Welcome to Free Thoughts from Libertarianism.org and the Cato Institute. I'm Trevor Burrus, a research fellow at the Cato Institute Center for Constitutional Studies. I'm Aaron Ross Powell, editor of Libertarianism.org and a research fellow here at the Cato Institute. Joining us is Grover Norquist, president of Americans for Tax Reform. He is the author of the new book, End the IRS Before It Ends Us. Welcome to Free Thoughts, Grover. Good to be with you. So before we get to your new book, I wanted to talk a little bit about your background and how you got into politics in Washington, D.C. What was your first political job that you ever had? I was in seventh grade. I went down to, I got on the train from 12 miles outside of Boston into Boston to go work on the Nixon campaign in 68. What made you such a believer? Was it just you loved the politics or were you already a fervent Republican? No, I wasn't any communist. And from there I decided I didn't like my government all that much, but so as a Soviet's first anarchist to get rid of theirs first and start working on ours in terms of size and scope of government. Maybe that would explain so you went from... What did you do on the campaign as a kid? As a kid, I was a kid. I sorted addresses for people they were either trying to raise money from or get out the vote on. So basically they were three by five cards with addresses. Wow. And making sure they were all in... Databasing basically. Yeah. Yeah, in little boxes. Scary how... Far we've come? Yes. Scary how far back we were, yes. So did you work on campaigns in 72 and 76? I did. I worked on the congressional campaigns in what was the fourth congressional district in Massachusetts, all of our unsuccessful efforts to defeat Father Robert Dryden. And I was involved in those and then back in again after college in 80 for the Reagan campaign. Okay. And you also worked at National Taxpayers Union, correct? Yes. Well, as soon as I finished college, graduated in 78, I rented a van and I drove down with my stuff and James Dale Davidson's stuff that he had asked me to bring down from Boston to D.C. to be the associate director, number two guy at the National Taxpayers Union. And within a month or so, I was the executive director because the executive director moved down the street. And that was the year of Proposition 13.  These guys have no idea what they're talking to. But you realize that there are no rules in politics, there's no age requirement, there's no license. They can't tell you, you can't do that. And first of all, the whole taxpayer movement was a bunch of people who didn't have permission to get involved in politics. They made all the decisions, they just kept raising taxes. But you saw Prop 13 that year and there were a dozen other states with initiatives and I worked on all of them. Now which one was Prop 13? Proposition 13 was California. Cut the property tax to basically in half and then it limited the growth of assessments up 2% a year. And it required a two-thirds vote to raise taxes. There are a bunch of very good, solid protections there. Simple. So it wasn't one of these very complicated percentage of GDP measures which, as interesting as they were, they were flawed because they were too complicated. And they were hard to sell to people and hard to defend. Two-thirds to raise taxes, everybody gets it, everybody gets two-thirds is on purpose to be more difficult than half. And people can do two-thirds. If you do three-fifths, they think it's counting slaves and they have to look at their fingers. Two-thirds, they can imagine the pie. They get two-thirds. It's a much more popular number than three-fifths. This whole idea of you thinking about messaging and what people get and what is the simple way of selling a limited government really ties into the pledge. But before we get to the pledge in ATR, you also had a period where you were working with anti-Soviet guerrillas which I wanted to ask you about. Sure. During the Reagan years, I spent some time in Angola working against the Cubans there and helped organize a meeting of the various resistance movements from Central America, Africa, Afghanistan, Laos. And we did that in Angola, a little conference. And I spent a little bit of time up on the border in Afghanistan. Not a complete mess, but at the time it was a lot of concern about the Soviet Union and its occupation at the time of Afghanistan. And was that private? I mean, you did that just on your own or was it through the government that you got involved with? No, all on my own. I did some writing and work with Zivinbi and was trying to just be helpful, bring attention and support to those political movements, which I think were very helpful in weakening the Soviet Empire without costing the United States a lot of money. No American lives, not much American money compared to other ways to organize these things. And it bled the Soviet Union and eventually the Soviet Union collapsed and ceased to exist as an entity. So it was a smart move compared to other ways to have done things. What does such a meeting look like? I mean, I'm just curious. You've got all these resistance. I'm picturing AK-47s involved. What does it look like? What do you talk about? It is interesting because everybody's got the funny hats, right? Afghanistan has the big military hat. And the guy from Laos is freezing because nobody told him that it got cold at night in the desert. It was very interesting. I drafted the joint declaration they put out. I typed it on a Portuguese typewriter without looking down. And the Portuguese typewriters transposed like T and S and R and M or something to get down your absolute gibberish as you looked down. So you had to redo the whole thing. But it was very interesting. Basically it was making the case that this is a common cause. Making the case that this was an anti-imperial movement just as existed in Latin America against Spain, as existed throughout the world in the 60s against Britain, France and the Netherlands and the Belgians and the various imperial powers. And the remaining large imperial power was the Soviet Union. And that was a big deal because they really bothered the Russians and the Soviets to think of themselves as an empire-pressing people. It wasn't just places like Cuba and Mozambique and Angola and Ethiopia. It was places like Ukraine. And that's what really took them apart was that the idea that they had to cease to be an imperial power. Now in 85 you started ATR at the request or suggestion of Reagan. The White House put it together and then they asked me to run it. It was sort of like organizing for America, which the Obama people put together. We were the grassroots organizing campaign in support of what became the tax reform effort of 86. I don't know that they'd ever done that before.  Or, oh yeah, we did this for the first Kemp-Roth tax cut. I think this was the first time out because it was not put together the way I'd have organized it if I was running from the start. But it was a good start and we ran a campaign in support of lower marginal tax rates. And I created the Taxpayer Protection Pledge as part of it because there were a lot of people who were worried that if you cut the rates, if you cut the rates down and broaden the base, over time the rates would creep back up and you'd lose even the protections of the deductions and credits. So the pledge was a written commitment to oppose raising rates or broadening the base unless it was revenue-neutral or better. And we had 100 members of the House and 20 in the Senate who signed. That was enough to guarantee that they'd never go into a dark room and come out and say, we've got this tax increase. You have to eat it now. And we kept building on that to where after the 94 election we had 90 plus percent of all the Republicans and majorities in the House and the Senate. This pledge, I mean politicians all the time stand up and say, I promise not to raise taxes or I promise to do this, that or the other thing. And those promises have no teeth. But the pledge seems to carry more weight than the other. Anything that I give is comparable. Sure, there's a reason. One, it is one issue, one sentence. No net tax increase. And second, it's in writing. And third, it's without context. The reason why politicians can lie so easily is that they're not completely lying. Taxes are the last thing we need to do. This is not the time to raise taxes. I think we should cut spending rather than raise taxes. None of those people promise not to raise taxes.  What they were telling you is how pained they would be when they raised your taxes. That they wouldn't do it now. But now is okay. Well, I said then was not the time. But now is the time. So the pledge, somebody in a speech says, I don't want to raise taxes, but five paragraphs before they said I really cherish education. The guy will come back and say, did you not read the whole speech in context? I was clearly going to spend through my nose. And you should have seen that coming. The pledge is not attached to anything. It's disembodied. It is one sentence. It doesn't go away at the time we faxed it to people. And now it goes online. And people can get copies of it, the press. People would sign the big pledge. You take pictures. You hand copies of the signed pledge out. There's a way of saying, you know, this commitment doesn't disappear. There's no qualifier. There's no weasel word. Other people have like 25 question, 25 part questions or statements or yes, no things that they want on so many different issues. And there are weasel words in there. We can't, I won't do too little. Unless necessary. What does that mean? So the reason it's so stark. It's also so moderate. There's no tax increase. People would come for years. We weren't budding up against the need, quote unquote, the demand for tax increase. And so people say you should change the pledge to be a cut, 10%. Well, if you move it around over time, it loses its power. So when the politicians came up against it in 2010, 2011, and it held, saved us $1.4 trillion, that's what the Obama people wanted as part of their tax deal and what some people would have given them. But because we had the pledge, it protected. It also means you can't get enough Republicans to break with everybody else when so many have signed the pledge. Because one guy might want to break. And we did have some unexpected people wanted to break. Cobra, who's very good on spending, not so good on taxes. But every time he'd run out, he was in fact all by himself and had to come back. And so while people would have impure thoughts from time to time, nobody pulled the trigger on it. Doesn't something like the pledge, though, contribute to the problems in Washington if you're tying the hands of these politicians? Like there may be emergency situations or instances where we just have to raise taxes and suddenly you've got all these people who want a piece of paper that has teeth are terrified to make those necessary compromises. Well, I had a friend, a leftist friend who, when I told him I was doing this episode, he said, you should ask Rover. Would he relinquish the pledge in an asteroid situation? Basically the movie Armageddon. Because he thinks that we're probably just a driver of one over the cliff. Yeah, an asteroid's coming for the planet. Raising taxes would help. I was going to kick out his ear. There's been a flood. Everyone in town is poorer. We must now raise taxes. Not to raise taxes if everybody in town is now worse