The radical Fundamental principles of freedom rational self-interest and individual rights This is the Iran book show All right, welcome everybody to Iran book show on this Wednesday On this Tuesday evening. Yes video is good today bandwidth is back in In my condo in Puerto Rico yesterday. We were running on literally fumes. There was No bandwidth zero zilch nothing Today we're back to full speed. We've got I don't know 200 megabytes per second up Upstream so we should be good still could be tons of technical errors, but at least we know The bandwidth is good. All right So thanks. Thanks everybody for joining me three days in a row I know you're probably getting a little tired of me, but I do promise I I'm leaving I'm going on the road tomorrow, so I won't be around for a couple of weeks So you can take a little bit of a rest from live shows live shows with me, but I Thought today we shift to an economic topic a topic that's related to To the state of economics in the world I read an article in the economist magazine You know, I get I get the economist emails from the economist on a regular basis and the title of this article Struck me in and then reading it Made me so Frustrated that I figure would share my frustration with you guys The title is economists cannot agree on what ails the global economy and this is true economists indeed Cannot agree on what ails the global economy You know, they're huge disagreement huge I think ignorance and and silliness and the stupidity among economists and And a lack of integration. We talked about integration yesterday a lack of integration of The theory and the data and and and what is going on So I thought I'd go over some of the arguments the funny thing is according to article at least The economists agree on the solution. They don't agree on the cause, but they agree in a solution We'll get to everybody agrees on the solution We will get we will get to that the solution for slow economic growth, but first The problem that the challenge is that the global economy Particularly the global economy in developed economies and and when I talk here about Western economies, I'm basically talking about Developed economies, so I'm not only including The West geographically, but the West spiritually and and culturally so I include Japan for example economically it is a part of the West I include the Asian Tigers So South Korea and in Hong Kong and Singapore and What is what is true of all these economies from the United States to to Europe to these these countries in Asia is that the economies of all these countries are basically Slowed down dramatically the United States maybe has the fastest growing economy among them And it's only growing it like 2.7% 2.2% was the latest number and might go below 2 I mean that is pathetic growth if we had had 2% growth from the turn of the 19th century in the 20th century till today we'd be poorer than Mexico so Growth matters every every fraction of a percentage of a point Matters when it comes to economic growth so For developed economies don't grow at around 2% is really really really bad now What's interesting is even the the developing economies have relatively slowed and I'd say that the You know China's a good example. It's slow to around 6% probably a lot less than that from 10 12 15% Even India slowed much of the developing world has slowed so generally This seems to be a slowdown in economic growth in the world and this has massive consequences massive consequences to alleviation of poverty massive consequences to the Opportunities that individuals face in the United States it has and in Europe it has consequences to Economic mobility it has consequences to the ability of a younger generation to become wealthy and to become successful and and it has consequences for all of us in the sense that We're just getting richer at a much much slower rate Wages are not going up very fast, although it's interesting if you look at the wage numbers While wage numbers on average and are going very up very fast. They're going a faster for for low-wage Employees and and slower for high-wage employees and all kinds of Technical reasons for that and and real reasons for that but generally wages are just not going up very fast and This is all in an environment with zero interest rates and negative interest rates in some places. So things things are Things should be Set up for massive amounts of growth with with low interest rates Low interest rates means it's cheap to make investments. It's easy to make investments. It's So well It's cheap to borrow money put it that way and therefore that money should be going to invest in new production Which in increased productivity and therefore in growing an economy? So why isn't it happening and why as a consequence if you will interest rates are stuck at such a low level So here's what economists are thinking economists So the reason the story came out and you know yesterday show about Suicide and opioids and so on was also a result of the fact that a bunch of articles came out because of the recent American Economics Association Meetings these are annual meetings of all the of economists They have sessions talks panels Discussions interviews for jobs. It's massive thousands of economists. I don't know where it was held this year But it's every year. It's at a massive, you know, one of these convention centers And they would it's always held or in recent years. It's been held in the first week in January So you get a lot of information coming out of that and So there are two schools of thought supposedly according to this article two schools of thought around The issue of Economic growth and why we're getting such low economic growth There's the supply side and The demand side the supply side is the producer side the side that produces stuff that creates stuff that builds stuff that invests that is investment and some blame Supply and some blame demand for the land demand side is consumption. It's buying stuff It's it's it's I want more I want more I want more and therefore more is produced And if I stop wanting more then less is produced and and the economy slows down that is those are the two slides sites, right? So let's start with the supply side is a supply side is argue that the demand demand Particularly in the US economy is robust Consumers are spending money. We have a strong labor market People have money and they seem to be spending it. The problem is not demand the problem they argue is Supply our ability to produce more stuff Ability