ourselves, like all of us, like way off from the center of the political spectrum. do in fact agree about a lot of stuff. And the things where we disagree are, I do think generally things where you can't, you can't really settle the question. It's just a general worldview about what you think about people

and how you think societies were. So I think this was really interesting, and I hope people listening got something out of it. Yeah, I agree, like as I say, like that was kind of a trolley headline. And if I were to write it again, I would put in a line about how, like, we don't want hyperinflation. I just don't think in the United States in 2021, we're anywhere close to that.

I don't think that it's ever going to happen. As I say, I think in a year, inflation is going to be much lower. And just the general point for me is that we're much better off under the current paradigm with a low, lower employment economy with higher rates of inflation. I think that's extremely positive for a bunch of reasons. It gives people in the bottom distribution of the wage spectrum, a lot more bargaining power when unemployment is low for wages and better working conditions. I also think there's a more subtle point, which is when labor is more expensive,

that tends to generate labor-saving technologies. And that is how you get higher levels of productivity in a richer society in the long term. So if I had to do it all over again, I would, you know, address some of these subtleties, but I think it's sometimes useful to just say the kind of stark way that riles people up and then go and be the backfilling that I'm doing right now. Yeah. I don't know. What do you say, Bob?

Should we just all get in a lot of debt? So, and arguably, that's to one of the problems with it is other things equal. It's actually not good to set the environment or set the conditions such that people want to take on a lot of debt. you know, of course, having it be fixed rate. So again, I can just say that, yes, John is correct that given the way that the Fed views things, and this is, again, a very Keynesian mindset, there is this apparent conflict. And, oh, gee, if, you know, if the labor market's overheating, then we got to raise rates. And I understand why some people on the left might look askance at that, and since it looks

like it's just protecting the creditors, but in the long run having the ability to debase the currency is not going to be used to help poor people. And again, and we say, okay, hyperinflation is bad, sure. Well, just think through why is it bad? And when you see that, you realize the same factors are present for a modest inflation. It's just they're not as bad. So I, you know, I'd make that point too. All right.

Well, in fact, all right. Let's stop wrapping up for a second and go back to that. Let's nail that down a little bit. Hyperinflation is destructive, John, but regular inflation. inflation is not, or on the sliding scale, it becomes objectionable at what point exactly to you? I don't know. I mean, this is something where you really can't give any kind of hard and fast answers. You know, if we were to have inflation around this point or, you know, maybe somewhat higher like seven or eight or nine percent for five years, like would that verge on sort of a situation where it is more destructive than constructed? probably, yeah, because, you know, people do need to blend for the future. And, you know, having high rates of inflation does make that more difficult for a lot of people, a lot of businesses. So, I mean, that's what I would say. That would be my best guess. But I don't think we're going to reach that point. And I don't think we really need to worry about it right now. I mean, the fact is that for the last 40 years, which has been a real period of low inflation and higher unemployment,

we've seen this gigantic accumulation of wealth at the top. And I think that fears about inflation, fear-mongering about inflation are a big part of that. So I don't think that we're really anywhere close to the point where we need to worry about it or whether the solutions that are available, which are raising interest rates and slowing the economy and throwing people out of work are not worse than what we're currently experiencing. So now I did read William Greuter, and it's essentially, Bob, it's the story of the Volker years there, where he came in to wage war against inflation. He caused, deliberately jacked up interest rates in order to force a recession in order to beat inflation. And it did throw a hell of a lot of people out of work. And as Greer described it, too, that, you know, forget all this monitor is supply side, this, that Chicago, something or other, where this was all going to lead to massive new reinvestment in support.

supply and new factories and infrastructure or whatever that didn't happen just a bunch of yuppies bought porches and diamond rings for their ladies and it was you know demand side for the rich as people who already had money got to sit on these high interest rates and make a killing in the ronald regan yuppie years at the expense of everybody else and now so my understanding i'm no economist i'm an anti-war guy but one of the things that really appealed to uh uh uh you to me about Austrian theory when I first read all this stuff was there's no denial about that part of it. It's just explaining that the very richest, they have it both ways. They're benefiting both ways from this. They benefit from all the inflation. I mean, I know that you would argue and

you're about to, right? That it's the abandonment of the gold standard and the increase in all this debt and inflation that's led to, you know, more than any other thing probably, the disparity between, you know, as they call it, in income between the top earners and everybody else in society. But so, but it's also true that what Volker did was make a lot of rich people richer and a lot of marginal people, you know, poorer.