off. It's a very good question and the power of the pledge comes from the fact that the pledge is so simple. It's easy to understand and it's actually two parts. The first part is stated and the second part isn't. The first part is I won't raise taxes. The second part is when there's a problem, I will reform government to cost less. I will prioritize. I will govern. I will make decisions. We will spend more on this and less on that because we have this new situation. Without the pledge, what politicians do is they simply paper over all existing problems with additional revenue and if they want to do something new, they don't stop doing anything old or dysfunctional or counterproductive. They just add the other on and you just collect barnacles on the ship and taxes are what you do instead of governing. So the commitment not to raise taxes is a commitment to govern. The pledge drives the Paul Ryan budget reform. The pledge drives the sequester that caps government spending for the next decade and without the pledge wouldn't have that. So don't raise taxes, drives limit spending, drives reform government to cost less. And saying you raise taxes is simply saying I won't reform government. Someone on the left would definitely say that that's all well and good but the pledge is actually just an unwillingness to compromise and an unwillingness to compromise is an unwillingness to govern with the other side. So that's why Republican obstinacy is such a problem and it's the reason that our political system is stuck in the mud. It says the party that won't agree to anything without a tax increase. No, they're just wrong. People who tell you that they look, they wish for, they long for the good old days of bipartisan compromise are telling you how old they are because many years ago the two parties didn't mean anything at all. They're just a northern party and a southern party and the fact that somebody was a Republican meant they were born north of the Mason-Dixon line and they didn't know anything else about them. They might want bigger government, smaller government, you didn't know but they were born north of the Mason-Dixon line and everybody in the... in Dixie was a Democrat even though they may be conservative on some issues as opposed to left or liberal. During Reagan's lifetime the two parties separated themselves out. One wants to be left alone in the key zones. One is a takings coalition. They've used the proper role the government is taking things from some people to others. And so instead of the old compromise which was Nixon wanted the government to get bigger Ted Kennedy wanted the government to get much bigger, very easy to compromise between bigger and much bigger, sort of bigger and you do that every year and the government over time gets quite large because you're compromising over the speed of moving in one direction. We now have two parties, one of which actually wants smaller government and one of which clearly wants larger government. Somebody wants to go west, somebody wants to go east. What in the heck would a compromise look like? There doesn't make any sense. And raising taxes is not compromising. It's losing. You say that the pledge so that the no raising taxes part and then there's the second part which is you've got to govern. But isn't the pledge really just incentivizing getting politicians to sure not raise taxes but instead just drive up deficits? Because it's not committing them to… It's not a spending. It's not a spending pledge. And so we get Republicans passing programs that are going to cost more but then not paying for it.  Well, you get the deficits. Taxes drive to the point, to the breaking point. All taxes are raised to the breaking point, to the point where politicians' careers are broken. Then they pull back. And the deficit, the debt is driven to the breaking point, to the point where people lose elections over it. And so it's not as if raising taxes is instead of deficit spending when Clinton raised taxes in 93 with only Democrat votes because we had everybody taking the pledge on the Republican side or almost everybody and not a single Republican voted for his tax increase. The projected deficits under Clinton were $200 billion all the way through because they decided $200 billion is what they could survive politically. They raised taxes and then added the $200 billion and that was the budget path. Now, because they lost the House and Senate in 2004 and they couldn't do the spending they planned to, we actually ended up in balance. But that was not their plan. It wasn't that the revenue came in and balanced the budget. It was that spending was arched down because the spending they planned, they weren't allowed. So no, the Democrats spend as much as they can get away with including a certain amount that they think they can get away with for deficit. The establishment press screams when they think the deficit is caused by a tax cut and there is complete silence. I mean, how often have you heard Tom Brokaw talk about Obama's deficits? Never. It's not a discussion point. And when I was at college, I was told that all this talk about 74-70 and all this talk about deficits was a dirty trick by Republicans to stop deficit spending, which was a good thing. And so deficits was a dirty trick to talk about deficits. When deficits could be used as a weapon against tax cuts, then all of a sudden deficits became a big interest. Then when the Democrats under Clinton wanted to spend deficits ceased to exist as an issue, it's what they used to try and stop lower taxes and they never used it to stop spending. With the pledge, you've been called the most powerful man in Washington. You've been called many worse things by many people. Yeah, that's a tough one to let. Stop being mean to me. But does it ever surprise you that how well it's worked and the kind of compliance rates? What are those compliance rates? How many people break the pledge in a given Congress? George Herbert Walker Bush. He took the sins of the world on himself so nobody else would have to do that.  Yes, exactly. That's what happened. Nobody's life is a complete waste. Some people serve as bad examples. And children, look at that. Don't do that. I remember my parents pointing out a street person years ago. Don't do that, kids. Don't grow up and do that. And they did the same thing with Bush. Don't grow up in just taxes. This is bad. When Bush raised taxes in 1990, he won the primary because he signed the pledge and Dole didn't. That's why he beat him in New Hampshire. He won the general because he said, read my lips and under taxes. He was 14 points down when he said that. He was losing to Mike Dukakis and they said, I'm Ronald Reagan. I won't raise your taxes. People said, oh, we thought you were George Bush. Okay, we'll vote for you. And he won because he was the guy who would not raise taxes. He was going to govern his Reagan's third term. But he didn't. He raised taxes in 90 because his advisors, who were the smartest guys in the world, they tell me, said, you're a lot to lie to the American people. They don't know. You don't know them anything. And he bought it. And he treated the people the way French kings would treat peasants. The nerve of these people that asked me. And Bush said that. He was on one of the cover of Parade Magazine. He and his wife had this feature. And where they're supposed to be talking about life and retirement, he sort of lashes out at me. Who is Grover Norquist? I don't know what he's talking about. She's Louise. He keeps bringing up his self-defeating. Mistake. He had a very successful presidency. If you look at managing the collapse of the Soviet Union, that blood on the floor. A lot of people thought the Soviet Union might go down, but there'd be an awful lot of blood on the floor. He drove Iraq out of Kuwait and didn't get stuck occupying the place for a decade. A lot of wisdom, a lot of common sense. He would have won, except for one problem. He raised taxes. He broke his word. And all the Republicans watched that and said, I get it, take the pledge win the primary, take the pledge win the general, break the pledge, lose. So keep the pledge and win. We've had almost nobody at the federal level, at the federal, after Bush. After Bush, everyone said don't do that. And again, this is the guy who was up at 90% during the Iraq war. And people said he was in fine shape. And I said, no, when that calms down and people focus on the tax thing, he's still in trouble. Anyone? So it's been 25 years since a federal Republican... Yeah, there's some guys at the state level who break the pledge. And former governor of Pennsylvania signed the pledge, broke it, and didn't get reelected. So there's some locals. Sometimes you have to relearn these things. Some states are slower than others. Does it ever surprise you, the way people talk about it too when they say, well Grover, release me from the pledge or Grover's holding my feet to the fire.  Well, they should write this down. The pledge, if you read it, is not to me. It doesn't say, oh, I pledged a Grover norquist. It is to the American people. It is to the people of my state and the American people that I will vote against and oppose all efforts to raise taxes or if you're running for president, I'll oppose in veto any effort to raise taxes. So the pledge is to the American people, which is what I mean. The idea that somebody could, it's like that scene towards the end of the Godfather part one, you know, could you get me off the hook for all time's sake? Sorry, I can't. I have to say to these guys, hey, you didn't promise me anything. You promised the voters.  Don't come and ask, you know, tell me and like ask for pardon or something. I did get repeatedly asked to be the most powerful man in the United States by 60 minutes when they did a six hour interview to get about six minutes of airtime. You know, were they looking at your pores? Yeah, yeah. Because they kept asking the same questions and I kept giving them my answer, not the answer they were hoping to write. They wanted you to cackle and say, I am the most powerful man in America. Yes, yes, yes. And then they beat me senseless for the next 12 minutes of the show. And my answer was is the tax issue is the most powerful issue in American history. Go back to the founding of the country. The country almost split my book and the IRS before it ends us is all about the history of taxation and how it shaped the country. Everyone thought the country was going to split everything west of the Alleghenies and the Alleghenies would go to Spain or France or Britain or independent and we'd only end up with a short line and that was exacerbated by the whiskey tax. One of the great moments in American history, yes. Yes, whiskey or valiant. The excise taxes that they put on, then the excise taxes faded because that's how come Jefferson and the Democrats, Republicans won for 24 years. They said they'd repeal the tax and they did it. Jefferson's advisors told him you don't really have to repeal that, you know, now that you won. Luckily for him and the country... There was no Grover. He said, no, I think I really do have to do this. We weren't lying at the time. But then the country almost split north-south in 1830. South Carolina called out the militia in 1830-31. What they went to nullify was the tariff. Then there was a big part of the civil war that was the tariff. If there had never been any slavery, we would have still had the civil war. It just would have been over the tariffs