to produce more stuff. So while demand is there producers just can't produce enough stuff To generate To match the demand Now Why is this why can't produces produces much? Well production goes up Based on two parameters Either you have more people That is more labor more people actually working Or the people who are working have to become more productive and ideally Both happen So Upton asks did immigration help economic growth in the 1800s? Well, of course it did massively Because what immigration supplied is more people therefore more hands that could reduce more Supply more stuff for people to have Now it wasn't just immigration It was also High both rates so growing population and it was more importantly Massive increases in productivity driven by technological innovation So the drivers of Production are increased productivity i.e. innovation or and More people more More people doing stuff more people working So reducing immigration all else held constant reduces production Reduction in both rates all else held constant reduces long-term production Reductions in the population in other words reduces production also You know retirement increase increased death People exiting the workplace like they are in the United States with the baby boom is retiring all else constant Reduces the amount being produced So the supply side is the same look Because of restraints on immigration because of lower birth rates because of an aging population We are seeing a reduction in the number of people to produce and at the same time at the same time We're actually seeing a slowdown in technological innovation There is just not enough technological innovation to drive economic growth right, so You know to quote the article the only two ways to boost potential growth Increase the number of workers or improve workers capacity for production through technological advances While unemployment is low the labor force participation rate has been declining primarily because of retirement The burden for boosting productivity and potential growth therefore falls mainly on technological innovation Trend growth is weak supply advocates say because low productivity growth keeps companies from being able to supply enough goods and services and the question of course is Why is productivity growth slow? Why is it low? What is holding it back? We'll get to that right so that's the supply guys Productivity is low. That's why we don't see economic growth No, no say the people on the demand side That's not the problem. This is more the Keynesian side if you will They say the problem is that we've entered a period of what's called secular stagnation That is that we've got an aging population that is true But we've also got rising inequality Not you exactly how that impacts anything and What these two things the aging population the rising quality have done is They've caused everybody to save more so people are saving Way too much from an economic perspective money indeed. They're saving more than they are investment opportunities And in that sense they are hoarding that is there's more investment. There's more saving than can be invested Now what this does is it pushes down interest rates and it Makes it very difficult for central banks to encourage consumption But the problem is that people are not consuming enough because they're worried about retirement Because they're worried about inequality and as a consequence They're saving much and of course the problem of inequality is that rich people don't consume Rich people save It's only so many yachts you can buy there's only so many mansions you can have the only so many private planes You can have if you're a billionaire you're basically a saver you consume a fraction of Your income or your wealth? so the problem today is to much saving and There's so much saving and there's so little demand for saving investment that Interest rates are dystopic lows or dramatically low so the these demand people are claiming there is a saving glut and a shortage of Consumption a shortage in demand Right so Let's see today they say if the labor markets were near for employment and Supporting consumption wage pressure would mount But wages are not going up although they are but not as fast as they would like There's no demand for new investment they say if there was demand for new investment We would see saving flow into existing capital in the form that we wouldn't see Savings flowing to existing capital in the form of shared buybacks or higher dividends so Here's the quagmire right you've got the demand side saying no no no no we have too much saving Not enough investment not enough demand for investment They're not enough people one capital in order to invest and we've got people who are saying And and and as a and as a consequence the saving is coming at the expense of consumption on the flip side we're saying No, the the the problem is that we Don't have Enough growth in productivity and we've got basically a stagnant workforce. It's not growing enough and These two argue now Both sides according to the article Agree on potential solutions now. Can any of you guess what the potential solutions are? well More government spending on the supply side. They say the government could support research and development science To improve education and skills so they could invest more in education and skills training to boost productivity growth Public investment could also stimulate aggregate demand By addressing some of the structural drivers of secular stagnation For example, we could have stronger social insurance would reduce the propensity for people to hoard savings So if you knew there was a vast safety net you wouldn't save You would consume Right and of course government doesn't save when they create the best safety net They borrow in order to do that right they don't they don't there's no Part of money somewhere with so security in it. It's being spent already they will borrow in the future to cover expenditures so It's great government will consume and you will consume and nobody will save we'll just count in future wealth to be taxed away to pay out your social insurance as they call it and They say look it doesn't have to be at the expense of a budget deficit because you know budget deficit some people think is bad For example, you could have much more taxes You could have much higher taxes on the rich much more progressive taxation and then much more progressive taxation Would reduce inequality which would also reduce people's propensity