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Sept. 4, 2009 - Rush Limbaugh Program
35:31
September 4, 2009, Friday, Hour #3
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That's absolutely right, uh John O'Donovan.
And this is Walt Williams filling in for a rush, and uh Russia's gonna be back on Tuesday, and uh and the best of it's going to be on Monday, uh Labor Day, and I'm on right now.
And we just got finished talking to uh Dr. Thomas Sowell about his uh latest book, uh The Housing Boom and Bust, and we were talking about uh other things like uh why liberals and why academics, particularly academics, uh they just see these uh barbarians as as heroes of one kind or another.
And you might say, well, Williams, that where's the evidence?
Well, I'll tell you what you do.
You go through the 1960s or the 70s to read papers, and they were they were marching around on college campuses waving Mao's little red book and chanting Mao slogans, and they just loved uh Mao Sedung.
And uh and keeping in mind, as I said to you that uh Mao, those of you tuned in late, uh Mao Sedung is responsible for killing, at least according to uh death by government, uh 38 million of his own citizens and Stalin and other Russian uh uh tyrants who are responsible for killing uh 61.
I and you know it's kind of interesting question.
These people condemn Adolf Hitler, but you don't see that kind of condemnation of Stalin and Mao Sedong.
Uh and and other tyrants, uh of course, Castro's not uh he he's not of the uh uh Kit Carson, he just gave me a contribution.
He says they were more complex.
But um uh the uh Mao uh uh Phil Del Castro, he he was not the uh kind of tyrant that uh Mao Sedung was, but nonetheless he's a tyrant.
And you find like a congressman.
Uh this Diane uh Watson uh she's uh uh uh Castro uh supporter uh saying, well, what do you think about Castro?
He's one of the brightest leaders I've ever met.
And she probably say the same thing about Hitler, Stalin, and Mao.
Well, ladies and gentlemen, there's one thing that people have been writing me letters about, they've been asking me questions, and I'm gonna talk about, even though it's covered in my in uh in uh in my columns in a book that I wrote uh late last year, came out late last year, is called the Liberty versus Tyranny of Socialism.
But I want to spend a few minutes talking about inflation and deficits.
Now, with these massive increases in federal in federal spending, inflation is one of the risks that that awaits us.
Now, inflation's not here yet, but I believe it's going to come.
Now, so we need to protect ourselves against uh from the the political demagoguery that will accompany uh inflation.
I think one of the things is just being informed a little bit.
And uh let's recognize that inflation, you let's rec let's kind of decide what inflation is and is not.
Well, one price or several prices rising is not inflation.
What inflation is, inflation is increases in the supply of money, and rising prices is a symptom of that increase in the supply of money.
Or as the late Nobel laureate uh Milton Friedman uh said, and I quote, inflation is always and everywhere a monetary phenomena, in the sense that it could not occur without a more rapid increase in the quantity of money than in output.
Okay, but however, thinking of inflation, inflation as rising prices permits politicians to deceive us and to escape culpability.
That is, they blame the rising prices on greedy businessmen, rapacious unions, Arab sheikhs.
Well, that all that's nonsense.
You cannot get an inflation without an increase in the supply of money.
Now, who is in charge of the supply of money?
Well, it's the Federal Reserve Bank and the U.S. Treasury.
Now, fortunately for our country, we haven't had the kind of inflations that have affected or that have plagued other nations.
The world's highest rate of inflation was in Hungary.
I believe the currency is called the Pengo after World War II.
And they had an inflation where prices doubled, prices of everything doubled every 15 hours.
The world's highest rate of inflation is today's Zimbabwe, where last year the prices doubled every 25 hours in Zimbabwe.
And that's a rate that's a rate of 89 sextillion percent.
Now, if you don't know what 89 sextillion is, put down 89 and write followed by 23 zeros.
And that will give you 89 sextillion percent.
Now, our country's highest rate of inflation occurred during the Revolutionary War, when the Continental Congress just churned out paper continental bills.
Remember the expression it's not worth a continental?
Well, that's what the Continental Congress was doing in 1779.
And the monthly inflation rate in November of nine of 1779 reached 47%.