and such as slavery and tariffs. So it's been a huge part of American history. It's a very powerful issue and what Americans for tax reforms, Taxpayer Protection Pledge does is it clarifies where people stand. You've signed the pledge or you haven't. Very binary. There aren't grays. And politicians come to me and say, well, I've never raised taxes. I said, my neighbor came and said, I've never eaten your cat, but I won't put in writing that I won't. I would keep the cat inside. Now the book, as you mentioned, is called in the IRS before it ends us. Is that a title too hyperbolic? It is not. It wasn't my choice, but I didn't, the publisher liked it. I like it now. I think it's not too hyperbolic. There are two ways in which you mean get rid of the IRS. The first is the way that Bill Clinton said get rid of welfare as we know it. Get rid of the IRS that's political, that is corrupt, that targets people that they don't like, that has, you know, six, you know, the amount of time and effort that people have to put into it, the number of pages in the code, it's much too complicated, it's much too crazy. No one can fully understand it or even comply and not break the rule somehow, not meaning to. And you've seen the ones, they ask ten different people to do the same tax reform, tax payment, and they get ten different answers from experts. And nine of those guys the government could decide should go to jail because they tried to cheat you. So I think that ending the IRS as we know it, even if you kept the income tax is a necessary step. That's not sufficient. You wouldn't want a pleasant structure that still took 20% of GDP and disincentivized work saving and investment. Can we do without the income tax, federal income tax? Well, the first answer is we did until 1913. So obviously you can. There are nine states that don't have income taxes. Ever have? Alaska had it and then they didn't. But nine states that don't have income taxes. As we get more and more states deciding to shed the income tax, Kansas is on track to do that, North Carolina, Mississippi has been taking votes to put themselves on that track, Arizona and Maine. These states are all saying our goal is zero. We have a campaign 50 in 2050 which is to have 50 states without a state income tax by 2050. And I don't expect to do any campaigning in New York or California or Illinois. I expect to win all the states around them and drain the swamp of talent, youth and resources and jobs and California will get the joke or they won't. That's like another gorilla action. It is. It is. We will take the countryside and surround the cities and starve them out for capital people and young people. So I think there's some real... The answer is yes. I think we can get there. But it does take a very serious focus on reducing the size and scope of government on reforming all our pensions to make them define contribution rather than define benefit to take all of the welfare structures and block grant them to the states. We have the 57 states compete on how to provide these programs and to get costs down. So I think that we can get there. The first part should be done in the next few years. The second part will take decades. You said 57 states in all the territories in D.C. No, I'm making fun of the president. Oh, okay. Did he say that? Yes. Oh, okay. We missed the joke. He had talked about visiting all 57 states during the campaign. What is the appropriate... If Quarell had said that... You would never have it memorized. What is the appropriate amount of taxes? Lower, less. Okay. Samuel Gompers, whose statue is like across the street, and I keep waiting for you guys to put a mustache on or something. Samuel Gompers, labor leader in the 1870s, 1880s, who hated Chinese and Japanese people, but otherwise was an interesting character. He went and asked, what are working people when he said more? I mean, there isn't some number. What do we want? We want government to cost less. We want it to be more efficient, more effective, and less intrusive in people's lives. So 20% of GDP spent by the federal government is too high. 10% strikes me as probably still too high. But when we get to 10%, we'll have a conversation with the nation. And if everyone says this is swell, I'll retire and write murder mysteries. But my guess is we'll keep going to 987 and see how far we'll get. Now, at what point can you drown it in a bathtub? That quote, it's amazing. That surprise you watched that quote that followed you around. Well, it is. It's because the original quote, the full quote is, my goal, this comes to what do you want? My goal is to reduce the size and scope of government as a percentage of the economy in half over 25 years. And then in the next 25 years to drop it in half again. And then I think the question was, do you keep going? I'd say, well, ultimately you want to reduce the government down to the size where you could drag it into the bathroom and drown it in the bathtub. So that's the exaggeration. But the first two are, I believe, exactly what we can do, what we should do, take government from 20% of GDP down to 10 and then from 10 to 5. You know, as the economy grows, it's not the government doesn't have to get teeny, but just teeny smaller compared to the rest of our resources. What's the path to getting there? Because on the one hand, getting Americans to get upset at politicians who raise their taxes from whatever they happen to be now is, I mean, people don't want to pay more than they are and everyone would like to pay less. But as you mentioned, getting, I mean, really dramatically reducing the size of government's going to involve doing away with pension programs and replacing them with, you know, savings. And at some point, you know, people love to pay less, but then they're not so willing to give up the things that they have. I mean, you start running into American voter constituencies that are benefiting from this stuff. Yeah, I think it's overstated the actual desire that people have for bigger government. Half of the federal government, federal government is 20% of the economy, half, 10% of the economy, was enacted in two-year periods. So four years of American history created half of our federal government, 34 to 36 New Deal and 64 to 66 Medicare, Medicaid, Social Security, food stamps. So there were some seeds planted in those four years. And it happened when you had several landslides in a row for the Democrats. They had supermajorities. They could do everything they wanted and they put in seeds that over time grew and it was never easy enough to cut down the tree or prune it back as it just kept growing. What the Ryan Budget Plan does, Paul Ryan's Budget Plan, I write about that in the book, is that it makes all these reforms now, but they're all ones that over time bend down the cost curve of government to where instead of 30, 40 years now costing 40% of GDP, it takes it from 20 back to 20. And that's assuming no economic growth from better policies. I think it does much better than that. But at a minimum it cuts government in half over the next 30, 40 years from where it would otherwise be.  But if you say we're going to lose weight and you do it over time, that's a lot easier to deal with. You do it all at once, chopping somebody's arm off is scary, but allowing somebody to lose weight over time is not scary. And it's healthy. So this is where I think we're in a position to and you need to get 51 votes in the Senate, a majority in the House, which is four times voted for the Paul Ryan's plan and a Republican president with enough digits to sign the bill. And then that puts you on a U-turn from our present road to serfdom. I mean presently we're going to Haiti's not as quick as we were three years ago, heading in the wrong direction. We're going to end up like France and no one will bathe or anything. So we need to fix this. Is that going to be too much of a bitter pill though because dovetailing off of Varen's question, would those kind of cuts, it would hurt some people at some point? And would that mean that if you actually signed that plan, if you were president who signed that plan, you would probably lose the next election? Well, the president of the United States just signed a bill which in that present value drops federal spending by $3 trillion. That was the doc fix bill. In the first 10 years, the government spends $100 billion more than it did and that's what they focused on. Politicians like street criminals have short-time horizons. I would smash the window. I would steal the watch. I would go to jail. Damn, I didn't think this all the way through. Politicians, if you say shiny thing here and all you have to do is bend the cost curve on some of these Medicare payments down. I've cut them in half. I just bend the cost curve down to where over the next 75 years the net present value is $3 trillion. Over time, it's a lot more than that. And that's what the deal will be. Here is something today to make you happy. The price of that and what you get is not a tax increase but a one-time spending deal. Then in the future, you alter the cost curve on entitlements and you can drop trillions in real time. So could a Republican president do that? Well, a Democrat president just did. $3 trillion, not bad. Doesn't that commit us to trusting them in the future, though? No, it doesn't because this is a law in the same way that Social Security, Medicare and Medicaid grew. There was just a law. Nobody went in and said, now we will add to this, now we will add to this. On a regular basis, it just grew over time because of the way it was designed. And so those reforms, if you move from a benefit to a defined contribution, tremendous savings, but nobody has to touch it again. It just happens in the structure. If you're saying, oh, 50 years from now, the appropriators promised to behave, no, that I would not trust. Now, you mentioned the tax revolts, which is a big part, the first part of your book. And in the stats you have here, we don't have income tax until 1913. The top rate then was 7% on people who earned $500,000 or more, which would be $11.5 million in paid numbers. Yes. Only 4% of Americans even paid income tax at all. Now about half of American families pay income tax, and the bottom rate is 10%, which is higher than the top rate in 1913. Do you think that Americans have become a little bit too, given our anti-tax roots, have we become too complacent about this level of taxation we're experiencing? Oh yes, absolutely. But when you remind people of how much they're paying, we finally defeated the Spanish-American war tax, which is a 3% federal excise tax on long distance phone calls. I have a question about that. That story is amazing with itself. Simply by focusing on it. Look at this. This is a hidden tax.  