The Three Issues That Will Decide The Presidency
Summary
➡ The speaker discusses the value of gold, its recent rise in price, and its role as a form of insurance against unstable currencies. They also touch on the potential impact of President Biden’s fiscal policies, including his proposal to tax unrealized capital gains. The speaker suggests that government spending is keeping the economy afloat, but also causing inflation. They conclude by advising listeners to consider investing in gold as a safeguard against potential economic instability.
➡ The discussion revolves around the upcoming election, with Trump facing challenges due to his stance on abortion, while Biden has to deal with issues related to the southern border and inflation. The conversation also touches on the differing views of two academics, Walter Bloch and Hans Appa, on the Israel-Palestine conflict. The speaker also mentions the growing popularity of libertarianism, citing examples of its influence in various sectors, and wonders if societies need to hit rock bottom before embracing libertarianism.
➡ It was a pleasure to have you join us for an amazing interview with Doug Fredge. Don’t forget to check out his book, originally his master’s thesis, about early speculative bubbles. This expanded edition also includes a section on the California gold rush. Thanks for being with us and enjoy your day.
Transcript
I’m going to interview Doug French. Doug is the professor of, emeritus of the Mises Institute, which is a nonprofit that I write about all the time, that promotes teaching and research of the Austria School of Economics. Doug is also, in my opinion, the best libertarian writer since Rothbard. His books are fabulous and he just updated what was originally his master’s thesis called early speculative bubbles and increases in the money supply, which we’re going to talk about, and his other fantastic book that he wrote right after the real estate crash in zero eight. Walk away, the rise and fall of the home ownership myth, which I’m probably not going to feel much better about buying a house after talking to Doug about that.
But all these books really dive into price bubbles and the implications of what a strategic default is. And especially walk away is about literally walking away from your home and what that entails. So I hope you’re as excited as I am to watch as interviews. I am to chat with my old friend Doug. Okay, so let’s get into it. Dude, how you been? I’ve been great. It’s a pleasure to see you again. The last time we saw each other was, I think, in the cradle of Hans Hoppe at property and freedom society, I believe. Yeah, that’s right.
So of course, turkey is not too far from some action that’s going on in the Middle east and which probably many of your viewers are concerned about. Certainly some kids on college campuses seem to be taking up this issue, at least in the United States. Whether they know what they’re protesting about or not is another, is another situation. But I always loved going back to Turkey and it was great when you and the hardcore types used to show up. Yeah, it was always a good laugh and it was great meeting you and your lovely wife Deanna and everybody there.
And it was one of those times like, I think it was time I was thinking about this. 2012 was the first time I went. So it’s been a dozen years. It’s just incredible how time, time flies. And what folks might not know is that Murray Rothbard, the Murray Rothbard, and Hans Herman Hopper, the man himself, were both on your master’s thesis committee and approved your master’s thesis, which became this fantastic book. And folks, the thing about austrian economics books, you can either get through or you can’t. And the great thing about Doug is that he writes, in my opinion, very similarly, very clearly to how Rothbard writes.
So not only do you understand it, you are entertained and you actually get to the end of the book. So what made you decide to do bubbles? And again, the great thing about your book is that you do Tulamania, which was a non paper money bubble. So I was just wondering if you go back 30 or so years, like what? Why’d you do that? It’s a book to hear. Yeah. So I took Murray, obviously, for history of economic thought. I had no idea who Murray Rothbard was. I was just a UNLV. I had moved to town, decided to pursue a master’s in economics, and I saw in the catalog, history of economic thought, I believe it was EC 742.
And the instructor was Rothbard. I asked a fellow student, id only taken a couple classes at that point. I asked a fellow student about Rothbard and he said, oh, don’t take him, he’s a kook. You can do this class, private study with another professor, and that’s what you should do. Don’t take the class with Rothbard. Well, at the time I was working, I was working as a banker, ironically, and I didn’t have time to mess around, I thought, with trying to get, doing things private, studying, things like that. So I decided to just roll the dice on Murray Rothbard.
And you know, from the first night, you know, he hit the door and started talking immediately. There was no futzing around with going over a syllabus, there was no taking role, there was no nothing he was talking about. And at the time, it was the first Middle eastern war, this would have been in the late eighties, early nineties. And so he was going on about gas prices and how politicians of stupid politicians wanted to put a cap on gas prices and out, you know, and I noticed everyone around me, uh, furiously taking notes, whatever he, whatever he said they were, they were taking down.