Now, the painful experience of our founders with inflation is why the delegates to the Constitutional Convention included a gold and silver clause in the Constitution, in the United States Constitution, so that individual states could not uh issue bills of credit.
And what they, if you read Article 1, Section 8 of the Constitution, it says Congress uh has the power to coin money and regulate the value thereof.
That is, the founders of our nation feared paper currency.
And the reason why they feared it is because it allowed government to steal from its citizens.
That is, if you have gold, if gold is the currency, then the government's ability to steal from the citizens by inflating the currency is very limited.
But when you have paper currency, uh it uh it allows government to steal from the citizens.
Now, what what inflation does, here's what you got to know about inflation.
It's not complicated at all.
Inflation distributes wealth from creditors to debtors.
For example, if you lend me a hundred dollars, and over the term of the loan prices double, well, I pay you back with dollars worth only half the purchasing power they had when I borrowed the money from you.
So since inflation distributes wealth from creditors to debtors, then you can find out inflation's primary beneficiary, whether it's the United States or any other country, by asking the simple question, namely, who is the nation's largest debtor?
Now, if you said it's the government, go to the head of the course, head of the class.
That is that is why governments love inflation, because inflation is a way for governments to repudiate the debt.
And that's what the federal government's going to do with the debt that it's creating.
It's going to repudiate it.
Now, inflation is just one of the effects of massive increases in spending.
You know, some people say you hear politicians say it, and you hear many Americans say, well, The deficits that we're creating are going to have to be paid by future generations.
It's going to it's going to hurt future generations who have to pay back the debt.
Well, we might really ask a question.
Is there a federal budget deficit?
Do we have a deficit?
Well, the short answer is yes, but only in the accounting sense.
This is very important for you to keep in mind.
Only in the accounting sense.
And so let's look at it.
But not in a real economic sense.
Only in the accounting sense.
Let's look at it.
If our GDP, the amount that we produce this year, comes to 14 trillion dollars, that's our GDP.
Now, if federal expenditures this year, 2009, federal expenditures are 3.9 trillion and tax receipts are 2.1 trillion, that means there's an accounting debt deficit of 1.8 trillion dollars.
Now the question is, if the government's going to spend about $4 million $4 trillion and take in about $2 trillion, where does the difference come from?
Who makes up the difference?
If that is, if the government's going to spend $4 trillion this year and only take in a $2 trillion this year, is the two ferry, Santa Claus, the Easter Bunny going to make up the difference?
No.
If the government's going to spend $4 trillion this year, it has to somehow make sure that Americans spend $4 trillion less of our GDP.
And so in the real economic sense, the budget is always balance.
The budget is always balance.
And so here's the way the federal government balances the budget.
One, or here's the way the government can stop us from spending that $4 trillion that it needs.
One, it can tax us.
Two, it can enter the bond market and drive up interest rates so we can spend less privately for investment and business and housing, and then it can inflate the currency, which is a sneaky form of taxation.
But the point, ladies and gentlemen, for you to keep in mind is that if the government's going to spend $4 trillion this year out of our GDP, and it's going to have to force us to spend $4 trillion less.
That is, it's no way that a $2050 kid's going to make up the difference.
As a matter of fact, if a $2050 kid was able to make up the difference, I would say the heck with it.
I don't care anything about 2050 children.
I care about children today.
And so don't let politicians deceive us into thinking that somehow it's going to be a burden on future generations.
It can only be a burden on future generations in the following way.
That is future generations as a result of our uh reckless spending, they will inherit less capital than they otherwise would inher in uh inherit.
We will bequeath them a less robust economy than we otherwise would be the case.
We'll be back with your calls on the subject after this.
We're back, and uh you can be on with us by calling 800-282-2882.
And before we get back to uh the the subject uh for this hour, I was just watching Fox News on the uh television and uh in in the studio and uh and we try to say on the on the cutting edge of uh society, and there's a news piece there,
and it said hundreds, now I don't have the sound on, so I don't know what the ta what the uh Fox moderator was saying, but she looked like kind of sad in the face like she might have been uh condemning this, but it said hundreds of Iraqis are selling kidneys, selling their own kidneys to earn extra money.