You're still paying for the Spanish-American. People were then outraged about a tax. They couldn't have told you they were paying because it was hidden in their phone bill. So when you highlight the cost of something, people will react. And we can get people to change their mind about whether or not they're willing to tolerate something. You described that Spanish-American war tax with just a funny sentence by itself. Remember the tax. We can describe it as the perfect tax because it has all these elements to it. It persisted for it. It doesn't really exist anymore. It's mostly gone. It's not completely gone. It's mostly gone. But how did it come about in the original? What was the idea? Sure. 1898, when Spain so violently attacked us and we had to defend ourselves, we needed to... And take over Guam and the Philippines and Saipan. Yes. Serve them right. They put in a tax. A tax on long-distance phone calls charged by time and distance. At the time of phone was $5,000 in today's dollars. Very few people had phones. Very few people made long-distance phone calls. So it's a tax on the rich people. So of all the things politicians do to trick you into agreeing to a tax increase, this nation found in a tax revolt, oh, it's only rich people. Okay. It's only temporary because we're having a war with Spain. Well, last forever, right? Falling apart as it is. Okay. It's patriotic. It's a war. Henry James, the only taxes people like to pay are war taxes. That's why everything needed to be the moral equivalent of war in order to trick you into having higher taxes. The energy crisis, moral equivalent of war. Jimmy Carter. He had read his Henry James. And so all of this stuff, it was hidden in the bottom of your phone bill. So all of these things combined to make it really the perfect tax. It lasted more than 100 years. It then became a tax on everybody because 98, 99% of Americans have phones and only really rich people can afford not to have a phone. So we went from a tax on the rich to a tax on average people. Came out at 3%. And we eventually got it mostly killed by focusing on it. But Clinton at one point did veto. He did. We had it all gone. And Clinton vetoed it. It was part of another package of things. And Clinton was the keeper of the Spanish-American war tax. Yeah. And you also would write about more about just the relation between war and taxation in general. Yeah. There's a long chapter. I mean, every time they have a war, the war ends and the taxes don't. The only war that really closed down all the taxes at the end of the war was the War of 1812. How those were the days? All the others. Not only the taxes stayed, but the level of spending stayed up more than before the war. Civil war. Government was sort of permanently made larger. And you saw this again with the First World War and the Second World War. Government kept getting bigger. Now, we used to spend 10% of national spending on Pentagon in the 60s. And now it's down to about 3%, 4%. But government's as big as it was because that money was just absorbed by other parts of the government. So our friends on the left, they like wars because it means more money for the government. And they're willing to wait to get their piece of it to laugh at the war ends, which may be why they run anti-war campaigns. And the war quickly and keep the taxes. But they do. And there's some of the books that I'd looked at researching this. I'm reading these left-wing books and they're so excited about all the taxes that the war has. But you were against that war. World War I was, of course. And Vietnam. But they love the taxes. What's wrong with seeing a silver lining? That's right. In other people's deaths and misery. But yes, war is the health of the state. And it is how you grow the government and then it doesn't snap back. One of the things, the one I can think of at present, that George W. Bush did right, was he kept all the spending in Iraq and Afghanistan in a separate overseas contingency thing. So there's this emergency bill they had to pass. And the first couple of times it happened, I said, wait a minute. Who are you trying to fool? What do you mean there's an emergency? You got 100,000 guys over there. You didn't know. Why don't you put it in the budget? And some smart person said, Grover, come here. We're not putting it in the budget because if you put it in the budget, when the war ends, it all goes over into other spending and it gets absorbed. Whereas this way, what it ends, it's not in the baseline. And the first victory we had over Obama was when we faced him off in 2011, we took the trillion dollars he was planning on spending over the next decade. As soon as Iraq and Afghanistan ended, he was putting that all into the baseline to spend on other stuff. And that's what we took away first. That was the easy way of doing it. For those who don't, this is an important point a lot of listeners may not understand baseline budgeting and what this sort of ledger domain is when they voice these things on it. Can you explain how that works? Sure. When they say the government spent more or spent less, they mean compared to what? Compared to plans. And under Bush, they were spending $100 billion a year on Afghanistan. So a trillion dollars over a decade. To end the war would mean that that $100 billion every year was now, if you had it in the baseline budget, it's now part of the budget. But we don't need it for the wars, so everybody will grab it and take it for other parts. But if it's not in the baseline budget, if it's off in some separate budget, when it ends, nobody gets any more money. And that's how you can say that too. So when they say you're cutting government over time, even though it's still growing, but at a lower rate or growing higher rate. It's cutting from their plans, from their hopes, from their expectations, from their desires. I wanted two ice cream cones. I got one. I was cut. I was planning on having seven ice cream cones in the future. Now you lowered it to six. That's right. And so now you've been at a cut. Even though I only have five now. Yeah, exactly. We have no idea how to produce the sixth one. Yes. Let me ask a question. Similar lines of the ways of Washington are a mystery to people outside the bow way. When you say things like... They're a mystery to me inside the bow way. You know, this is... We had this victory. We, being American tax reform, had this victory against Obama. What does that mean? Like, what are you doing on a day-to-day basis to achieve these victories?  That's the important part of your job. The incantations. Yes, exactly. We work to build a broad coalition opposing tax increases to start with. So it is a guardrail that you can't get past. And it's terribly reasonable because on this side of the guardrail, you can do anything you want. It doesn't violate the pledge. But with the guardrail, we were able to stop Obama's plans for additional spending and taxes. And the Republicans held, the Republican leadership held and said, we need $2.5 trillion in spending cuts, not tax increases, spending cuts. And Obama, for the longest time, would hear a deficit reduction when we were talking about spending reduction. And this is so important for conservatives, Republicans, libertarians, limited government people. We should always focus on spending and never on the deficit because there are two ways to fix the deficit. Spend less. Oh, that's boring. Washington Post is not interested. Or raise taxes. Oh, that's endlessly fascinating. And so if the problem is the deficit, the Democrats have a solution that is technically every bit as good as the Republican solution, which is raise taxes. But if the problem is too much spending, there are only two ways to fix it. Cut spending, which the left doesn't have an interest in. Or grow the economy so that the same size government becomes a smaller part of it, a smaller problem. And free market economists, free market advocates have lots of ways to make the economy grow more. The friends on the left have no idea how to make the government grow more.  They stick the labor unions on it. They tax it. They regulate. They spend it. And the thing's just bleeding all over from leeches. And it doesn't get healthy. It doesn't get better. They don't have any plans to make the government grow faster. The economy or the government? I'm sorry, the economy. The economy or the economy. There are plenty of reasons and arguments for making the government to get bigger, which doesn't help the economy grow. So I think it's very, very helpful and important to focus on total government spending and the percentage of the economy. Grow the economy. That's good. Reduce the size of the government. That's good. If you focus on the deficit, you don't get either of those. Now, you have some interesting... There's a lot of... It's not just complaints in your book. You have a lot of proposals for actually helping some of these. Oh, yeah. No whining in there. No whining. One of the more interesting ones for spending that you mentioned is your idea for the sort of spending-brack type of thing, which I've actually thought about before, because sometimes Congress, it's kind of like an alcoholic and you got to take away the liquor and put it on the shelf and don't even let us... Don't even give it to me if I ask type of thing. So what was BRAC and how would that kind of work? BRAC, base realignment and closure, was how we began to reduce the number of unnecessary military bases. Dick Armey and a Republican, a conservative Republican from Texas and a sharp liberal Democrat from Indiana together came up with this idea that the Pentagon would come up with a list of bases they didn't particularly want anymore. There were many. And then you'd have this bipartisan group that would look at them and choose some of them. And then unless Congress voted no, that list would be closed down or reorganized. You could move half of the guys somewhere. And this allowed everybody to vote for creating the BRAC so that it would happen. And then when their state or city was going to lose the military base that nobody needed, but they thought it was nice to have the federal money flowing in, they could vote against it, but it didn't get you the two-thirds to defeat it, and therefore it happened. So we got to vote yes or no. We needed to yet cover and the right thing happened. You could do that with the number of post offices. There are many more post offices than necessary in the United States. I mean, more than one is more than necessary. You can take that as far as one wants to go, but there are a lot of government programs that you could prune back this way. I think we should do the same thing with federal laws. There are 4,000 federal laws that could send you to prison. Do you really need 4,000? There used to be 39, I think, when they started the country off. And I don't know at all, 39, where no trek could remember them. Piracy was one of them. Yes, I certainly can't remember the 4,000. So I think it's extremely helpful to come up with ideas. You set up a BRAC and then, unless Congress acts, these things fade. You also the anti-appropriations committee. I love this because it's real. There was actually something called the BIRD Committee, which is named after Harry Bird, fiscal conservative sort of out of Virginia. And he wanted to fund World War II by cutting other spending. And he set up a committee called the BIRD Committee. I called the anti-appropriations committee. This group could only recommend cutting the budget. So they write bills and they hand it to the House and Senate. And sometimes they pass them. That's how we got rid of the Civilian Conservation Corps. That's how we got rid of the work projects of the administration. These things would still be with us. I mean, Civilian Conservation Corps over 50, 60, 70 years would have morphed into national service if it hadn't been shut down to take that money and pay for World War II. I am hopeful that we will get this bill. We started up in the next year that we can pass it in the next two or three years. And then people like Jeff Flake of Alabama and Massey and Justin Amash could fight to get on the committee to unspend. That could be a great campaigning thing at this