to save because as the rich got poorer They you know, they would have less money to save and The poor people would get that money and they would use it to consume because the fact is that the poor people's propensity to consume is Higher than rich people's propensity to consume so everybody agrees on the solution Morgan and spending Morgan and spending on education and science Morgan and spending on social programs and redistribution of wealth and that my friends will solve the growth problem, but funnily enough to some extent on other that's what's These economies have been doing for the last 40 years The United States has the most progressive tax system in the developed world maybe maybe that's why they argue it's doing better than the rest of the world really Japan is invested massively in infrastructure and education and training and all kinds of Stuff in order to increase aggregate demand and To invest in long-term science to in order to boost long-term productivity Japan has invested massively in Japan if you don't know the story of Japan Japan has seen almost no economic growth since the early 1990s Right, that's 30 years of almost zero economic growth That's astounding and that manifests itself in almost no growth in productivity now To me the whole thing is somewhat comical Because supply is demand and demand is supply and and this idea that they're all Different that the the causes here different that that that there's no connection that they're not related that they're not interconnected Is to me ludicrous? The idea that saving is bad somehow the consumption is good somehow or saving is better than consumption or consumption is better than saving As if the market doesn't have a mechanism to deal with all of that. It's called interest rates and we'll get to interest rates But let's start With the supply site and we'll go to the demand site and we'll see how it's all connected. It's all the same It's all one problem and the cause of the problem is the exact opposite of what they claim I mean, no, it's it's not the exact opposite. It is the the what they're claiming in a sense But the solution to it is the exact opposite of what they claim. So sorry, let's Let's look at the supply site. It is true It's it's just a fact That we're seeing population stagnate in Europe in the United States Japan is the fastest growing fastest shrinking population in the world South Korea is shrinking Much of Europe is shrinking the United States is kind of Stable primarily because immigration and because immigrants have higher birth rates But overall population growth is stagnant and because of restrictions and immigration and Not only restrictions immigration restrictions and immigrant immigrants ability to work. So even in Europe when you had mass immigration In many of those places the immigrants were handed checks But not allowed to work or not allowed to work for a year or three years in different countries. It's different So basically the workforce is stagnant to shrinking because the baby boom generation Which is a worldwide generation suddenly in a developed world a generation is Retiring you've got a shrinking workforce And it is true That productivity has slowed so you've got less people working and productivity has slowed and the question is why Why is productivity slowed? Well to answer that question you have to ask Or why is innovation slowed or why has technological progress slowed and now It has In some ways in spite of the internet in spite of all the technological marvel that's coming out of Silicon Valley. It seems that technology is advancing only in what Peter Teal calls the electron businesses in the subatomic particle businesses But in businesses that actually deal with atoms with molecules of stuff we can see Innovation is almost non-existent and you have to ask the question of why Why is innovation slowed so dramatically? Why is product productivity therefore slowed significantly wise technological Breakthrough slowed. I mean if you think of the technological breakthroughs at the turn of the century you think of the Wright brothers Thomas Jeff Thomas Edison So going to electricity Going to oil Going to the internal combustion engine automobiles airplanes, I mean these are massive massive Life changing world shattering changes to everything Now it's true. We have had a computer revolution and indeed almost all the productivity gains over the last 40 years are the consequences of Computers of the integration of computers into business do a placement of employees with machines with algorithms with robots with everything so whatever Productivity gain we have seen it's come from this one industry, but we're not seeing much innovation elsewhere We're still using fossil fuels now the damn good, but what happened to the to nuclear What happened to flying cars? What happened to mining asteroids? What happened to? The massive potential that exists out there in the in the in the space of big physical products to improve dramatically beyond just the computing power Again, one has to ask the question. What makes innovation possible? What makes progress possible? and Here one has to rely on on iron and and Austrian economists What makes innovation possible is the human mind is People thinking is people exploring it's people Experimenting it's people trying and failing and failing and failing and failing and failing and failing and failing and then succeeding as Thomas Edison ask the right brothers what Progress technological progress innovation requires is an entrepreneurial mentality an individualist holds you know Pushing ahead taking risks failing experimenting trying getting up on your feet going ahead again trying again failing it requires experimentation it Requires the human mind to be free to think to innovate to progress and it requires the freedom to apply those thoughts in reality in reality That is it requires the freedom the freedom to build businesses to fail at businesses to experiment to try new things and The fact is that other than in the Silicon Valley world and that world is going away in my view But other than in the technological world We have no none of that freedom anymore. I mean I was just reading that the European Union wants to regulate the the power connector for phones and devices They want to make sure that all devices have the the same connectivity So that you the consumer will only have to buy one cable for all your devices Isn't that wonderful and they're upset because Apple uses one type of cable and everybody