In fact, people hear me probably from time to time mention that the Fed kept statistics on suicides and divorces and foster care and bankruptcies all across the country, very detailed numbers and they saw it as a measure their virtue that yes we know people are blowing their brains out but we've got to stay the course to beat inflation which they of course had caused but it's also the same thing i would point out john that when their inflationary bubbles pop like when greenspan and burnacky's bubble popped in a way people are blowing their brains out over that too although i guess you would say it's

because they started raising rates they should have kept inflating and instead they they stopped inflating and then, I don't know, something. But anyway, whose turn is it? I think mine. Well, we actually haven't given Powell a chance. Maybe we shouldn't for equal time. So, yeah, again, you're anticipating what I'm going to say, Scott, and that it's because you're so well read.

But, yeah, it's, I understand that Volker is held up as a hero, you know, among the hard money types or whatever. Like, he had the courage to do it as necessary. But that begs the question. maybe it raises the question. I never remember when to use those phrases, that why was it that when he took over that inflation, you know, conventionally measured consumer price inflation was at double-digit levels and so forth, it's because, like you said, Scott, Nixon finally closed the gold

window in 71 and that so it wasn't a coincidence. Gee, how come the 70s were marked by stagflation? Why was that period so special in U.S. history? And also some of your listeners, Scott, might be familiar with, there's a lot of statistics to try to, on the surface, it looks like it's impugning Reaganomics because it's showing, like, oh, look at the gains to the top 10% or the top 1%, whether an income or wealth. And, you know, and it, they make you, they lead you to believe that it was turning around because the Reagan tax cuts.

But if you actually look at the charts, the turnaround happens in the mid-70s. And so you say, okay, what happened? What was the fundamental shift in the U.S. economy in the mid-70s that could have made it so that all of a sudden, you know, productivity increases? didn't translate into nominal wage gains for the workers, but instead seemed to get absorbed by the Wheeler dealers. And I would argue the major change was Nixon finally killed the gold standard, and it's partly because of the welfare state programs of LBJ, but also because of the huge warfare state that

they had unleashed in the 60s. So, you know, that's the way, again, part of, like, so I don't think it's just purely ideology the way John seems to be suggesting. I think you can, you know, look at facts and try to make the case. Certainly, the facts do withhold, you know, the story I'm telling where far from sound money causing the problem in the early 80s, the reason they were in that position to begin with and thought, we quote, have to break the back of inflation was because they'd open up the monetary spigots a decade earlier. All right. And now, so what do you think, John, about the idea that the wealthy are not necessarily so resentful against inflation? because they're the creditors who are getting screwed because they're the ones who benefit from all the

inflation in the first place. And so, you know, they're essentially, again, as in the Volcker years, yeah, they're sitting on bank on high interest rates. But in the inflationary years, they're getting extremely low interest loans to do, to invest in whatever they want and ride massive stock market gains and all the rest of these things. Well, I would say a couple of things about that. First of all, all, you should talk to all the Wall Street guys who wrote me angry emails about that inflation article. Like, they definitely did not feel that inflation was a good thing for them.

They were extremely concerned about it. And also, I think it's good to keep in mind about the 70s, two different things on this subject. First of all, a very big part of the inflation of the 70s was the huge rise in oil prices. And so, like, is it true? like maybe in theory is there a system where we could have stable money if we just didn't have any wars and we didn't have any other countries that controlled a key commodity that powers our economy like wasn't that wasn't that just the price of oil finally catching up with inflation

whereas the Saudis had been rigging it artificially low previously just like they do today I don't know I mean I would have to go back and look at the numbers on that but I mean again that's just sort of like, well, we could have stable prices if only none of the things that have happened continually throughout human history happen. You know, it's like, well, maybe, I don't know. I don't think that's a good thing to count on. But in terms of the wealthy and inflation and stocks, I think that is something to keep a very close eye on and is something to understand.

Like, in the 1970s, the real return on holding money in the stock market was negative. you know, for a decade. Like, if you kept your money in the stock market, you were losing money, you were losing value. And so it doesn't, like, high inflation does not mean that the stock market is going to go up in real terms. It's just a year in my lifetime only. Well, I mean, even there, it's not really clear about that.

I mean, there was not high inflation in, like, 2019 and 2020 by any means. And the stock market also went up a great deal during those years. So I don't think you can really draw any real connection between inflation and the stock market in those terms. And I would tell you, in fact, I'm certain that one of the main concerns of the Wall Street people and the reason why you see all of these articles about the terrible danger of inflation and the New York Times and the Washington host is because they are concerned about a repeat of what happened in the 1970s. And especially because the stock market is way overvalued at this point, that they're concerned. that their real return is going to go way down and is plausibly going to be negative as it was in the 1970s.