point. You could have press conferences. You could get attention to yourself. You would have actual deliverables. Here is what I saved you. This is the bill I wrote. We cut this budget in half or in 10%. And what they did with the BIRD Committee they cut something in a quarter, then a half, and then they'd get rid of it. Drown in the bathtub. Yes, exactly. So I think there's some real opportunities there. And the book has a series of a couple dozen solutions to different things. Why the focus exclusively on taxes? I mean, government does lots of really awful things to us and restricts the way we can live in all sorts of ways and taking money out of our pockets certainly not all of it. Taking money out of people's pockets enables the government to do everything else because it has that money it can also do other stuff. Because it has that control over your life it can control other things. So I think it's the pressure point that you start taking away their power. You're right. When you don't let them tax and you don't let them spend they will regulate. But water always tries to find a way around a dam. Power always tries to find a way around restrictions on power. And that shouldn't surprise you. You just go, okay, we're going to ask once we've stopped the tax increases, once we've limited spending we are going to have to deal with judiciary, judicial power, and executive orders, that sort of thing. That's not a problem but it's one you anticipate you just have to live with. So we have two, there are two proposals you talk about by IRS, you bring up fair tax and flat tax. Fair tax, what is the fair tax? It's one proposal for kind of... Sure, fair tax is a retail sales tax. The idea that you get rid of the income tax abolish the 16th amendment and you have a that or a sales tax that is collected not from you but from the store you buy something when you buy a hamburger shirt. Now both... And the flat tax is you take the present income tax you have a single rate and you broaden it out and you have very low rates compared to what we have today. Simpler. And I think they're both an improvement over what we have. They both bring you to taxing consumed income one time at one rate. So an economist would look at the two and say they're the same darn thing. Why are you asking me to pick between them? People look at them differently. I won't have to do the tax as some business guy will. Since more and more people are going to be self-employed and we're going to have hundreds of thousands of Uber drivers who pay their own taxes instead of a few thousand taxicab, unionized taxicab guys who the company fills out your tax form. We're moving to a world with more independent contractors and fewer employees. So I'm not sure how much it buys you to... Do you think that will create a more of a movement to simplify the tax code, possibly, because people will be doing their own taxes and the withholding will not be... If they're an independent contractor and they don't have withholding and then you write a check to the government... They notice the taxes more. Yes, that would have an impact and I think it is having an impact to Uber, Uber, Lyft, Airbnb, more and more people. The number of people... And it's great because the journalists these days have several jobs because one company can't hire somebody necessarily. People have several jobs and they're independent contractors. And once they get it, it's easier for them to write about it intelligently. So the Tea Party seemed to have changed things. Would you agree? Do you think it's a different era now? Oh, absolutely. This idea where people whine like the Tea Party completely disappeared, they're wrong. They went to Congress. It changed the world. It changed the direction and trajectory of the modern Republican Party. We were the party that... The Republican Party's party would not raise your taxes. Now, they invade small countries that can't pronounce, but they wouldn't raise your taxes. That was the good selling point and what won a lot of elections, won the House for them. But as Bush showed us, Bush, George W. Bush, he never had a focus on limiting spending. It was just never on the list of things to do.  What are you talking about? It wasn't on their to-do list. Oh, I mean, they probably defended by that, but they never brought it up. They never pushed it. It wasn't what they did. And every time there was a crisis, they answered the crisis was more government.  Let's have limited government. That is what you should be doing. That is what competent governors do. But Bush didn't. And so there was a frustration by average people who were otherwise well-disposed towards Bush and the Republicans about spending. And Obama came in and really went crazy on the spending and people said, okay, this is it. This is scary. I had thought that you could never get the American people to rise up and revolt against spending too much. That they would be... You'd have to wait until spend too much turned into tax increase. Then the Pitchforks would come out and everybody would go crazy. People in the 70s in California didn't have a revolution. It wasn't until all of that spending upward drift turned into tax increases on your home, then people said, now we've had it with you. Well, where were we in the last 10 years when this was coming? As clear as day, this was coming. I didn't see it. Because of the speed with which Obama raised spending, the aggressive nature of it, the understanding that there was nothing in Washington that could stop them from doing anything because they had 60... The lack of any votes on Republican sides. FM, as Rahm Emanuel said. Yeah. Every Republican voted against Obamacare period. And the D's still had... They could just pass it. So the people had it scared. And you had a very strong reaction on spending. And so the people got elected in 2010, which was dozens and dozens and dozens of congressmen and senators, all came in with ringing in their ear, stop spending, stop earmark, stop spending, no tarp, no bailouts. Change is the nature of who you are. You come into office. You learn what the people want. And there are people who 30 years later were voting as if the Great Depression was still on in the 60s, from the 30s. And those guys coming in are going to be focused on spending as long as they stay in Washington, D.C. So the Tea Party changed the direction of the modern Republican Party to be not just the party that won't raise your taxes, but the party that fights spending. And that's a big deal. So is tax reform urgent? And I guess the last question would be, are you optimistic? I'm optimistic long term. Nothing terribly interesting happens until Obama moves on, because he'll veto anything too good, although he just signed a $3 trillion net present value cut in spending. So I'm open to possible deals. He's supporting a trade agreement, which he would never have done in the first six years of his presidency. So there may be some opportunities to pop up, but we should just be ready. And so there are people planning tax reform packages. And Casey wakes up one morning and says, I need a legacy. Let's do lower marginal tax rates. I'm not counting on it. I don't think that's the way to bet, but why not be ready? But overall, in the longer term, you're optimistic. Things are going in the right direction. We finally have federalism working in a way that's going to help drive the country in the right direction as people are leaving high-tax states and big-tax spending states and moving to low-tax states. The electoral college is collapsing into the red states. Thank you for listening. If you have any questions, you can find us on Twitter at Free Thoughts Pod. That's Free Thoughts POD. Free Thoughts is produced by Evan Banks and Mark McDaniel. To learn more, find us on the web at www.libertarianism.org.


Before we get into the video, people, I am giving away 11,500 Apex coins every month to be my chance to win them, make sure you are subbed to this channel and have that bell notification button ticked to drop a like on the video only if they comment down below. More details are in the video description. What is going on guys, welcome back to the channel and I do appreciate you being here. Today I bring you another Apex Legends video and today guys I bring you all the details on the latest update to the game including guys a bug that's restarting or resetting ranks and deleting all which people have loved. So firstly guys, I recommend you holding off on update in the game while they get things sorted. Their Twitter account can be found linked within the video description, I recommend you follow it just to keep up to date for when they get bug fixed. But in terms of the update itself, what's been added and what's been changed? Quality of life, adding the ability to party up with the last squad you played with. To the match, you will see buttons in the lobby area that display the last two people you played with and you can invite them to your squad. You can choose to allow invites or ups out in the friends menu. Additional behind the scenes improvements for squashing cheaters, added mute button during the intro and legend selection. When using the report player button for PC, you now have the option of selecting cheat or other. The option to turn off lighting incompatible hardware, for example, raise the chroma devices in the mouse keyboard settings. Added informative messages that appear on PC for crashes due to run out of memory, CPU errors best explained by overclocking or overheating. Added better collision to other turrets and supply ships. Stability fixes to all platforms. Bug fixes, fixed issue where the Battle Pass rewards page would not have a default item selected, resulting in a mostly blank page. Fixed bug for PS4 and Xbox One where sometimes attempting to use a keyboard to chat could cause a fatal script error. Fixed bug with banner cards not showing up during and at the end of a match. Jump pad phase walk into reactions. Octane's jump pad no longer affects players when using into the void ability. So not a massive update, some great changes though. I am definitely digging the option to invite the last two players you played with if you do play in a team with randoms and you do good, I think that's a great, great addition I really do. No dating fortnight's next update, you'll see added to that too. But that is that people. Now what I also believe this update has done is added the Alstar into the game. Interestingly people who have been reset by the bug and have EA access, as we know you get 5 free Apex packs with EA access, but because they've been reset they get these free packs a game. A lot of people are reporting that they are getting Alstar skins from these packs, like the image we see on screen now. So the Alstar is now that ready to go live people, so expect that over the next few weeks that is for sure. But yeah guys just a quick update on the latest news surrounding Apex Legends. There hasn't been much news as of late, but as always I'll keep you guys covered on anything else that drew up. But on that note guys we have come to the end of the video, if you guys enjoyed it leave a like and leave a little sign up out, if you are new around here and enjoy daily Apex Legends videos be sure to subscribe, and if you never want to miss a video I upload a content notification on by hitting that bell button. But guys thanks as always for stopping by, hopefully you enjoyed the video and hopefully I will see you on that next one.


