The Future of Liberty With Special Guest Jeff Deist
This week the Mises Institute holds its annual summer economics program for college students. The Liberty Report checks in with Mises Institute president Jeff Deist about the Institute and the importance of educating the next generation of free market economists.
This week the Mises Institute holds its annual summer economics program for college students. The Liberty Report checks in with Mises Institute president Jeff Deist about the Institute and the importance of educating the next generation of free market economists.
This week the Mises Institute holds its annual summer economics program for college students. The Liberty Report checks in with Mises Institute president Jeff Deist about the Institute and the importance of educating the next generation of free market economists.
Hello, everybody, and thank you for tuning in to the Liberty Report.
With me today is Daniel McAdams, who's the Executive Director of the Institute for Peace and Prosperity.
Good to see you, Daniel.
Hello, sir.
Good to be with you.
Good.
We have a special guest today.
Yeah, we do.
I think you've met him once before, back in the old congressional days.
We have with us today the president of the Mises Institute, Jeff Deist, and we're going to have a little visit here on what's going on in the world in the area of economic training and education.
So this is a wonderful chance to visit with Jeff.
He was the chief of staff for quite a few years, but he was also in other various jobs like chief of the taxes, that is, the chief who was going to help me get rid of the taxes, as well as press and other things.
But in these last year or so, he's been president of the Mises Institute.
So, Jeff, it's great to have you with us today.
Thanks, Dr. Paul.
Good to hear from you and good to talk to Daniel.
Well, wonderful.
You know, I'd start, I want to start off with one of the items in the news.
As we speak, of course, every other day it had been solved, and that's the Greek economic crisis.
One thing for sure is the people who have been managing this crisis, who created the crisis, and who have messed up all of Europe, were not Austrian economists.
And there may be a couple over there, but they don't practice it any more than we practice it here.
But Greece is really messed up.
The other day, a friend of Liberty, Nigel Farage, who's a member of the European Parliament, did a little clip on there.
Did you happen to see that, his little four-minute dissertation of what the problem was?
I did indeed, and I always enjoy watching the other members of the European Parliament squirm while he's speaking.
Right.
So I guess what I'd like to get from you is where you think they should go now.
Because, you know, we can talk about how it messed up.
It took a long time.
And there's always a little bit of pain.
And I think Farage actually admitted there'd be a little bit of pain with this.
And he was more optimistic than me.
I usually say, if you do what's right in a year, you'll be all back on your feet again.
He said something like, in four months.
But tell us a little bit about what kind of policy changes have to be changed and take into consideration the politics of it all and how to get a consensus and an understanding by the people on what one would be doing would be beneficial.
Well, I think Mr. Sipras might not be long for his job.
The problem is he was bluffing with the ECB and with his European paymasters without much of a Trump card behind him.
He really should have been working on an alternate currency for Greece, something that he could have fallen back on if in fact an exit from the Euro was his final bluff.
But he didn't do that.
He really could have taken a lesson from Iceland and looked at their crisis where they basically told their creditors who were among others German bankers that they were going to take a haircut, pure and simple,
and that when a default comes there is a process known as bankruptcy generally whereby lenders take a haircut and that's the manner by which the bad debt is resolved and taken care of and these problems don't just linger and go on and on and on and become saddled onto future generations.
So I fear what Mr. Sipras is trying to negotiate here in this 11th hour is something that's just going to perpetuate the problem, kick the can down the road.
I mean, Dr. Paul, they need 25 billion Euro just to keep their banks, just to reopen their banks and have some operating cash for what will almost certainly be a bank run.
They need 7 billion Euro just to meet their next payment commitment to the ECB to not be in default to the ECB like they are in default to the IMF.
So these band-aid measures, it harkens back to our own crash of 2008.
If we had just suffered the pain, a year or two of real pain, and let the bad debt liquidate itself, we would have been able to start to build from a real foundation some sort of economy.
But I'm afraid the term Greek economist is now much like a French economist or apparently a German economist.
It's smoke and mirrors.