I think that's wonderful.
A lot of people uh you know in America, their laws against selling your organ.
You know, I can sell my hair, I can sell my fingernails, I can sell many things, but I cannot sell my organs.
And uh and I think that I should have the right to sell my organ.
You know for example, here's the question that you have to ask whether Williams can sell his organs.
You have to say, well who does William's kidney belong to now if my kidney belongs to Barack Obama or the United States Congress, well then I cannot sell my kidney.
Because I that's selling somebody else's property.
But if my kidney belongs to Walter Williams, I have a right to sell it and make a lot of money.
And so see my test of whether I own something, you have to ask, do I own myself?
And my test for owning something, my test for like owning this beautiful uh suede vest that I'm wearing today and that the uh the guys Mike Mamone and and Kit Carson there are very envious of a beautiful vest.
Now evidence that I own my vest is whether I can sell it.
And if I can't sell it, I don't own it.
Now it's the same thing with my kidney.
And matter of fact, um one of the big problems in health care is that people can't sell the organs and yeah I can imagine let's say I I'm laying on my deathbed that's you know if I ever die I'm laying in and and the doctors talk to my daughter and saying well would you like to volunteer his organs would you like to uh volunteer
donate his kidneys or liver.
And I can just see my daughter.
She loves me dearly.
She said, oh no.
I want him to be buried just the same way he came in.
But if the doctor says, well look, I'll give you $100,000 for the kidneys.
You know, my daughter's going to say, hey, that's a deal.
Do you want the eyes too?
And so it would increase the supply of organs.
we have to allow people to sell their organs but let's that that was just a little aside but I just wanted to bring you up to date about what the IRI Iraqis are doing to earn extra money.
They're not going out robbing people they just want to sell their kidneys but let's go to to Devon in Los Angeles.
Welcome to the show Devin.
Hey Dad Oh my God that now that was not right there these guys set me up they sure did they say they say and I will say I'm gonna sell the kidneys the eyes the heart the liver anything I can anything I can get some cash for I will I will sell it.
Ladies and gentlemen, this is my beautiful daughter, Devin.
And these guys really set me up.
Well, it sounds like your Hayfee was better, daughter.
It is.
It is.
Fires are kind of calming down out here in Los Angeles.
But the reason I call it, actually, is I've been listening to this show this morning, and we're talking about government intervention.
And I definitely agree with you on a lot of projects and things that you say.
But I did have a question, and I think it's something we talked about with some of the folks from Hillsdale, and that is the Necessary and Proper Clause, or what is termed the Elastic Clause, Article 1, Section 8, Clause, I think 18.
And I think that a lot of people, and especially our federal government, think that it's okay a lot of things they do that are outside of the scope of the government, outside of the scope of the powers that have been used.
been given to Congress because of that that clause the elastic clause um I just wanted to maybe to touch on that a little bit and and should is that the clause that should be taken out that should be amended?
Well I I I don't think so but we surely don't have enough uh uh time to talk about it because I'm up against uh a hard break but uh I think that that's a lot of the justification that people use for the intervention but i I think the congr the Constitution is clear on a couple things that is uh that that it says uh well at least the founders of the Constitution uh I'm sorry,
the uh the writers of the Constitution, they were very clear saying, well, the federal government does not have the right to do this, does not have the right to do that, and many other restrictions and the necessary and proper clause does not get around these restrictions.
But look, look, honey, uh this this is awful.
And I'm gonna get you for this.
I my daughters, I uh I as I tell my daughter every once in a while, I'm still her father, and I can still put her across my lap and give her a spanking, even though she's in her thirties.
So anyway, folks, what what do you think or uh is her voice better for the show than mine?
Oh kid says you do very well.
We're back, and uh and that was really a dirty trick that uh that Mike Mamon, my engineering kit, uh hold on me.
Uh and the and the uh necessary and proper clause my daughter's talking about, I don't know a lot about it, but it did come up on and she's referring to the Hillsdale Cruise and Hillsdale uh cruise that's put on it was put on by a Hillsdale College and Hillsdale College in Michigan is one of the civilized college,
in addition to one that I talk about quite often is the Grove City College, where I am uh on member of the Board of Trustees, so we know that there's no nonsense going on, and if you send your kid to Hillsdale Grove City College, they come back a human being, uh as opposed to some of these other colleges you might send them to.