Thank you for having me here. I thought I would spend a very quick 10 minutes just giving you an update on the Hyperledger project and a lot of really exciting things happening for us here in China. My hope is that if you're not already looking at this technology or playing with it, that this inspires you to kind of give it a look and to think about some of the ways that it can be used to solve some real world problems today. So Hyperledger, as again many of you know, we're a project hosted, embedded entirely inside the Linux Foundation, like many of the other projects here. It's a three-year-old open-source project to advance cross-industry blockchain technologies. And when we think about blockchain technology, it's not really the cryptocurrency side of that. That's interesting and there's a lot of people focused on that. This is really more about the use of two technologies in particular. Distributed ledgers and smart contract systems and lots of different ways that that plays out. But this has been a three-year-long effort to go and build a series of technologies that make it possible for you to go out and build blockchain networks. And just in the same way that the Linux Foundation has a whole set of projects like Hyperledger, even within Hyperledger we have a whole series of projects. We call it the Hyperledger greenhouse to try to get across the sense that these are technology projects that are distinct from each other. But they share a lot of things in common. They share an open-source license, the Apache license of course. They share a common development methodology. This is all built out in the public. But they offer some very different features and functionality. And I won't go into too much depth. There's a lot more information on the Hyperledger website. But just to give kind of a taste, so many of you perhaps have heard of Hyperledger Fabric. Fabric is very widely deployed. I'll show some information about it later about how widely it's used and a bunch of examples of where it's being used. And it's a very mature platform now for building all sorts of different blockchain applications. But even within Hyperledger we have competition because we believe very strongly just like in databases and programming languages and even in operating systems, sometimes it's good to have a set of options when you go out to try to solve a problem, right? And there's a lot of different ideas out there about the right way to do a distributed ledger, the right way to do a smart contract. So we have another project called Sawtooth, which takes a very different approach to this. Sawtooth has some novel attributes that make it easier to plug many different kinds of smart contract engines in, as well as support much larger networks of nodes on a permissioned and perhaps even unpermissioned network basis. Other projects at Hyperledger are focused on digital identity, for example, Hyperledger Indy, very much on that, and others that go up the stack, so to speak, to start thinking about whole categories of use cases that might be appropriate for this. So Hyperledger Grid, for example, is very much focused on supply chain applications. You can pick up Grid, it happens to run on top of Sawtooth, and very quickly have a supply chain traceability solution in place. Lots of other things to talk about, but we're really moving in the direction of components and libraries and templates that'll allow for a lot of mixing and matching. Partly because we believe what will happen in the long term is all these different blockchain technologies out there in the world will start to consolidate, will start to combine, and maybe converge in the same way that the Linux operating system converged a lot of the server operating system world over the last 20 years. And we'd like to be there to help that convergence be a very graceful kind of process for users of blockchain technology out there. So lots of things to investigate in here. A lot of momentum in the public project, I won't spend too much time on this, but again in three years we've had lots of different projects launched, lots of different people take our edX course, over 100,000 different people taking the public training about how to build a hyperledger network. We have a whole lot of members as part of hyperledger. In fact, hyperledger fabric itself has gotten very widely deployed out there. In fact, every major public cloud now supports hyperledger fabric. So both inside of China, so Baidu, Tencent, Alley, and Huawei on all of their public clouds, they offer the ability to stand up a fabric node or even a full fabric network, as well as build up networks that span multiple clouds at the same time. But also all the public clouds outside of China support that as well. And it's really hard to get a sense for market share, like how many people are using hyperledger technologies for enterprise blockchain applications versus the competitors. There's not a lot of competitors. There's a couple that are known as Corda and Quorum and some of the public Ethereum or even enterprise Ethereum clients. Arguably our competition here or there. Forbes did a survey recently of 50 very large companies and found that over 35 of them are using hyperledger fabric or fabric-derived versions. And then even more of them are using some of the other projects of hyperledger. So really a good sense that we're becoming kind of that Linux kind of dominant play here. Here in China, we have a lot of great members, a lot of great support. As I mentioned, the major organizations that run clouds are all not only supporting fabric but also members of ours. But you'll also see, and it might be hard from the screen from that distance, a lot of other types of large organizations like Lenovo or JD.com, very big e-commerce place. Companies in the supply chain space like H3C, a lot of banks like China Minsheng Bank, China Citic Bank and a lot of interesting organizations and another one called Beijing Genomics Institute that I'll mention in a bit, but as well as a lot of startups in the energy sector, in the healthcare sector, lots of folks who are pulling this together. We've also pulled together a real collection of the different universities here, like Beijing University, Zhengjiang University, as well as the Chinese Academy of Information and Communication Technologies, which is the predominant organization in the Chinese government setting blockchain policy for the companies here in China and for the nation. But the heart of what we do has got to be about developers, right? At the heart of every Linux Foundation project, it doesn't matter how much press coverage you're getting, how much corporate interest you're getting, or momentum out there, unless you're actually getting code written. And from the very beginning of the project, when I first joined, you know, just after it started in 2016, I came to Shanghai for an Ethereum developer conference hosted just across the river and started to meet a lot of people who were thinking about the application of blockchain tech to the enterprise. That's where we really got started and recognized that China needed to have a first-class position in the blockchain space and in Hyperledger, and that Hyperledger needed to be a global technology. And so, in addition to all those members, we also have a tremendous amount of software coming in from developers here in China, about 15% as best we can tell, because sometimes it's hard to tell where contributions come from, but also many of the projects in Hyperledger, like Caliper, which is a benchmarking tool, actually started as projects written originally by developers here in China. And a key part of that outreach, as well, has been engagement through meetups, engagement through kind of face-to-face small events that we've done. In March, we did what we called a bootcamp in Hong Kong, which had quite a bit of participation from developers in China. And our bootcamps are really designed not to just be a hackathon or a training environment, but intended to try to help bring the developer community along with understanding how to become a contributor to the project, right? How do we get past the language barriers? How do we get past the cultural barriers? How do we really engage with the global Hyperledger open-source community if only to get our questions answered or our bugs fixed, but really, hopefully, to become co-developers on that? So look for future bootcamps soon. And also, we do quite a few of these meetups and gatherings in Shanghai, in Hsing, in Hongzhou, in Shenzhen, and I think 15 different cities have had Hyperledger events now, so watch for that. I have a series of four different examples of where people out there are using it. Please download the presentation deck. I'm not going to have the chance to go through all of them. Very quickly, JD.com built a blockchain network to provide a lot of different functionality in finance, in supply chain traceability, and in settling legal disputes. They actually built a system that talks to the Hongzhou, sorry, the Guangzhou Internet Court system so that contracts and agreements between businesses doing business in Guangzhou can be presented as evidence in a court trial so that you know that you're looking at all the right evidence and it's all time-stamped and those stamps are stored on the blockchain network. Tencent Cloud launched a really interesting project around warehouse receipts and being able to finance them. And they saw a lot of advantages that you would expect from digitalizing an otherwise paper-based process, but the key thing here is that blockchain technology is being used to replace things like signatures on pieces of paper and faxes and phone calls and all of this really heavy-duty overhead that otherwise we depend upon humans to do with each other. And that's so that we can get to a sense of trust. Lots of other big projects without the time to talk about in trade finance, also in genetics, being able to trace the ownership of data and where it comes from and have people given the permission to properly analyze that data in the search for cures for cancer, all this amazing stuff. It's all happening here in China and it's happening on hyperledger technologies and it's really exciting to be a part of this big thing together. So lots more information available at the hyperledger website as well as a lot of us are very reachable on all sorts of systems including WeChat, so please get involved and hopefully we can talk about your project here on stage next year. Thank you.


