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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, John and Donovan.
And this is Walter Williams filling in for a rush.
And Rush is going to be back on Tuesday.
And the best of is going to be on Monday, Labor Day.
And I'm on right now.
And we just got finished talking to Dr. Thomas Sowell about his latest book, The Housing Boom and Bust.
And we were talking about other things like why.
Why liberals and why academics, particularly academics, they just see these barbarians as heroes of one kind or another.
And you might say, well, Williams, where's the evidence?
Well, I'll tell you what you do.
You go through the 1960s or the 70s, you read papers, and they were marching around on college campuses waving Mao's little red book and chanting Mao slogans.
And they just loved Mao Sedung.
And keep in mind, as I said to you, that Mao, those of you tuned in late, Mao Sedung is responsible for killing, at least according to Death by Government, 38 million of his own citizens and Stalin and other Russian tyrants who are responsible for killing 61.
And you know, it's kind of an interesting question.
These people condemn Adolf Hitler, but you don't see that kind of condemnation of Stalin and Mao Sedung and other tyrants.
Of course, Castro is not, he's not of the Kit Carson, he just gave me a contribution.
He says they were more complex.
But Philadelphia Castro, he was not the kind of tyrant that Mao Sedung was, but nonetheless, he's a tyrant.
And you find, like a congressman, this Diane Watson, she's a Castro supporter, saying, well, what do you think about Castro?
He's one of the brightest leaders I've ever met.
And she probably says 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 going to talk about, even though it's covered in my columns in a book that I wrote late last year, came out late last year.
It's called 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 spending, inflation is one of the risks that awaits us.
Now, inflation is not here yet, but I believe it's going to come.
Now, so we need to protect ourselves against from the political demagoguery that will accompany inflation.
And I think one of the things is just being informed a little bit.
And let's recognize that inflation, 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 Milton Friedman said, and I quote, inflation is always and everywhere a monetary phenomenon 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 as rising prices permits politicians to deceive us and to escape culpability.
That is, they blame rising prices on greedy businessmen, rapacious unions, Arab sheiks.
Well, 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, 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 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 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, the United States Constitution, so that individual states could not issue bills of credit.
And what they, if you read Article 1, Section 8 of the Constitution, it says Congress 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, it allows government to steal from the citizens.
Now, 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 $100 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 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 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 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, 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.
Now, the question is, if the government's going to spend about $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 Tooth Ferry, Santa Claus, the Easter Bundy 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 balanced.
The budget is always balanced.
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.
It's no way that a 20, matter of fact, if a 2050 kid was able to make up a 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 reckless spending, they will inherit less capital than they otherwise would inherit.
We will bequeath them a less robust economy than otherwise would be the case.
We'll be back with your calls on the subject after this.
We're back, and you can be on with us by calling 800-282-2882.
And before we get back to the subject for this hour, I was just watching Fox News on the television in the studio, and we try to stay on the cutting edge of 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 Fox moderator was saying, but she looked like kind of sad in the face, like she might have been 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, in America, there are 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 I think that I should have the right to sell my organ.
For example, here's the question that you have to ask whether Williams can sell his organs.
You have to say, well, who does Williams' kidney belong to?
Now, if my kidney belongs to Barack Obama or the United States Congress, well, then I cannot sell my kidney because 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 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 suede vest that I'm wearing today and that the guys Mike Mamone and Kit Carson 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, one of the big problems in healthcare is that people can't sell the organs.
And, yeah, I can imagine, let's say I'm laying on my deathbed.
That's, you know, if I ever die.
I'm laying, and the doctor is talking to my daughter and saying, well, would you like to volunteer his organs?
Would you like to volunteer, you know, donate his kidneys or liver?
And I can just see my daughter.
She loves me dearly.
Say, 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.
But we have to allow people to sell their organs.
But let's, that was just a little aside, but I just wanted to bring you up to date about what the 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 Devon in Los Angeles.
Welcome to the show, Devin.
Hey, Dad.
Oh, my God.
Now, that was not right.
These guys set me up.
They sure did.
They say.
And I will say, I'm going to sell the kidneys, the eyes, the heart, the liver.
Anything I can get some cash for.
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 hay fever is better, daughter.
It is.
It is.
Fires are kind of calming down out here in Los Angeles.
But the reason I called, actually, is, you know, 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, 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.
You know, 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 given to Congress because of that clause, the Elastic Clause.
I just wanted to maybe touch on that a little bit.
And is that the clause that should be taken out?
Is that should be amended?
Well, I don't think so, but we surely don't have enough time to talk about it because I'm up against a hard break.
But I think that that's a lot of the justification that people use for the intervention.
But I think the Constitution is clear on a couple things.
That is, that it says, well, at least the founders of the Constitution, I'm sorry, 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, this is awful.
And I'm going to get you for this.
My daughter is, as I tell my daughter every once, well, I am still her father, and I still put her across my lap and give her a spanking, even though she's in her 30s.
Anyway, folks, what do you think?
Is her voice better for the show than mine?
Oh, Kit says you do very well.
We're back.
And that was really a dirty trick that Mike Mamone, my engineering kit, pulled on me.
And the necessary and proper clause my daughter is 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, a cruise, it was put on by Hillsdale College.
And Hillsdale College in Michigan is one of the civilized colleges.
In addition, one that I talk about quite often is the Grove City College, where I am on a 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 as opposed to some of these other colleges you might send them to.
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 Sean in Manchester, New Hampshire.
Hey, Dr. Williams.
How are you?
Okay.
Hey, I got some bad news for Devin.
You're conservative, and by every liberal standpoint, that means you don't have a heart.
She's not going to get anything for it.
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 on unemployment figures that are at a 26-year high.
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 might be very good news.
That is.