So I, I figured, you know, whatever this guy had to say must have been pretty important. And, you know, my life was changed forever, as I like to say. So in that particular class, EC 742, history of economic thought, he changed the emphasis every semester. So a lot of people in class were not there to take it for a grade. They were there just to audit the class. And my particular semester focused on finance. Indy for a banker, so it. Yeah, so, you know, the planets just aligned where, you know, he talked about some booms and some busts.
So I had the bright idea to write my thesis on the subject. But I would say, and I like to tell this story because people, a lot of times people don’t believe that I didn’t know who Murray Rothbard was. But I’ll tell you, just to prove that point, Murray would have us write a ten page paper as part of our. As part of the class. There was a midterm, there was a final. There was a ten page paper, and you could write on anything, but you had to go in and okay the subject with Murray. So I go into Murray Rothbard’s office and I said, oh, you know, I’m kind of interested in the Great Depression.
I was thinking about writing about the Great Depression. And he goes, oh, Douglas, that’s great. That’s great. Yeah, you might want to, you know, look at this source and that source and so on. And then he said, oh, you know, and I wrote a little something about that. It’s called America’s Great Depression. And, well, he not only wrote about it, he wrote the book about America’s Great Depression. So that’s how naive I was. That’s. I didn’t. I didn’t know who I had in front of me. I only, you know, with subsequent, subsequent years that I figured out that I was.
I was truly struck by lightning. And, you know, so, so lucky to study under Murray. And by the way, in the new book, and if I may just hold it, see it in the picture. This is a new cover. It’s got these. These fancy orange tulips. But you had mentioned that, that Hans was on the committee. I actually have the signature page. I wish. It’s on the Amazon edition. Yeah. So if you buy the book, I like to say it’s like a box of cracker Jacks. There’s a prize in size. Well, I’ll tell you what the prize is.
It’s my signature page from my original thesis. So you have Murray Rothbard’s signature at the top as chairman, and right under him as member, Hans Hermann Hoppe, and then three or four guys that you don’t care about. But. So. But that’s how the book came about, as you mentioned with Tulip Mania, the original thesis, I wrote about three episodes. Tulip Mania, Mississippi bubble with John Lawrence, South Sea bubble, and then with this fourth edition, what I’ve added is some work I’ve done over the past two years, connecting the California gold rush of 1849 with the panic of 1857.
And so that’s what’s been added. And that is another episode. Similar, number one, it’s been ignored by austrian economists, as far as an austrian analysis of it. It’s been ignored by other economists, really, as being kind of part of the Civil War narrative, if you will. And nobody till this point has connected the incredible increase in the base money supply, that is gold. They went from mining 13,000oz in California in 1848 to mining 4000, nearly 4000oz of gold five years later. So you had this incredible increase in the base mining supply. Of course, banks pyramid it on top of that.
And so you had this great incredible boom, which was railroad stocks, which was land prices in the midwest, and that was the malinvestment that occurred from the increase in the supply of money. And, of course, then the bust came with the New York banks, where 63 out of 64 banks in New York suspended specie redemption, which is essentially, you know, a failure at the time. So that is the. The new part of the new book. And, you know, it’s available wherever, wherever fine books are sold. But that. That would normally mean Amazon and Barnes and nobles.
But, yeah, it all started with a thesis written under the direction of Murray Rothbard, with Hans Hermann Hoppa on the committee. That’s just a brilliant story. That’s amazing. And it’s funny, I like the idea that, again, this is, again, not about paper money, really. It’s base gold expansion, where tulip mania was, I think silver, right? And Charlie five going crazy clipping the coins, the old guilders, if we can, let’s just shift to gold for a second, because now we’re trading up above 2300. Right. Now, I think I haven’t looked at today at my house, but, yeah, about 2300 Austrians kind of taking, let’s be honest, a victory lap.
We’re waiting every ten years to do that, it seems, you know, what’s your view on this? Because, I mean, you’ve been looking at this for 30, 40 years now. Is this going to be one of those things where the government is just going to order the New York banks to start shorting it and calm it down, or are they going to revalue upwards? What do you think? Shall we say I have a rooting interest in the yellow metal and how it does. And I also, I tell a friend of mine that we get together and talk about austrian economics every Friday, and I tell them, you know, I’ve been showing up to this gold party for 30 or 40 years, and I’m all dressed up, you know, white sport coat, pink carnation.