And uh and Wake Forest is pretty good as well.
That's where my daughter went to school as well.
But anyway, let's go to the phone and to uh Sean in Manchester, New Hampshire.
Hey, Dr. Williams, how are you?
Okay.
Hey, I I got some bad news for Devin.
You're conservative, and by every liberal standpoint, that means sh you don't have a heart.
She's not going to get anything for it.
Well uh that now that's not nice.
Well, you know what?
I'm just parroting what they seem to say.
And I'm sitting here listening to you and watching the stock market rally um on employment figures that are a twenty-six year high.
Uh-huh.
What insane part of Dante's inferno do we live in?
I mean, when does losing a quarter million jobs translate into good news?
It m it might be very good news.
That is uh let me let me just kind of go back to start off with very simple case you can really see easily.
That is when we start out in 1787, 93 percent of of our nation was involved in agriculture.
Now, only three percent, huge number of jobs destroyed by what?
By productivity.
And so what firms are looking for now, they're looking for ways to replace labor, because if you're gonna get a machine or a program to uh uh replace labor, well the machine's not going to be in a union, it's not going to get sick, it's not going to take time off, blah, blah, blah, blah.
So some of the uh unemployment that we might be seeing is uh maybe a relocation process whereby people are looking gonna get other jobs.
They're not gonna cut get their original job, but they're gonna get other jobs.
Uh and and keep in mind that there's an infinite number of jobs in any society.
And why I say infinite number of jobs, because human wants are infinite.
You know, and and I'll give you that.
My my my computer has been my personal assistance for years.
It doesn't talk back.
Once in a while it crashes, but so don't we all.
Yeah.
And um to my original point with which is screener, which you were talking about inflation down the road, and I you know, unfortunately, the only listeners I think to your show are conservative because it's not gonna ring true with the liberals anyways.
There's one chance and one, I think, only chance that we have to keep our country safe The way that we've grown to see it, and that is that in 2010, we need to vote out as many.
I don't care if you throw a dart at the phone book.
We need to vote out as many of these knuckleheads in the Senate and in the House as we possibly can and start from new and repeal whatever is left of these insane insane tax increases.
Well, well, I I think what what we have to recognize is that we cannot solve the problems of our country by trying to change the personalities in Congress.
We need to be able to change the rules of the game.
Whatever happened to the greater good, the good of the many outways that of the few.
Yeah, and nobody pays that attention ta pays attention to that.
I I don't give a damn about the good of the many.
I care about the good of Walter Williams.
And so But if Walter Williams lies in the majority, and we're we're gutting, we're taking this thing, turn it upside down on its head for what seems to be about fifteen million unfortunates in this country.
It doesn't make a lot of sense.
Well, no, but no, what no, what we need to do is somehow get back to United States Constitution.
See, we've gone away from the Constitution, and the American people have allowed it.
See, the framers of this nation, they had a huge distrust for the United States Congress.
They had an immense distrust.
But we Americans trust them.
And you can look at that you can get an idea of the distrust that the framers had for the United States Congress just by reading the Constitution.
Just look at the Bill of Rights.
What does it say?
It says Congress shall not prohibit, Congress shall not disparage, Congress shall not restrict.
Now, why do you think they would say all that if they didn't believe that Congress would?
That is, they you know, matter of fact, when you die, and the next place you go to, and if you see anything like the Bill of Rights, you'll know that you're in hell.
Because the Bill of Rights in Heaven would be an affront to God.
That would be suggesting that God's not trustworthy.
And so the I believe if you look at the United States Congress, the Constitution, there must be close to 40 negative statements about Congress.
But but somehow we Americans, we love Congress.
We respect these people.
These people in Washington, uh they're evil people and they're taking advantage of immoral Americans.
Because uh Congress wants uh Americans want Congress to be in the business of taking what belongs to one American and bringing back to them.
Let me just give you one example, then we have to go to a break.