else uses a different type of cable So they want standardization of cables. I mean this is how you destroy innovation You start regulating the minutiae You start regulating every aspect of a business you tell people when they what businesses they can start what they can't start What things they can experiment in what they can't they have to wear goggles. Otherwise, they you could go to Jail, I guess okay find imagine if you told Thomas Edison he had to wear goggles and he had to have Spinklers and he had to invest millions of dollars in safety. He would have never done what he did Or the Wright brothers. Oh, no, no, that's too risky guys We live in a culture Where the government stifles Risk-taking it stifles innovation. It stifles experimentation the FDA Makes it almost impossible to bring a new drug to market the innovation in healthcare that would be allowed if you privatized the FDA and you had private private institutions Who regulated for the private sector? Drugs is unimaginable as compared to what we have today Now of course One of the funny things about the European Union is they're gonna regulate which cable you stick in the thing just as Apple is Announcing we're not gonna have any cable. Everything is gonna go wireless, right? Everything is gonna go Wireless charging but but that's Regulation would stifle that they say wait a minute. It has to have a cable You can't produce products without Kate without the ability to charge with a cable What about all the cables you're on bought and and has you know, it's you can't not offer that option That's what we're getting to so It is the regulatory agency. It's a regulatory mentality That is stifling Economic growth that is stifling a lack of productivity that is stifling entrepreneurship. It's true That we lack an investment in research and development and education but that's because Government is crowded out private investment from these fields We have no massive investment in education because the government controls education and our educational system Sucks is the technical term in order to produce entrepreneurs. We have to have people who can think Not just think by the book not just think but think creatively think outside of the box think independently and For that you would need a vastly different educational system than what we have today Which is about what learning if it's about learning at all When it's not about socializing, but even Europe's better educational system I don't Finland or whatever are not producing thinkers Not producing innovators not producing Producers not producing risk takers indeed. We've taken risk out of life risk is dangerous We don't want people to take risk and we teach them not to take risk as parents. We do the same thing We discourage us taking So we have a culture of people who should be the innovators who are afraid to take risk afraid to fail I mean the US is better than Japan in this better than Europe in this and in the US It's still acceptable to fail in these other countries. It's not The dream job of a Frenchman is a government job and as a civil servant with a lifetime income and a lifetime pension and everything That is an ideal But that's what needs to be chucked We need to encourage risk-taking we don't want a stronger social insurance network You want people to feel like they are responsible for their own lives. They're responsible for being The money that that we live in a world that is not structured to To protect you But one that is a structure to allow you to benefit from freedom Allows you leaves you alone to produce to create to build to make Free of mother government paternalistic governments sitting on your shoulder telling you what you can and cannot do What you can and cannot produce how much you can and cannot play and pay your employees You want increasing productivity what you need is more freedom? Freedom in the school system by privatizing it allowing for real competition in innovation in schools Freedom in science and research and development by taking the government out of science funding so that entrepreneurs and individuals and Corporations and businesses start investing in science, but in science that can be turned into technology Science that can be turned into increasing productivity okay, I was talking about the the supply side explanation for why We are in stagnation is because there's not enough Increases not enough growth in productivity and that is absolutely right But the solution is not more government investment the solution is not more government control, but less What we need is to free up free up Businesses free up entrepreneurs free people up to be creative We need to free up the educational system to improve education and Change a mentality change our attitude towards risk-taking and entrepreneurship, but what about the demand side? What about this idea of? Too much savings Now again, there is truth in this idea There is truth to the idea that right now there's too much saving relative to investment and Eat that is why one reason why? Interest rates are so low That is there's not enough entrepreneurs They're not enough good ideas They're not enough places to deploy money Where you can get a good return on your investment? That is not enough places to Invest your money that are profitable It's not that there's a glut of saving it. There's not enough investment a part of all this Both on the side of productivity on the side of saving on the side of investment on the side of consumption Is the massive distortion is created by central banks? that play with us Play with us as if we're just puppets Instead of letting interest rates be determined by supply and demand for saving and investment Interest rates are determined by fear by some committee by a Bunch of guys sitting around a desk deciding what their appropriate interest rate would be and guess what? They obviously keep getting it wrong Because we've got stagnation and to a large extent the stagnation We have is caused by the constant tinkering with the money supply and with Interest rates and it's not just like in the old days where they used to for the most part only focus on short-term rates Today with quantitative easing They're buying Long-term bonds mortgage bonds that they're determining interest rates in the mortgage markets and private markets and public markets across the entire board so We've got this massive distortion of central banking and you can't therefore argue That there's too much saving or too little saving or too much this or two