The balloons are there, you know, the band’s ready to play and nobody else shows up. Well, and so you would think I’d be worn out by now. But, you know, for, for those who follow technical analysis and I think a few, few of your viewers do, you know, this has made, you know, three tops was not be able to burst through the 22, whatever number it was. Now we’ve had a spurt through 2400 has come right back down. This is all while the dollar has been extraordinarily strong. So that’s what’s very unusual with this particular situation.
And probably a few of your viewers are following the, the yen. The yen hits 160 versus a dollar a couple of days ago. Then suddenly the bank of Japan wakes up and smells the coffee. They do the intervention. Now it’s, you know, I think as I looked at it this morning, 154, something like that. But it’s creeping. Probably creeping back up. Suffice it to say, fiat currencies are having some issues, shall we say, at the moment. And, you know, I probably. If it wouldn’t have been for Murray, I wouldn’t have been as interested in gold as I have been over the past few years.
For many years. I used to say owning gold doesn’t build capital, but builds character. But I’m hoping that in my older age here, that it’ll finally build some capital. So I’ve shown up for the party again. I’m ready to party down. Gold is insurance. What people need to understand is I get a kick out of the people who, who want to put a 1oz bar in their shopping cart at Costco because Costco is now selling gold bars. And then they want to turn around two weeks later and sell it back to Costco and think they’re going to earn a profit.
And that’s not. Gold is insurance, folks, and especially the physical. So that’s a long answer for probably a short question, but I’m a believer, and I’m sorry if you were looking for another point of view that’s interesting. I will stay right there. Yeah, I don’t dispute that at all. I myself have a sporting interest as well. And we’ve been looking at it for years. We’ve been so excited. We’re like, hey, finally we’ve been right. Yay. That in itself is, I guess what business would call psychic income. Finally, at least this gold gave us some sort of income.
And now it looks like everything has come to pass. Now, while you’re there, you mentioned university students already, and I mean, if you read the route, and I know a lot of folks watching do. I haven’t been very kind to Joe Biden over the past few years. What you know, now he, in fact, I just wrote something for the Daily Record he was sporting. He wants to tax unrealized capital gains. Now, that’s his latest brainstorm, or shall we call it a brain drizzle. What are they doing? Is he trying to destroy the country? First, I can’t understand his policies.
And second, I can’t understand people rooting for him and his policies. You’re in, you’re in Vegas. I guess you’re around a lot of California transplants. Can you just eliminate me for a bit? Tell me something about this. You are really trying to stop me now. No, I think that Joe is probably playing to his base somewhat. I don’t think taxing unrealized gains is probably going to go anywhere. You know, let’s, maybe part of this is hope, but, you know, he hasn’t a very aggressive fiscal agenda that we have already seen play out. Yeah. And that’s something we can talk about because.
Well, let’s talk about it now. Everybody’s been looking for a recession. Where’s the recession been? Where’s the recession been? Where’s the six cuts then from the, from the fed? Well, I’ll tell you where they been. Biden through both the COVID measures and then whatever else, build back better program. When these things are announced, people in their heads tend to think, oh, that money is out the door. Well, they don’t know government very well, that guy. That money has to sift down to state and local level and then they have to go out and, and get bids and they have to get various plans to do things.
That money takes years to go out. So if you drive around a city like here in Las Vegas, every highway is under construction, every, that money is continuing to seep into the economy. And some people benefit. For those who follow the austrian school or follow Murray, they know that’s government spending benefits. Some it takes away from others. And that would be the, you know, that would be what Joe wants to accomplish. He wants to take from, from some, the rich, who you can’t take it from poor people because they don’t have anything to take. And he wants to ostensibly give it to the needy.
However, you know, government takes a big bite out of it in between. So, you know, I don’t, I think that’s why we haven’t had the recession that everybody has been thinking that we were going to have. We’re starting to see cracks, we’re starting to see problems here and there. Obviously, prices have remained high, and they should, they’re probably higher than what are advertised. And the reason for that is that this huge fiscal response that came from the COVID years and build back better, and now we have the Chips act, suddenly the United States is going to start doing something that evidently Taiwan does very well, but, you know, they think it should be done in Texas and North Carolina or whatever.