Good morning and welcome to Same-Same Markets on Friday the 5th of June and this quick look at the week ahead beginning Monday the 8th of June though some of the data that I will be talking about will actually be happening over the weekend. Before we get started just a couple of disclaims as we start to look back at the price action of the last week or so which has been yet another positive week for global equity markets and European markets in general. We've broken out through a number of key levels on the upside and in the case of the NASDAQ 100 we've actually seen new record highs. So equity markets continue to really only know one direction at this point in time and that's to go ever higher and when you look at the divergence between what the economic data is telling us and what the markets are telling us it's chalk and cheese. I mean if I'm honest I hate this rally because the rally runs completely counter-intuitive to what the economic data is telling us. The data is terrible and while you can make the argument that the worst is probably behind us in terms of the data but that doesn't necessarily mean that we're going to get into a v-shaped recovery and that's certainly what markets are pricing in. You're certainly seeing that on the FTSE 100 we've continued to push high. We've finally broken above that 50 per cent Fibonacci retracement level from the 6,230 level. We sort of flirted with it towards the end of last week and finally broke through it on the Wednesday. We are currently in the process of potentially trading all the way back up to 6,580 and if we look at the weekly chart we can see straight away again three positive weeks. The move off the lows that we saw all the way back in March has been nothing short of staggering back towards levels that we last saw all the way back at the beginning of March before lockdown. At the moment the FTSE is trying to fill this gap here between 6,200 and the lows on this candle of 6,400. We are around about there now but certainly if you look at the FTSE and you look at say for example the German Dax and a similar chart here we've broken above the 200 day moving average. We can actually draw a line through these lows and you can conceivably argue that there is certainly a lot more potential now that we've broken through a number of these key levels for further gains essentially back to the highs that we saw in February which is an absolutely mind-boggling turnaround and it's not because the economy is going to be in a much better place than Marcus were thinking at the beginning of the year it's simply because of the amount of money that's been thrown at the problem not only by central banks and central banks are throwing a mind-boggling amount of money at it only this week the European Central Bank upped its pandemic emergency purchase program by another 600 billion euros to 1.35 trillion euros. Now there's some who will argue that it wasn't necessary for them to do that given that they actually haven't even used the initial 750 billion euros but we've also had the German government this week undergoing a significant fiscal stimulus program another fiscal stimulus program this time 130 billion euros largely made up of loans to small businesses and targeted PAT and other tax cuts so when you tie that in with the fiscal stimulus that's coming out of the US there's talk now of another fiscal stimulus program in light of the unrest that you're seeing rippled out across US cities and a huge fiscal stimulus program undertaken by UK authorities there is an absolute wall of money a wall of money flowing into stock markets at the moment or flowing into the global economy and some of that is going into stock markets one thing I would say despite the gains that we've seen this week over the course of the past three weeks in equity markets gold is only a little bit weaker so while there is this expectation that central banks will remain in pretty much full-fledged easing mode for the foreseeable future I'm going to say the foreseeable future I mean the next four to five years at the very least um the prospect of gold falling sharply is probably fairly low given the risks that this could actually turn out to be inflationary two or three years down the line at the moment there's no risk of inflation very much concerns about deflation hence why the european central bank justified this extra 600 billion euros but there are still political considerations to think about in terms of the fiscal stimulus that the european commission have also said that they are looking to implement next year there is a significant chance the fiscal stimulus which is being driven by the european union european commission could actually get watered down and in fact could not happen at all so there is an element of hope over expectation when it comes to some of these measures but nonetheless it's been enough to help drive equity markets back above some very key um resistance levels and in this case it's the DAX above the 200 day moving average the 50 day moving average is starting to turn higher momentum it's nearly positive and we very much remain in by the dip mode um I talked to an awful lot about over the course of the past couple of weeks that while we are below these significant resistance levels I remain suspicious of this rally um simply because of the fact that there was significant resistance in and around um some very key um previous highs now these highs have given way you really do have to go um with the momentum and the momentum is you're getting higher lows getting higher highs so essentially we are now in a very much by the dip mode so the prospect of a retest of these peaks that we saw at the beginning of the year certainly remains very much on the cards while we're above for me I think the the support level apart from this line this blue line here is 11,568 which is essentially the 61.8 of an edge of a tracing level um of this entire down route it's a similar Solry 40 S&P 500 you can see that here it's also broken above it's 200 day moving average and as those of you who follow me will know when these indices and I look at the NIC I look at the DAX and I look at the S&P when they all confirm a break of a similar technical indicator that generally tends to tie into my policy of looking at DAO theory the histories with the the indicators basically need so the averages confirm each other so in this case I look at the S&P I look at the DAX they move in a fairly similar way the fact that both of these indicators have broken both of these indexes have broken above the 200 day suggests there's more to come given the fact that the NASDAQ has retested its previous all-time rise now that we're above the 200 day moving average now we're above the 3000 level on the S&P 500 then really we are very much in by the dip mode now does that mean that we're not going to see a second wave of coronavirus infections does that mean that we could well see further economic shocks absolutely it does mean there is a risk of that will that derail this equity market rally at the moment you've got to ask yourself um what the what you know what what can stop an equity market sell-off you've got the Fed buying corporate bonds you've got the Fed implementing policy in a way that's never been done before you've got the ECB you've got fiscal stimulus really with the amount of money that's being thrown at this until such times as you get a significant break below significant support levels you really have to look at what the price is doing and the price at the moment it's very much momentum is in favor of further gains and while and I'll say it again I hate this rally because it flies in the face of all the fundamentals ultimately you have to look at it in the context of what's being thrown at it and until such times as the current uptrend that we're in gives an indication that it's about to come unstuck you basically stay with the underlying trend so those the those are the key levels on the S&P 500 so just quickly just quickly recapping um the the the FTSE 100 um support now comes in around about these previous highs 6,200 so I think any dips in the FTSE should find decent support around about 6,200 so those are the key those those are the three key indicators that I've been looking at this week in terms of equity markets have a quick look at the NECO 225 and again we've broken the 200-day moving average so momentum is very much in equity markets favor it's very much in the case of look to buy dips until such times as the current uptrend shows signs of running out of steam at the moment it doesn't so looking ahead um you've really got to ask yourself whether any of the data that we're seeing come out really matters that much today we have non-farm payrolls obviously I'm giving the I'm recording this before the payrolls numbers are released they are likely to be bad but it's also very likely the markets just do not care um and really it's not about how bad the data is it is backward looking it's really what is being thrown at the economies across the world trying to mitigate the economic damage that's likely to result the high levels of unemployment um which are likely to get worse before they get better but the hope is and the expectation is that this wall of money and this fiscal stimulus will prompt the unemployment rates that are currently rising to be much much lower by the end of the year than they will be or than they are set to be in the next couple of months so in essence markets are pricing invest case scenario v-shaped recovery rising unemployment now with an expectation that unemployment rates will be much lower by the end of the year as furloughed and laid off workers returned to the workforce by the beginning by the end of q3 and the beginning of q4 so next week what are we looking at we've seen a big sell-off in the dollar this week and the euro's gone up significantly over the course of the past few days we can see that here in the last three weeks the euro's gone up along with pretty much equity markets very much risk on we can see that here back towards the previous highs you've got to think that the air is going to start to get a little bit thin anywhere near around about 114 and 115 in these these previous highs from a year ago June last year but also March this year whenever we've been above 114 the euro hasn't been able to sustain that momentum very very long so when we look ahead to the week ahead having come off watch is another positive week for equity markets and a poor week for the dollar we've got the latest head meeting on the 10th of June we've got the latest China trade numbers for May over the weekend they are due out Sunday night I believe we've got potentially an OPEC class meeting over the course of this weekend so which I've penciled it in my week ahead for the 9th of June unfortunately the date for that meeting is a little bit of a moving target it's like throwing a dart at a dartboard and hoping that you hit the bullseye but again that's driven a very decent rebound in oil prices this week so I'm going to talk about that we've got some UK data out this week on the 12th of June and that is likely to be ugly industrial production manufacturing production and GDP for one month GDP and rolling three months GDP we've also got German trade numbers EQ 1 GDP a couple of fairly low key earnings announcements which I probably won't bore you too much with I might mention in towards the end British American tobacco and telecom all your numbers but let's start let's start with the China trade numbers now obviously there's this continuing tension between the US and China but in terms of the current rebound in equity markets and expectations of V shaped rebound I think an awful lot of people are looking at China they're looking at the fact that China was locked down in February they're looking at the fact that this week we saw the Kaishin Services PMI in China post its best number in May since 2010 and that has prompted optimism that we could well see a significant rebound in some of the May economic numbers so we're going to start with China trade well the most recent China trade numbers for April showed little evidence of a recovery in economic activity despite the lifting of the lockdown that happened at the beginning of March exports did improve in April they rose 3.5 percent but I think this was largely as a result of the shipping of medical products like PPE to the rest of the world as the rest of the world was in pretty much lockdown as a result of rising coronavirus cases there were there were more worrying signs about internal demand within China because that different main week imports fell sharply by 14.2 percent so in terms of what we're expecting for China trade data for May if those Kaishin Services PMI numbers are going to be any sort of guide you would expect to see a little bit of a recovery in exports and a little bit of a recovery in imports now expectations for China trade imports and exports for May aren't expected to be that positive exports are expected to decline 6.5 percent