there is not such thing as too much saving There is no such thing as a glut of saving. There's a response to the market if There was a lot of savings interest rates could go down Borrowing costs would decrease Demand for borrowing would increase and interest rates would go up But the central banks won't let interest rates go up when there's an increase in a demand so The whole mechanism by which Investment gets adjusted the cost of investment gets deducted capital gets allocated across the economy That mechanism is completely distorted and perverted by central banks So you want to get back to a robust growing vibrant economy is you've got to eliminate regulations Get government out of science and education and importantly get government out of the business of setting interest rates and Determining out of the business of money completely so that interest rates are determined by supply and demand Interest rates are determined by how much investment there really is How much saving people want at any given point in time at any given interest rate? I mean interest rates are artificially low Across the entire Yield Cove across all kinds of bonds Because government has demanded that Central banks have dictated it so When can't blame the market or claim that this is a market phenomena When it is so perverted and distorted and The solution cannot be more of the same more government control of education more government investment in science more safety net more manipulation of the currency and of interest rates by the central bank that is exact opposite of what needs to happen So the bottom line is the West is stagnating because economic freedom is stagnating Developing economies is stagnating Because economic freedom is stagnating until we get freedom up coming out of the way We are going to live through slow economic growth look at Japan Japan is a great example of this Japan is massively regulated massively controlled by the government business Banking is dictated by the government and therefore when it had a big recession It couldn't get out. It couldn't recover. It couldn't increase productivity. It couldn't realign resources Because everything was dictated through central planning Now not everything not in the same way as communism. So there's enough freedom not to completely You know collapse into depression But not enough freedom in order to grow growth again requires innovation It requires freedom. It requires thinkers. It requires risk takers and that's not Japan Not Japan not because there's anyone with the Japanese but not Japan because of the level and extent of government intervention Okay, great. Let me let me see if there are any questions in the super chat and I did save all the old super chat questions I haven't Let me see Which founding father had the best economic ideas? I mean Hamilton had some good economic ideas and I think some bad ones Jefferson had some good economic ideas, but a lot of bad ones None of the founding fathers were very good in economics Economics was a very young field capitalism and not really fully being born in a sense. They were birthing it They had read Adam Smith But I'm not an expert on the founding fathers and far from an expert on the funny fathers But from my limited knowledge, I don't think any of them was was a superstar when it comes to when it comes to Economics and it and and I haven't read enough at the source to tell I mean many people will argue that it was Alexander Hamilton I'm not in position to argue against that. I know others would argue against that claim to Some claim infinite economic growth is a fantasy in the field of economics needs to be reconceived along a long-term steady state Nonsense is my thought of that complete nonsense There's no reason why economy cannot grow forever the myth of limited resources was blown up by Julian Simon the great economist Human needs are infinite the human ability to Create resources to discover resources to figure out resources The human ability to do that is infinite We should be mining asteroids and mining Mars and mining the moon There's the earth is not our limit, but there was no limited resources in any meaningful way so There is no reason to imagine Economic growth being capped in some way There's no limit to how much we as individuals need We discover we need stuff after the producers produce it for us And then we can't live without it iPhones is a good example of that, but We're just starting We've had economic growth For 200 years 250 years. I mean just think of What is possible in another 500 years? I mean you'd have to be a science fiction writer to imagine it but We've just started figuring out what computers can do. We've just started figuring out what robots can do We've just started figuring out all these You know the human the full human potential and the potential of innovation I mean and as we combine human brainpower with computers Wow What will our needs be then? So no, there's no limit to economic growth Because there's no limit to resources because there's no limit to the human imagination. There's no limit to human needs There's no limit To what we can produce All right, we've got some interesting super chat questions that might require whole shows Okay, so that was say economic. Let's see if there are any economic questions Why do so many smart people believe we need more inflation? Many talking heads were saying the opposite 10 years ago. I mean I Don't know why so many people smart or otherwise think we need inflation. It is nuts Because they associate inflation with economic growth There is this myth That economic growth produces inflation but economic growth produces the opposite it produces deflation not Credit deflation, which is a collapse of credit, but price deflation When economic growth is really high For example, look at economic growth. Look at productivity increases in computers That resulted that has resulted in the price of computing going down every single year. It's resulted in deflation You buy a computer today for $2,000 It's what it's got the power of a computer that would have cost you a million dollars 10-15 years ago so Productivity increases tend to cause deflation and it's interesting Because those areas in economy that have massive price inflation have massive increases in cost healthcare education real estate Are the ones in which government is involved the most? And if you free those sectors up privatized them deregulated them Then what you would have is more deflation In almost every sector where the