So it’s the typical games, but at a much, much higher level. And it will continue with Biden. And I’m afraid if Mister Trump is elected, he, he’s not exactly a tightwad with the federal purse himself. So as long as he could sign the checks, I think he’d do that money drop he did before. So, yeah, that, I was going to get to that. I think we have more of the same. And if you. I don’t expect anyone to be convinced by me to do anything, but maybe listen to Sean, listen to people, Agora. If they’re telling you to buy a little gold and put it away and forget about it, that is your insurance.
And I’ll tell you what it’s insurance against. For the 6th time, the Zimbabwe government is reissuing its currency. It’s called zig Zimbabwe gold, supposedly backed by two and a half tons of gold and some foreign currency. Now, if the Zimbabwe, and I doubt the zimbabwean people trust their government to back, continue to have their goal, have a backing of their currency, but they have destroyed currencies five times in a row and they will do it again. And I would hate to think that Jerome Powell or one of his successors would go the way of Zimbabwe, but that’s the insurance you’re buying when you buy.
Go. Yeah, it’s funny, Gideon Gono’s name just went straight into my head. And one of my buddies was actually in Harare. I don’t know why. He was just there on a trip and he said it was funny because he was, I think he’s about my age at the time, so I’m nearing 50. And he was walking into his store and he kept hearing a ding every ten minutes or so, and he thought he was getting tinnitus or something like that. And what he realized was all the price tags were electronic and every ding meant they went up about 10%.
So you had to get in and get out. Talk about dumping your money as fast as possible. Really scary stuff. While we’re there, though, do you think Trump has a chance with, you know, Biden this time around? I know you’re not a Trump guy. That’s okay. But, you know, do you have any, any prediction for this November and who’s going to, who’s going to come out on top? Not the american people, that’s for sure. Well, I would make a prediction, except this is on camera, so. But I, and we would tail off very quickly into things that I probably shouldn’t be talking about.
But since you did ask, and since I just can’t help myself, Sean, there is an issue. Mister Trump has it some headwinds that he has in winning this election, and that is called the abortion issue. And so there are plenty of, there, there are plenty of people who will go to the polls for that very issue and probably not vote for him for that very, very issue. So you’ve got three issues, really. I had thought it was two. I kind of thought it was going to be abortion. The border, and I do mean the southern border.
There doesn’t seem to be an issue with the Canadians yet, the southern border. And then I would say inflation. I would say inflation has piled up to the point where it is very much on people’s mind. So the two headwinds for Biden, our southern border, and inflation versus Trump’s headwind, which is the abortion issue. I don’t know exactly how it’s going to come out, but it will be very interesting to watch. And I kind of wish Murray was here because, you know, Murray wasn’t. He wasn’t some stodgy guy just thinking about, thinking about economics. He had a very keen interest in politics, politics from the local level, state level, national level.
He was on Pat Buchanan’s kitchen table committee, if you will, for a while. And so he was very interested in politics. In fact, when I would sit around and wait to talk to him in his office, most of the time, we talked about politics because that’s what he loved to talk about. So I have friends of mine who are students of his that claim that he would be a big Trump fan. I’m not quite so sure. I watched him go from Rossborough to George Hw Bush. You know, who knows? Who, who knows? Maybe he might land on Robert Kennedy.
Who knows? But he, as far as chaos and politics, he would love to watch, I bet. It’s just fascinating. And for me, being across the pond it’s even more fascinating because Europe’s basically bearing the brunt of a lot of these policies. I’ve been watching my construction costs. I’m like, oh, my God, how much more? But it’s crazy times right now. And also, I’d love to because you’re still an american taxpayer. So, I mean, this whole thing with Ukraine, Taiwan and Israel, you mentioned about university students and not probably knowing what they’re protesting. I’d love to get your view on that as well.
There’s this ongoing battle at the moment between two guys that you and I know very well. One is Hans Appa, the other is Walter Bloch. Oh, yes. And I don’t know how many, I don’t know how many of the viewers are necessarily, you know, dialed into this thing, and they’re probably not. But, but Walter was more or less a student of Murray’s. He grew up in New York, went to Murray’s apartment, and for most of the time, I think, was close to Murray in some ways. Sometimes he wasn’t. Walter has very much taken aside and wrote an op ed for the Wall Street Journal, essentially touting the idea that Israel should wipe Gaza off the face of the map of Palestinians.