But in 17 1794, Congress appropriated $15,000 to help some French refugees.
Madison, the acknowledged father of the Constitution, he stood on the House of the Floor of the House irate, and he said, and I'm quoting him, and it's a quote can be found on my website, Walter E. Williams.com.
He said, I cannot undertake to lay my finger on that article in the Constitution that authorizes Congress to spend the money of their constituents for the purposes of benevolence.
Can you imagine uh uh a president or somebody running for the president saying that today?
Or as as Cleveland Grover uh I believe Grover Cleveland said, or either Franklin Pierce uh point out, uh actually it was Madison, I'm looking at the quote now.
Charity is no part no part of the legislative duty of of uh of government.
Or um Benjamin Franklin, um no, it's not Benjamin Franklin, I believe uh oh Grover Cleveland, he said charity again, uh charity is not a legitimate function of government.
These people would not get elected to Congress today if they took that point of view.
We'll be back with your calls afterwards.
We're back.
Walter Williams uh sitting in for a rush and rush, remember he'll be back on Tuesday, but the best of on Monday.
And right now we're gonna go to the phones and talk to Steve in Lafayette uh Louisiana.
Welcome to the show, Steve.
Welcome.
Uh this is an honor and a privilege, Dr. Williams.
Thank you.
I I have waited eighteen years listening to comment on this show.
And uh I cannot believe that I have gotten through.
Okay, great, great, great.
And and during most of the eighteen years I was a conservative.
I'm not there now in this camp.
Okay.
So my comment to you on ba and basically I have four good reasons, but one of the reasons you were just talking about the supply of money the causing inflation.
Yeah.
Uh my conjecture to you that the the supply of money rising is a symptom, not a cause of inflation.
Cause of inflation is demand, demand for currency, demand for profits, demand for material goods.
Uh this demand is what i is what causes the government to print more money.
Let me help you out a little bit.
Let me help you out now.
With a simple example, or everybody can understand.
Now, let's imagine we're we have a monopoly game.
You know the game Monopoly?
Mm-hmm.
Okay, now let's have we have a game Monopoly.
Now, there's a certain amount of money in the monopoly game.
Now, it's impossible for all of the prices of the property in the monopoly board to go up.
Maybe one or two because of demand, maybe boardwalk, a whole lot of people want to buy boardwalk, maybe its price will go will be bitted up, but not every price will go up, will rise.
Now, suppose I sneak my money into the monopoly game.
I bring money from outside, maybe twice the amount of money, then what do you guess you're gonna see about all the prices on the monopoly board?
What's gonna happen to them?
They're gonna rise.
So you cannot if you increase the supply of money, then the effect of that is to increase prices.
That's a symptom of increase the supply.
And matter of fact, if if I were just to go print money, print the money.
Well, the Chinese are controlling their inflation here.
No, no, no, that's no, you're absolutely wrong on that.
No.
The point the point is is the point is is that it's government is the cause of inflation.
Now, you go to Zimbabwe, they have uh they have eighty-nine uh six trillion percent inflation.
Do you think it's because of demand?
You got to be kidding it.
The gov the government is printing.
The government is printing m hand over, hand over fist with money.
You cannot get an inflation unless there's an increase in the supply of money relative to the demand for money, and it's that simple.
Matter of fact, I've always told people, I've always suggested to people that if you're if you ever find yourself on trial for counterfeiting, just tell the judge that you are engaging in monetary policy.
That's the and you'll get off because that's exactly what the Federal Reserve is doing.
It's engaging in monetary policy, which is nothing short of inf of uh of uh of counterfeiting.
Let's go to Bob in Tallahassee, Florida.
Greetings, sir.
Hi.
Earlier you were talking about inflation and repudiation of debt by the government.
Now, through the history of the country, this is the the debt, the inflation has been manageable up to a point.
My question for you is what percentage or do you have an idea when that debt is no longer sustainable?
And part of what I'm a going for is for example, like in the late 60s, early 70s, and I forget who the sociologists were, but they're a part of the uh the theory that if the welfare system, if you overtax it and overuse it, you will implode it.
Well, the inflation can do the same thing to the federal government in some aspects.