private sector dominates Prices have come down not up So the subcession with 2% inflation targeting or whatever is completely nonsensical and You know it's derived from Keynesian models of the economy that are very sophisticated and very complex and very and and are the exact kind of models that have led us to The crash in 2008 and there were great recession and and the stagnation that we experienced today What we need Is to get over all of that what we need is a return to objective money and Objective money is probably gold but you'd let the market determine that the market has determined it in the past And we'll probably determine that in the future and what you need is private banking Competition for currencies which I think gold would win that competition and would actually have a global currency And I know globalists out there You don't like globalists. Well, we'd have a global currency, which is called gold And that's really a one currency world. I Know that's globalist speak But that's the ideal But people are enamored with government with its ability to print money to control money They're enamored with the power that that gives us over or gives them over our lives they're enamored with the idea Their only government can do this And You know, it gives them immense immense power You know, it's it's stunning to me how really really really really smart people are So utterly stupid It's one of the reasons I don't like the whole IQ thing because I know so many people with Unbelievably high IQ that cannot think Cannot think They've got the host power They can do the math They can't think they can't integrate And therefore they're destructive. They're not productive And and I count most economists or many economists many academic economists if not most of them on the Destructive side because they cannot think they cannot integrate and the consequences are this this The the they can't think outside of a box. So they have a federal reserve So now, okay, what should the federal reserve do? Well, it should target something so you can come up with equations You come up with a number you can come up with all kinds of things instead of saying well, why do we have a why should we have a Fed why can't we let markets do this? all right What is the business cycle a business cycle is just the idea that You have expansion and then you have contraction You have economic growth and you have a recession then you have economic growth and a recession so you have these cycles and It's a business cycle because it's about business activity During expansion you have expansive business activity every economic growth. You have business is growing during contraction business is contract and the idea is that there's this business cycle and one of the the next question is Can you explain the differences between the Austrian and Chicago school? One of the differences between the two is the explanation for the business cycle the Austrians believe the business cycle is driven by primarily by Federal reserve policy by monetary policy by inflation not the kind of inflation people talk about today Price inflation, but real inflation which is the printing of money the printing of money so That is what That is any the Chicago school doesn't believe that they believe that the market basically knows what the Fed is doing Can predict what the Fed is going to do and basically neutralizes what the Fed is going to be it's called rational expectations so they can rationally Predict Fed's movement and therefore nullify them and some in the Chicago school actually believe that the Fed is irrelevant in that sense It cannot have a real impact on the real economy Chicago school is quite mathematical model-driven Believes in a Fed at least most of the Chicago school believes they should be a Fed Milton Friedman was part of the Chicago school most of his life. He was a very academic Economist he was a built models did math did empirical studies and Versus Austrians who don't believe in don't believe in math and economics who It's like Mises and Hayek. They explain economics in terms of You know verbal explanations logical explanations They use reason to explain the economy without the use of math now. I think some math is useful I think empirical studies are useful I I think the Austrians some Austrians go too far in dismissing mathematics and empirical studies But I think generally most students have it right I do think markets can be fooled I think it's a mistake to assume markets cannot be fooled that they always predict that they always get it that they always anticipate Those are some of the differences They're generally free market both schools Austrian tends to be more free market Then the Chicago school as illustrated by the fact that Chicago thinks Most Chicago economists believe they should be a Fed reserve. They should be central banking the the Austrians do not All right, I think that is all the questions. I have On economics, so I'm going to go down the questions Just in order a lot of odd questions, which is great. What is your favorite Shakespeare play and why I? Mean that's a tough one because I love a lot of Shakespeare. I think Roy and Juliet is a stunning amazing play with with with so many Interesting ideas in it About love and about tribalism and and and evil of tribalism and the consequences of tribalism I love Macbeth the consequences of evil and and I mean Shakespeare is such a good Psychologist he understands the psychology of evil. He understands kind of the rationalizations of evil the need to rationalize The the Macbeth and Lady Macbeth's constant need to rationalize their actions to explain it to themselves to justify to themselves and teach others just masterful in terms of the What evil does to you? I mean the scene where she's trying to watch the blood off of her hands, right? And it's not really the blood is not really there. It's psychological Evil destroys you it destroys your capacity for joy. It destroys your capacity for happiness. It destroys your capacity to think I Love for for I love the merchant of Venice. It's not I don't think aesthetically one of his greatest plays But I love the merchant of Venice. It's so It's so clever. It's so smart in terms of its understanding of of Usury and and it's you know, it's explicit Antisemitism but but in you know the clever kind of way You know, but it's illustrative of of a whole line of The way people thought about the world in those days and the drama that then involves and it's it's an amazing place um then