Well, that seems kind of intuitive, Bob, that all these rich people don't want to be on welfare, and they're afraid that if they're on too much welfare, that's going to cause their price to drop? Well, let me just first make the point, too, that I don't think, you know, the average working class person also, you know, lots of repeat of the 70s either. So I don't think it's correct to say, ah, the 70s were the, you know, the time when the working man did very well. And it was the fat cats that, you know, had a short end of the stick. I think the 70s were just bad for everybody. So, yeah, I mean, part of what happened in the 70s, I would argue as a free market economist, not surprisingly, is remember Richard Nixon was just awful on so many levels that he wasn't even the free marketeer that one might have supposed, right?

he had waging, literally wage and price controls that he put in place, okay, besides going off the gold standard. So, you know, there's a reason that the U.S. economy was so bad in the 70s. And, you know, I think that partly contributes to the fact of why the stock market didn't keep up in real terms. But again, too, it's when they look at it this way. And John made a good point there, you know, to try to counter what you said, Scott, about, oh, just in our lifetimes then, that the.

The way that Austrians tend to use the word inflation is, you know, so for the purposes of our discussion here, I've been not harping on it just to not be pedantic, but if you notice that the listeners, I kept trying to say price inflation, because for the Austrians, what inflation is, just full stop, is creating new money. You're inflating the money supply. And so there I think you do see that is what happened in 2019, 2020, or 2020 for sure, is the Fed created boatloads of new money, even more than they did. following the financial crisis.

And so the rounds of QE, there's a very tight correlation between the movement in the S&P 500, for example, and when Bernanke said whether they were going to have another round of quantitative easing. So again, just real simple stuff. You don't need to be an economy. You don't have to argue statistics. Just the government is, you know,

creating trillions of new dollars and then getting them into the economy somehow. Who's getting that money first? It's not the wage earner. the factory like that's only that by the time the money new money hits that guy or grell it's already gone through several hands and the people near the front yeah it's arms manufacturers it's not just them it's lots of other people too but i i think you know when you just think of it like that it's implausible to say that this engine of inflation is going to be harnessed and help

the working person okay but so why are john's letter writers matt if they all in fact i'll bring up John Stewart had Alan Greenspan on and he says oh so you cut interest rates to spur the stock market keep the economy homing right and Green Span says yeah ain't I smart and John Stewart says yeah but if you're just some grandma then you can't really have a savings account because you keep lower in the interest rate where she can't even you know keep up with inflation so now you're kind of forcing her to speculate you kind of robbing regular folks to keep the stock market hot for rich guys, aren't you, Alan Greenspan? And Alan Greenspan says, hmm, I mean, yeah, I guess. Something like that.

On the other hand, John is saying he writes this letter and he gets a bunch of, writes this article and he gets a bunch of letters from rich investor types saying essentially the opposite, that the last thing in the world that they want is for the government to create a bunch of new money and dump it into the stock market for them. Bob, so, What are they thinking? What's behind that? Okay, sure. So again, keep in mind, it's not that I'm arguing the mirror image of John's claim. So he's saying inflation's good for the poor, it hurts the rich. I am not saying, no, actually inflation hurts the poor and helps the rich. I think I said that right.

I am saying inflation is bad for everybody in the long run, except perhaps for the very few politically connected people, you know, the people run in the central banks and their cronies and so forth. So I am not saying the one percent. stock market investor even like a middle rank stock market investor i i'm the only reason i'm mad about inflation and the stock market is if i'm an austrian and i know there's a bust coming but otherwise i'm just happy so in other words again how come these people are mad at john for saying let's keep inflating seems like they'd be the ones to say actually yeah you're right mr left wing guy. Wink, wink, wink. Well, I mean, I think

the people who are happy about it aren't going to write him in email and saying thanks for having our back, you know, and tell him the world of our nefarious. You know what mean? Like a selection, but, and also, I'm sure there are a lot of people that when they see how expensive the grocery, I mean, this isn't like some, you know,

rhetorical point. I mean, for real, going just to the grocery store lately, it's crazy. Like, stuff is ridiculously expensive compared to a year ago. and so, you know, I think a lot of people are not writing emails about, well, no, actually the fact that meets so much more expensive is really bothering me. So it's, you know, it's not shocking to me that there are many hundreds, I don't know how many emails John got, of such people in America who are rich and have the time to complain to him because, you know, they understand the principles of sound money. But I got you. All right. Well, so now let's wrap

up. John, you got your last words and then, or whoever wants to go first, I don't mind. I'll go and then, John, you want to close? Sounds good. Okay. So, yeah, again, I understand, let me, I guess the one major claim that John kept making her point that I didn't directly address is this idea that, hey, you know, Murphy's utopia might be fine in theory, but in the real world. But look, look, we're arguing about should inflation be higher or lower going forward.