Let me just kind of go back to start off with a very simple case you can really see easily.
That is, when we started out in 1787, 93% of our nation was involved in agriculture.
Now, only 3%, 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 going to get a machine or a program to 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 unemployment that we might be seeing is maybe a relocation process whereby people are going to get other jobs.
They're not going to get their original job, but they're going to get other jobs.
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 I'll give you that.
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.
And to my original point, which is Greener, 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 going to ring true with the liberals anyways.
There's one chance and one, I think, only chance that we have to keep our country 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, I think 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 outweighs that of the few.
Yeah, nobody pays attention to that.
I don't give a damn about the good of the many.
I care about the good of Walter Williams.
But if Walter Williams lies in the majority and we're gutting, we're taking this thing, turning it upside down on its head for what seems to be about 15 million unfortunates in this country, it doesn't make a lot of sense.
No, what we need to do is somehow get back to the 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, 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, I believe if you look at the United States Congress, the Constitution, there must be close to 40 negative statements about Congress.
But somehow, we Americans, we love Congress.
We respect these people.
These people in Washington, I mean, they're evil people and they're taking advantage of immoral Americans because Congress wants Americans want Congress to be in the business of taking what belongs to one American and bringing it back to.
Let me just give you one example, then we have to go to a break.
But in 1794, Congress appropriated $15,000 to help some French refugees.
Madison, the acknowledged father of the Constitution, he stood on the floor of the House irate, and he said, and I'm quoting him, and its quote can be found on my website, walterewilliams.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 a president or somebody running for the president saying that today?
Or as Cleveland Grover, I believe Grover Cleveland said, or either Franklin Pierce pointed out, actually, it was Madison.
I'm looking at the quote now.
Charity is no part of the legislative duty of government.
Or Benjamin Franklin, no, it's not Benjamin Franklin.
I believe Grover Cleveland said charity, again, 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 sitting in for Rush and Rush, remember, he'll be back on Tuesday, but the best of on Monday.
And right now, we're going to go to the phones and talk to Steve in Lafayette, Louisiana.
Welcome to the show, Steve.
Welcome.
This is an honor and a privilege, Dr. Williams.
Thank you.
I have waited 18 years listening to comment on this show.
And I cannot believe that I have gotten through.
Okay, great, great, great.
And during most of the 18 years, I was a conservative.
I'm not there now in this camp.
Okay.
So my comment to you on, basically I have four good reasons, but one of the reasons you were just talking about the supply of money causing inflation.
Yeah.
My conjecture to you that 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.
This demand is what causes the government to print more money.
Let me help you out a little bit.
Let me help you out with a simple example.
Everybody can understand.
Now, let's imagine we have a monopoly game.
You know the game Monopoly?
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, its price will be bidded 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 going to see about all the prices on the monopoly board?
What's going to happen to them?
They're going to 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 increased supply.
And matter of fact, if I were just to go print money, print the money.
Well, the Chinese are controlling their inflation.
No, no, no, no.
No, no.
No, that's no, you're absolutely wrong on that.
No.
The point is, is that government is the cause of inflation.
Now, go to Zimbabwe.
They have 89 6 trillion percent inflation.
Do you think it's because of demand?
You've got to be kidding it.
The government is printing 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 ever find yourself on trial for counterfeiting, just tell the judge that you are engaging in monetary policy.
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 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, 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 going for is, for example, like in the late 60s, early 70s, and I forget who the sociologists were, but there were part of the theory that 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 as to being, like you say, the straw that breaks the camel's back?
Well, we can have a very, I don't have a number for you.
I don't have an idea.
What are some factors?
But I think that the government can always maintain its power.
It will always survive.
You know why?
Because it has M1A1s and it has F-18s.
They have the guns.
All right.
But another thing that I've seen.
I mean, just like Zimbabwe, the Zimbabwe, the Mugabe government is surviving.
Even though there's $89,6 trillion inflation rate, the government survives.
Does this fall into the false belief that, hey, it's too big to not survive, such as GM?
I mean, look at, I mean, what point does the government get to that point?
Well, yeah, I think the economy, I'm saying.
Yeah, I think it's a serious mistake that the government people say GM is too big to fail.
I think failing companies like GM should not exist.
That is, you know, a lot of Americans don't understand.
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 operation of the 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 producing your goods in an inefficient way.
I mean, in an efficient way.
And so, what bankruptcy does, if Chrysler or General Motors went bankrupt, it didn't mean that the assembly lines just go puff and disappear into 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 thinks 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 pushing back the frontiers of ignorance, and let's welcome Hitch from Ha Ha was Ha Ha Tonka, New Jersey?
Missouri, and I had the same problem when I moved here.
Ha ha Tonka is it.
Okay.
It's a pleasure, Doc.
I think you and I may or may not have a disagreement.
Okay.
I heard you refer to the phrase promote the general welfare as a clause.
No.
If you didn't, then we don't have a disagreement, or we may still.
I've always considered the preamble to be a mission statement, and 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 10th 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, mentioned the elastic statement, or pardon me, a clause.
And I wish people would read past all laws necessary and include and property.
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 8 says: Congress shall 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 8.
Check it out.
See, you can't mess with professors.
But thanks a lot for calling in.
Hey, folks.
Hey, look, it was really great being back on.
And I don't think we have time for another call yet.
No, we don't.
No, we.
Less than a minute.
Matthew, you have 35 seconds.
Well, thank you.
I just want to give you the reason why 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, their degrees from college are either political science or history degrees, vast majority of them.
These guys know nothing about economics, health, insurance, or anything.
And need more engineers and more doctors and more of these kinds of people running this country.
And finally, I'm sorry, but even if they did know economics, they have contempt for it.
They have contempt for the ideas of Freeman, 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.
Tune in on Monday because it is the best stuff.
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