after a 3.5 percent positive number in April and imports are expected to decline 7.9 now that will be an improvement on the 14.2 percent decline that we saw in April but nonetheless it's still a negative number so the if that trade data isn't better than expected then you have to really cast doubt on the fact that one month services PMI is any way indicative of a significant rebound in economic activity I will be paying particular interest to the May retail sales numbers from China which will be two out later in the month I think around about two weeks from now but certainly as the leading indicator China's economic data will be closely monitored for any signs that we're going to see a similar sort of rebrand economic activity as lockdowns were eased here in Europe looking at the Federal Reserve which is the other key benchmark economic announcement for the coming week not really sure that we can expect too many surprises from the Federal Reserve there's been about the speculation the prospect that the US could go down the negative rate route I really don't think that's an option and I don't really understand why mark is surprising the fact that the Fed could go negative I think we've seen a host of commentary from a number of different Fed policymakers about saying the Fed is not leaning in that direction there are so many other tools that the Federal Reserve can use and are using so I think we have to take our cues from the comments recent comments of Fed Chair Jay Powell now he suggested that the central bank was more minded to look at ways to control the yield curve by way of attempting to cap yields on certain timeframes for two's times in the 30 year in a manner that keeps a nice upward slope in the yield curve I think one of the main problems and the ECBs found this out to its cost is a fact yield curve or negative rates it's you know negative rates are absolutely toxic for your banking system and I think the less central bankers learn the lessons of what's come before them they will continue their own set of groupthink policies which will continue to fail I think it's encouraging that the Fed is not going down that route because I certainly don't think it's the answer there's no evidence that it works and despite the fact the Bank of England is flirting with the idea personally I think it's a bonkers idea and if it if it worked then I think Europe and Japan would be in a much better state than they currently are the fact that it hasn't suggests that it's a failed policy so I think one of the one of the key areas that the US Fed officials are worried about is the US banking system and if they're worried about the US banking system they're not going to go negative so I really don't think it's something that the federal reserve will consider but it's certainly one area that will continue to be probed by policy makers and no journos to see whether and the markets as well to see whether or not they're leading in that direction so what does that mean for the dollar well we've seen a very bad week for the dollar over the course of the last few um few sessions and we can see that in the CMC markets dollar index from here let me just change that font size so that you can all actually see the fonts that much clearer now on our dollar index we've broken quite a bit lower over the course of the last few sessions which suggests that we could well be in line for further declines but I you know I'm still of the opinion that despite the fact that we've broken lower yes we could potentially see a little bit more weakness but overall I would expect the dollar to sort of find a little bit of a base it's just a little bit below the current levels that we're currently trading out at the moment and you also got a factor in that this dollar index here has a much greater weighting than a much lower weighting much lower weighting for euro and a much higher weighting for the Chinese one so the Chinese rim limby so as a result it's certainly not as reactive to any moves in euro dollar as the ordinary dollar index is so looking at you can certainly see here that we've seen the significant move to the downside at some point we will probably find that we'll get a little bit of a rebound certainly if we look at a similar move here we had one two three four five six seven eight eight down candles before we got a strong rebound we're pretty much at that level now where we are probably vulnerable to a rebound in the US dollar we can certainly see that born out in the way the cable is behaving and has been behaving over the course of the past few days we are still there or thereabouts 200 day moving average still finding fairly solid support from this trend line here but again this this is a huge level between 126 50 and 126 70 80 which is where the 200 day moving averages that is proven to be a significant barrier and we've got some very big economic data coming out this week again it's backward looking again it's probably not really instructive in terms of where the economy is now and the the likely rebound as a result of the easing of lockdowns and we've also got the added wrinkle that EU UK Brexit talks aren't going particularly well so that's likely to cap the upside for the cable in the short to medium term but you can be absolutely certain that if we do break above this level here and start to reach higher I'm still of the opinion that at some point we will start to push back out towards these peaks that are around about 132 it's likely to be a bumpy ride don't get me wrong we could head back all the way back to this trend line here which is around about 123 124 but certainly while the lows the reaction lows are getting higher then we will eventually take out these highs here as long as we stay above this trend line yeah so the data that we're looking at for this week is UK industrial production and manufacturing production for April well the economy was locked down in April so the data is going to be ugly there's no getting away from that it's going to be awful so the question is whether you really pay that much attention to it we've already seen the measures that have been implemented by Chancellor of the Czech Republic and they are quite comprehensive in nature what we do know or what we are expecting is that the UK economy in April on a monthly basis is expected to contract by 18% that equates to a rolling quarter on quarter decline of minus 10% but with the 330 billion pound fiscal stimulus plan that's been rolled out the hope is that in the second half of this year some of that economic output should be recovered not all the jobs that have been lost will come back but the downside impact will hopefully have been mitigated in the second half of this year as we slowly ease the lockdowns in Q2 in May Q so industrial production is expected to climb to 13.9% manufacturing production minus 15.5 that is all out on the second half of this year so what does that mean for euro sterling well you can see again we've got a nice little rebound here we are starting to run out of steam in around the 90 level we had had to go at it at the end of May we've come back down we've retested it we haven't been able to recover back above it so at the moment 90 looks a decent area potentially goes short with the stop loss above the previous high and for a move back towards these issues again we tend to be we seem to be in a little bit of a range for euro sterling certainly decent support at 8870 so certainly I think any weakness is likely to be confined to the 8870 area until such times as we break a line but at the moment it appears to be a range trade between 8870 and just above 0.9 area but the latest German trade Germany trade numbers as with China in March the picture of a trade in Germany is likely to be similarly true and that we're going to see big drops in both imports and exports so not really expecting too much in the way of the German data let's have a quick look up Brent crude because we do have an OPEC meeting and we've finally broken above that very big resistance line that I talked about in last week's week ahead that the $32 and a $33 a barrel level we've now broken above that we can see that there when we did break above it it then actually just support for the move back above $40 a barrel and there is certainly scope for further gains in the oil price to try and refill this gap in and around here which is currently between the lows of $45 a barrel and that peak there is around about $39 so there's a $6 gap in the cash contract from Brent crude which needs to be filled at some point which means that there's certainly potential for at least another $5 move higher in Brent crude towards $45 a barrel before we start to now and that really I think will depend on the upcoming OPEC plus meeting where the hope is amongst OPEC plus members that there will be an agreement to extend the production cuts that came out in May into the month of June now there has been an agreement between the Saudi Arabia between Saudi Arabia and the Russians to do just that but there is a rising irritation amongst those two members about the lack of compliance from countries like Iraq and Nigeria who haven't lived up to their part of the bargain now the upcoming meeting is likely to determine how much longer these agreed cuts will last there is consensus for another month but they want them but it's conditional on the non-compliers like Iraq and Nigeria and selling up to them so there's a number of moving parts I think there's certainly potential for the cuts to be agreed for another month but I think there's a little bit of a reluctance for them to extend much beyond the end of June because that certainly doesn't suggest that we can't see further upside in price so that's Brent Crude quickly have a look at gold finding support just above the 50-day moving average at the moment there is evidence perhaps that we're starting to carve out a little bit of what could be the head and shoulders reversal yeah you've got a left shoulder here potential head here with a right shoulder forming here if we do break below this line then certainly we could see a very sharp move back down to around about 1650-1640 but we need to break below the 50-day moving average and we need to break the neckline of what could be the start of the construction of a potential head and shoulders reversal on the gold price so keep an eye on that because that could be an interesting trading pattern going forward some earnings announcements we've got talk talk telecom coming out on the 11th of 11th of June that's their four-year numbers they they're sort of the one of the one of the minnows in the UK telecoms space been punching well below their weight that time they started to punch slightly above their weight seen a decent rebound over the course of the past few weeks could well run into a little bit of resistance around about the 100p level so I think any expectation that the numbers the numbers might come in better than expected is probably largely priced in we've also got us cinema chain amc entertainment holdings and they're in big trouble um they took a two billion dollar impairment charge in a pre-results announcement earlier this week and they have said that there's a good chance that it's unless cinema is reopened very very soon they may not be able to continue trading certainly the share price doesn't reflect that if you look at a share price on a daily basis but if you look at it on so for example a weekly basis it's just slightly better indication of how far they've fallen and how difficult the cinemas cinema industry which relies on thoughtful is finding the current shutdown so at the moment they're they look to be on borrowed time and the cinemas are able to reopen certainly soon we also have British-American tobacco and again that's trading in a little bit of rage has appeared to have found a little bit of a base suffering on the back of um um pushback now against um tobacco products but also there's been problems with vaping in these cigarettes and the health problems surrounding that so they've been hit from both sides of the equation when it comes to their revenues tobacco revenues are suffering because of concerns about um smoking but there's also concerns about e-cigarettes and vaping and health problems in a much younger cohort 18 to 35 where people have been smoking e-cigarettes and reported lung and respiratory problems so um it's not particularly um a positive figure for BAT but they do appear to be heading back towards the recent highs of the recent ranges so um so that's it I think for this week's look at the week ahead thank you very much for listening by this time next week we'll know what the US payrolls numbers are likely to have been and whether or not there's some evidence that maybe the US unemployment rate is starting to plateau and there's evidence that US furloughed workers are starting to go back to work otherwise I'd like to thank you all for listening um I wish you all a nice weekend and um I'll speak to you all same time same place uh next week thank you