Our friend Professor Hoppa has taken the opposite view, that these are two warring states, two warring political gangs that shouldn’t have a rooting interest in either side of this. And this is blown up into some people looking from the outside would call it a tempest in teapot, I suppose. But this is two academics who, you know, this is what they live and die for. But, you know, I was sent a 54 page response from Doctor block to Doctor Hopa that’s going to be published somewhere as some publication that I. And of course, he’s got a co writer, as Walter always does.
But he makes the case that, you know, Israel and their response is perfectly legitimate from a libertarian point of view, from a self defense point of view, you know, and Appa would take, obviously, the other side of that. Murray, by the way, I was reminded because, because Walter put this in his quote at Murray, at Lane, Murray said that libertarians, and he wrote this in 19 66 67. He said libertarians tend to say pox on both their houses and let it go at that. These are two. But then he went on to write, and he was writing about the Middle east at the time.
And that’s important here because he said you have to do more and more research to find out who the real good guy is. Yeah, it’s really interesting because I was going to end on libertarianism. But I wanted to ask you specifically about libertarianism. I actually forgot about Walter and Hans’s kerfuffle, let’s call it that, to put a nice, fine lump point on it. Yeah, that’s being very kind, but, you know, it’s. And again, I’m kind of. Kind of backed. Backed out a little bit from it. I’m not on Facebook anymore, thank God. But it’s libertarianism. Stronger than before or weaker.
Have. Have we kind of split into, like, left kind of gauche libertarianism and hoppy in right wingers, or is it better than ever? I mean, guys like Dave Smith, you know, they’re all over Rogan and they get in big air time. And that UFC fighter, you know, going read mazes if you care about your country. Barnaby feels like it’s never been better. Barnaby feels like what’s going on here? So this is. Wonder if you had a view on that. Well, it hasn’t penetrated the White House, but as far as the UFC fighter, certainly, you know, mises has not received so much attention since the Ron Paul campaign.
And so this, this guy, in a fit of exuberance, you know, shouts out that, you know, you know, read Ludwig von Mises if he wants to save your country. And of course it doesn’t. You know, some of us have been working at this for a long time, and so not anything that I did at the Mises Institute, or anybody else for that matter, has generated the kind of publicity for mises. I mean, he had three in the economics genre of Amazon. He had three of the top ten a few weeks ago. And so it’s. It’s been wonderful.
Now, I hope people not only buy the books, but they also read them, and I hope that they get beyond a chapter or two. Now, the. The gentleman, Malay down in Argentina. Argentina, yeah. Yeah. That is another amazing case. There. He was turned around by a single article by Murray Rothbard. He has a number of. He has a few dogs and he feels very close to him and has named one of them Rothbard, I believe. And he is putting some things into the political works in Argentina that are starting to work. And he’s doing it through democracy, which I think is kind of interesting because then if you circle back to Hoppa and many of us, you, I, and maybe a few people who own this have read democracy.
The God that failed, he’s taken the opposite tact, but he’s a bit of a scholar in his own right. There’s been a recent fetch rift written two volumes for de Soto in Spain and wrote a chapter in it. Wow. Don’t know if you knew that. I did not know that. So he is not some sort of fly by night libertarian. There’s people that call themselves libertarians, and I’m not sure if they’re libertarians. I tend to throw a pretty wide net over this because, you know, kind of the Reagan view that, you know, if we only disagree 20% of the time, then, you know, we’re friends and so.
But, you know, first, for some people, you know, even 2% of disagreements too much, so that’s been the typical view. But I’m not in academia, so I’m used to operating in business where the idea of friends and enemies is really cast aside because you need to do things together to get things done in academia, where people have jobs for life and they can fight over small things and that’s why the battles are so big. But yeah, in answer to your question, again, I know I’ve taken too long. You know, I have mixed feelings about it. But, boy, you know, there’s, you know, there’s some green.
There’s green shoots out there or maybe some tulips bloomy and in the land of libertarianism. And the problem is, do we all have to hit the bottom like Argentina did before we grab onto that last libertarian straw to try to pull ourselves out of it? Maybe that’s what it takes. That. That is a brilliant thought. Hopefully not, but that’s. My thoughts would be on that. Incredible. But thank you so much, man. It is so great to see you folks. Thanks for joining us on this fantastic interview with Doug Fredge. Do read his book. I will put the link in the description.
Early speculative bubbles, which was Doug’s master’s thesis originally under the Murray Rothbard and the Hans Herman oppa. Read it. It’s fantastic. And this time he talks about California gold rush as well. That’s why it’s an expanded edition. Thank you for joining us and have a great one..
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