So, you know, we're acting as if, you know, we either have some influence or we're just talking about what would be preferable. So, you know, the government did have the gold standard at one point, and then it went off of it. And I think it's worth pointing out that most of the negative consequences that John, and I agree with as pointing to, was not because the gold standard was adhered to. It was precisely when they went off and allowed inflation, monetary inflation, which caused price inflation, and then tried to tighten again. That was the problem. So again, looking at like what Volcker did. If we can all agree that was not good for the working person at that point,

I would just push it back a step and say he was in that position because of the earlier torrent of monetary inflation. And we've all agreed, too, that you can't just keep doing it. In other words, Volker couldn't have just said, ah, let it rip. And then we don't have to have the painful recession. At some point, the currency collapses. And we all agree that's bad for everybody. So I'm saying rather than let the dogs out and then try to just keep them tame,

actually in the long run, the safest thing is to maintain the purchasing power of the dollar and ultimately take it out of the government's hands altogether. So it's not that I want, you know, more rational monetary policy conducted by a responsible Fed. I would want to get rid of the central bank altogether. Now that is a whole new debate. But John will let you close from here. Thank you, Bob. Yeah, well, so anyway, I just want to say again, like how much I enjoyed talking with you guys about this.

Yeah, this has been great, right? Yeah, me too. I should have been... I hope I ask good enough questions. I really am very much amateur at this, but I hope I help frame all the arguments, many of them, right? Yeah, and it is very rare

that oddballs and cranks such as ourselves really get the opportunity to talk at length about these kinds of things. And I also hope somebody with a stopwatch tell me if I was fair on the time. I think I was. Yeah, just about. And all I would say...

at the end here, is that I would really encourage people to just think about these issues. Like, whatever conclusions you come to in the end, one of the things about American society is that this is one of the core aspects of U.S. politics, like one of the most important things. And if you're bored by it and you don't pay attention to it, believe me, the people in charge are very happy about that. They would love for you to not think about this kind of stuff. So there are a million books that you could read. I would say, I think if you're willing to read 800 pages about monetary policy and the Federal Reserve, for me, a great place to start is Secrets of the Temple by William Greider.

And, you know, at the end, he talks about it's a kind of human reluctance to look at these issues so directly because it makes you realize that monetary policy is this extremely powerful lever. and it allows us to wield power in a way that is kind of disturbing if you think about all the implications of it and people resist this and want to hand it off to experts. So don't hand this stuff off to experts. Read William Breeder, read, you know, stuff, Austrian stuff, and just think about it for yourself. And read the Wall Street Journal. They also tell the truth there to a surprising degree. Yeah, good point, because they know who's reading that.

they actually need to know what the hell's going on in their audience. So that's always sound advice. Not that it's true, just that it's what they want those people to think, which is important. Now, so I want to challenge you both, too. I would, and you don't have to accept this at all either of you, but I would like to see, John, I would like to see you read Bob's politically incorrect guides, and I guess he's got his new monetary book out. But those politically incorrect guys, I like him because I was, and listen, I, Me and Bob are friends, and I really respect him and all of his thinking and everything.

But I was so pleasantly surprised throughout both of those books about how thorough a job he did of, essentially, as I like to put it, attacking the left from the left and presuming your objection and attempting to answer that. And you could, you know, knock them out real quick, both of them. It's the Great Depression and the New Deal. And then the other one is just the politically incorrect guide to capitalism. And I think you would get so much out of that. then Bob, I would like to see you read secrets of the temple and maybe write up a review with that and see, because I agree with John, not that I agree with William Greider, but I agree with John that there's a lot of value in taking a look at that version of the history. This is a Washington Post guys, you know, a liberal Democrats version of the Volker years, but it's very well informed and very detailed and has so much in that. And then, you know, you You know, maybe we could even revisit this at a medium-term future date here. Yeah, it would be great to reconvene after reading stuff from the other side.

That would be very interesting. Yeah, what do you say, Bob? Yeah, that sounds great. All right, cool. Well, everybody should take hands, and thank you very much to both you. I think it's been really great. Thanks for having us, Scott. This was fun.

Yeah, Scott. Thanks for providing the opportunity. I really appreciate it. The Scott Horton Show, Anti-War Radio, can be heard on KPFK. 90.7 FM in LA. APSRadio.com, anti-war.com, Scott Horton.org,

and Libertarian Institute.org.