my favor, you know and you could go on and on I mean The very few plays of Shakespeare. I don't like but my favorite my favorite is Othello Because it's so well done It's so dramatic It's so striking The evil is the most evil maybe outside of Ellsworth to he one would ever see in a drama Yago has no motivation other than the destruction for the sake of destruction of Othello because Othello is a good guy because Othello is a good guy and it's so tragic and it's so sad and it's so powerful and You know, it shows you again the psychology How good people can be manipulated by bad people how good could be manipulated by evil I mean the problem philosophically with the play is it it gives evil too much credit too much It's two efficacious But it also shows the weakness of the good in this case How easy it is to manipulate what envy with jealousy What distrust will do I? I've seen the movies of Othello. I've seen it on stage. It is truly a Magnificent play and I think probably Shakespeare is best. I'm not an expert my favorite not as best I shouldn't say it's best because I'm not an expert my favorite probably but but I like I like all of those plays I like some of the comedies What's the one Taming of the Shrew I mean if you have ever seen the movie Taming of the Shrew with if you haven't seen that you should definitely with with What's his name Richard Burton and Elizabeth Taylor. Oh my god. Oh my god. That is such a fun movie I mean the acting is so brilliant So look at Richard Richard Burton and Elizabeth Taylor Taming of the Shrew It it's it really is it really is fantastic. I you know, I haven't seen as much Shakespeare's I'd like to Generally, I haven't seen as many plays as I'd like to mid-summer night. Dream is is hilarious and Clever a lot of them are a lot of the a lot of them, you know I'm not gonna tell you, you know, I don't know of a Shakespeare play I I don't like I mean some of them are a little more difficult. I mean I like Henry the fifth I like his historic the history plays where he tells the history of kind of the British monarchy I think all of those are really good So there's a lot there's a lot All right Favorite romantic hero novels that you have read. Well, my favorite are who go 83 83 93 93 Um Lemons Robles The man who laughs Toilers of the sea Those are the most heroic best novels ever I also like a book called Ivanhoe So I like a lot of the kind of the 19th century French and English Romantic writers. There's a lot of them Scalamouche Scalamouche, I think his name is I forget the author's name. There's a lot of good 19th century Romantic Literature that is Very enjoyable. Again, I'm not an expert on romantic literature Have you seen the Witcher on Netflix? I have not I've I've just Downloaded a few episodes onto my iPad to watch while I travel Uh, let's see in Zurich. There is a show Of atlas shrug the satire. I haven't heard of that I'd appreciate if you would send me some information About that a musical satire of atlas shrugged in Zurich if somebody can send me a You know a link to that. I would love to see it.  I mean probably not and I probably should have I probably should have You know, it's one of those things that I probably could have done more To help my kids develop hierarchy of values Anyway, I'm Um, you say soldiers of authoritarian armies aren't motivated But weren't the Nazis some of the most motivated and efficient fighting forces in the world? No, not particularly not particularly I think there's a small cadre of people who you can brainwash for a while into being highly motivated and Brainwash, I don't mean in a technical sense You can convince to be motivated around a cause for a while But at some point that motivation dries up because at some point it doesn't add up and it doesn't integrate into anything I don't Think of the Nazis particularly motivated soldiers I mean, I think they lost the war primarily because of strategic errors made by the nazi high command But that was inevitable But I also think they would have lost the war anyway because I don't think they are capable of fighting as well as a free army So no, I mean if you think about You know, in a sense how easily patent destroyed the german army once american forces And and allied forces landed on normandy and once patent was unleashed on europe how quickly how quickly And and and I think if he if he had been left free even more it would have been even faster. They destroyed the german army so I don't particularly think the nazis were motivated in a fishing fish and fighting force They might have been initially When when they thought oh, we're gonna win and this is gonna be easy and we're gonna crush everybody But once they got resistance once they saw resistance on the russian front Once they saw resistance on there on the western front And but but just think of how much resistance they got with russia and russia had pathetic weapons No motivation. They were communists. So they were less motivated than the nazis and yet the nazis couldn't defeat them I mean weather didn't help lots of other things didn't help, but Nazis are not this amazing fighting force as they're projected not at all Do you like armor deutch? Yeah, I like armor deutch.  You can get out of her music But she's talented and she's worth supporting And enjoyable the music is enjoyable just as You know young Mozart's music was enjoyable and and not that I'm comparing her talent to his I I don't know how wouldn't know how to But um, she's obviously talented and obviously oriented towards classical music, which is good and trying to write sophisticated Uh Important music and we'll see how far she gets. I hope I hope she does very very well. All right, uh, let's see I wonder how primitive man still is intellectual in general knowledge science thoughts I don't understand the question I wonder how primitive man Still is intellectually Is intellectually in general knowledge science? I don't understand the question. Sorry um Do movies like avatar discourage economic growth? Yeah To the extent that they tell people that economic growth is evil to the extent that they tell young people in particular That mankind is evil that we should go back and live in caves Live with with the plants live in the forest Don't try to be civilized don't try to to progress and yes, I think it has an impact on motivation It has an impact on culture and it has an impact on legitimizing The anti-life anti-man environmentalist movement Star Trek the original series on next generation. I mean, I'm biased here