What do you see, you know, as to being, you know, the like you say, the straw that breaks the camel's back?
Well, then it it can we can have we can have a very I I I don't have a number for you.
I don't have an idea.
What are some factors?
But I think that I think that the government can always maintain its power.
It will always survive.
You know why?
Because it has M1A1s and it has and it has uh F eighteens, they can just they have the guns.
All right, but my you know, another thing that's I mean just like just like Zimbabwe, the Zimbabwe the the Mugabe government is surviving.
Even though there's eighty-nine six trillion uh uh inflation rate, the government survives.
Does this fall into the false belief that hey, it's too big to uh to not survive, such as GM.
I mean, look at I mean, what point does the government get to that point?
Well, the yeah, I think I'm saying Yeah, I I think it's a serious mistake that the government's uh uh people say uh GM is too big to to fail.
I think uh uh failing Companies uh like GM should not should should not exist.
That is, you know, a lot of Americans don't understand.
I'm and this is kind of getting off your point, but I think it's very important to keep in mind to recognize the kind of things that we're doing, that in a market, failure, companies failing is just as important to the smooth operational market as companies succeeding.
That is, success tells companies you're doing the right thing, you're pleasing your customers, and you're doing it in an economically efficient way.
Failure means that you're not pleasing your customers and you're not doing you're not producing your goods in an inefficient way.
And I mean, in a in in an efficient way.
And so what what bankruptcy does if if Chrysler or General Motors went bankrupt, it didn't mean that the assembly lines just go puff and disappear in the thin air.
What bankruptcy means if it goes all the way, it means that there's a change in the title to those assets.
Those assets are sold to somebody who think that they can do a better job.
And if the government comes in and saves them from bankruptcy, the government in effect says, keep on screwing, keep on messing up.
We will hand you taxpayers' dollars to make sure you survive to continue messing up.
We'll be back with your calls after this.
We're back uh pushing back the frontiers of ignorance, and let's welcome uh hitch from Haha was Haha Tonka, New Jersey.
Missouri, and I had the same problem when I moved here.
Ha ha tank is it.
Okay.
It's a pleasure, Doc.
But I think I think you may you and I may or may not have a disagreement.
Okay.
I I heard you referred to the phrase promote the general welfare as a clause.
And no, it's uh you uh if you didn't, then we don't have a disagreement.
Or we may still.
Uh I've always considered the preamble to be a mission statement, and the uh what follows the words Article 1, Section 1, is the law of the land.
And that the preamble describes what they want to do, and Article 1, Section 1 starts to describe how you may do it, and the Tenth Amendment says if you can't find it there, you ain't got the power to do it.
That's right.
And the other thing is your daughter, when she called uh mentioned the elastic statement, uh uh pardon me clause, and I wish people would read past uh all laws necessary and include and properly.
You're right, yeah.
And let me help you out a little bit, because I always carry my constitution with me in case somebody disagrees with me.
And section eight says Congress should have the power to lay and collect taxes, duties, imposts, excises, to pay the debts, and provide for the common defense and the general welfare of the United States.
That's Article 1, Section A. Check it out.
I uh see you you can't mess with professors.
But thanks a lot for calling in.
Hey, folks, hey, look, it was really great uh uh being back on.
And I don't think we have time for another call yet.
No, we don't, no.
We uh uh less than a minute.
Matthew have you have uh 35 seconds.
Well, thank you.
Uh I just want to give you the the reason why uh these politicians can't get our deficit under control and are spending trillions and trillions of dollars.
If you look at it, most politicians are lawyers, and if you look at that, most lawyers uh their degrees from college are of either political science or history degrees, vast majority of them.
These guys know nothing about economics, health, insurance, or anything.
And if you need more engineers and more doctors and and more uh of these kind of people running in contracts.
And and and finally, uh I'm sorry, but even if they did know economics, they have contempt for it.
They have contempt for the ideas of freedmen, just like many, many economists.
Folks, tune in on Tuesday.
Rush will be fresh back from the vacation.
I think he's playing golf, and he'll be able to answer all your questions and tune in on Monday because it is the best stuff.
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