because For a variety of reasons in terms of when I was watching tv and when I grew up and all of that I you know Star Trek the original series is is part of my Youth and and next generation was not I wasn't watching television when next generation was on So I watched very little of next generation. So I'm definitely an original series guy And and I think the original series is very clever very smart very intellectual always ideas driven and I'm a big fan And I've been told that the next generation is too I've been told that like there's other parts of the Star Trek universe They even better than the original one in terms of intellectual and ideas and being smart and everything I just have not experienced it directly If no federal reserve, what would have been the best way to stop bank runs? Well, you have to ask why they're bank runs I mean, uh, the federal reserve in and of itself did not stop bank runs. There were bank runs in the 1920s While there was a federal reserve. There was there was uh bank runs in 1932 massive bank runs in 1932 When the bank when the federal reserve was very involved what stopped Bank runs was not the federal reserve, but with the positive insurance Was the government guarantee that your insurance would be safe no matter what happens And I think that's perverse as well. So I don't think in a sense anything should stop bank runs I think the marketplace. I think bank runs are good discipline against bad banking bank runs, uh, uh, you know, the only thing that should, um Stop bank runs if you will is deposit insurance that's privately guaranteed privately priced privately insured And therefore adjust the insurance rates Based on the riskiness of the bank which encourages banks to keep more reserve And therefore be less susceptible to bank runs So I mean, we don't have time now to get into the intricacies of bank runs and deposit insurance and all that but The market solves these problems much better than a federal reserve or or government does and if you're interested There's a lot of literature on free banking. There's a lot of literature on why the federal reserve is bad Uh, George selgian and larry white Are some of the top economists when it comes to free banking when it comes to getting rid of the federal reserve when it comes to To defending fractional reserve banking and and that goes to the can you teach? But my stuff why fractional reserve banking is good. Okay, I've tried before I think with but my stuff I don't think this is the first time it's come up But no, I don't think today is the time or the place to do it. I'm happy to do a show on fractional reserve banking Uh, if if there's will demand for that, but um, I think, um people have heard me and I've I referenced I refer you to good content on this topic, uh larry white george selgian On on fractional reserve banking on free banking. I think they're the best resources for this Um, if okay, so that's if no federal reserve. What else do we have? Yeah, why aren't prices rising given all the qe? well because The qe is not going into consumption Which is what would drive prices up Qe is going into basically two places It went into bank reserves at the federal reserve So it went back into the fed it was distributed by the fed and then sucked back into the fed Uh by the federal reserve through, uh, what do you call it through? Required reserve not required reserves through the fact that the federal reserve pays interest on reserves And an increase in reserve requirements by by uh, dot frank And the second place that the money is going in is because it's flowing through financial institutions It's going towards increasing Financial asset valuations So where it looks like we're seeing inflation, if you will increasing prices price inflation is in financial assets Stock market certainly the bond market low interest rates And and and potentially real estate hard to tell but potentially real estate So there is prices are going up in certain sectors of the economy Not in all sectors those sectors that touch qe are going up Those sectors don't touch qe consumption goods You don't see inflation going up. You don't see prices going up But most of that money if you look at The amount of money flowing in and then the amount of money going into reserves Most of the money flowing in through qe went into reserves What's the best way to achieve your values when feeling down? well It's too I mean the best way I think to stop feeling down is to achieve your values. So The I think the best way when you're feeling down is to go and do something Don't let yourself be mired in the down. Don't let let the down hold you back act It requires an act of massive will To overcome the feeling down And to go out there and act in reality and achieve At the same time if there are real problems that are leading you to feel down Then I think you need to go Think about what those problems are And if necessary go see a psychologist go see somebody who can help you Figure out the things that are keeping you down So that to free you from that down feeling so that you can Push ahead So if it's a real bad situation a chronic situation a situation where you cannot find the will to overcome Then you need to see a psychologist But sometimes you just have a down day and I'm feeling down Don't feel like getting up by you know, I told my wife before the show I said I don't feel like getting up from the chair.  It depends on what's slowing you down All right, sorry for the technical error in the middle. I'm glad we got to Pick up where we left off. I think I've covered everything I wanted to cover I got to all of your Super chat questions Remember to like the show And if you like it remember to share the show and if you like My shows more broadly remember to support the show and you can do that by by supporting the show financially on your on bookshow.com slash support I will be traveling For the next month in and out of here But generally on the road, I will try to do some shows on the road. We'll see how the technology holds up there I will definitely do shows when I'm back here, but that won't be very often and Some of you some of you I will actually see on the road particularly if you're in Europe I hope all of you in Europe are coming to our Warsaw conference I hope those of you in california are coming to either the orange county conference Or the san francisco conference. I'm always excited to personally meet You guys the listeners to this show. All right. Thanks everybody. I'll talk to you soon. Bye