And it's so disheartening to see for the Greek people who are not wholly blameless, but at least partially blameless in this terrible drama.
Right.
You know, Jeff, Jeff, you make a great point about debt.
You know, what I found so fascinating about this, the idea that a country so badly in debt, such as Greece, I think they have $300 billion and some change.
Now with this wonderful new bailout deal, it's going to save them by adding $200 billion more debt.
That's like when you max out a credit card and get another one and max that one out.
Does it make any sense to you?
No, it's terrible.
And the real victims here are the Greek people.
They're not wholly blameless, but they're certainly partially blameless.
And it all harkens back to our own crisis of 2008, where we thought, well, we can kick the can down the road.
And instead of just letting the bad debt work itself out and letting the bankruptcy process occur for firms like B of A and Countrywide and AIG, we propped them up, we bailed them out, we got more debt, we restructured.
And as a result, five or six years later now, we find ourselves mired in the same problems we failed to fix.
And it just seems as though if the Greek people were given an opportunity to go to their creditors, much like Iceland did, and say, you're going to take a haircut and that's it, and we're starting over.
This debt cannot be repaid.
We can't solve it by borrowing more.
They would actually have an opportunity to build something new, to build a real economy based on some sort of productivity as opposed to just more debt and more short-term relief.
But what's so interesting to me about all this is how it just proves that the centralizers were wrong.
The centralizers were the ones telling us that the UN and the IMF and the EU will eliminate hostility between countries in Europe.
Instead, we find that the EU is inflaming the old tensions from World War I and World War II between Greeks and Germans.
Instead of creating prosperity, we find that the ECB has created huge moral hazards that lead to more of this kind of debt.
And instead of creating just a trade zone, we've seen that there really is a real loss of sovereignty for the Greek people.
They're now being dictated to by Brussels and Frankfurt, and their own parliament, which is supposed to be the parliament of an independent sovereign country, is now forced to meet tomorrow and accept terms from the EU.
So the centralizers have always been wrong.
And the problem, the great problem with centralization is what could be small contained problems like we saw in Iceland become larger systemic problems that affect larger parts of the global economy.
You know, as bad as it is in Greece, I think the real fear for many people is the contagion.
What will happen after this?
And when will the European Union and the Euro go, which is all a possibility at any time.
And sometimes there are distractions and people think that if they talk about something else, people won't worry.
But there's more news now about our debt.
Even though nobody's panicking, I don't think too many people are taking money out of our banks.
It's a while off, but surely could come.
But I saw a statement by our friend Mark Faber, who is an Austrian economist and also a very famous investor.
He was saying the really big issue, and he was into economics, as bad as it is in Europe and with Greece, he said the really big one is the turn-down in China, mainly because they buy 40% of all the commodities.
He thinks the economy is much weaker than they admit to.
They claim they're really slipping toward a bad time because they are only having 7% growth.
But he says in reality, it's much lower, and that's going to have ramifications.
So I think that's the big picture: this is a world dollar standard.
It's been going on since 1971, and the bubble is huge.
It's a dollar bubble, and all this malinvestment and debt.
And I think the day is coming where this debt will have to be unwound, and just dead pout on debt will not solve our problem.
Well, absolutely.
I couldn't agree more.
And what we're going to find out is what happens when a world's reserve currency fails.
You know, we've had examples of regional or national currencies failing.
We had Weimer, Germany.
Of course, more recently, we had Argentina.
But the scope of the dollar status since the 70s as the king dollar of the world, there's no historical precedent for this.
And we're really in uncharted territory.
That's why nobody can say for certain whether the result will be a hyperinflationary spiral or whether it will actually be a deflationary depression.
But we know it doesn't end well, and we know at some point our creditors, especially Asian central banks and Asian exporters, are going to get very tired of our profligacy here at home and are going to start to look for alternatives to the dollar.
You know, I want to work this into the purpose and the function of the Mises Institute because they, it, has been dealing with this for a very long time.
And they have an answer.
You know, there are several libertarian, so-called libertarian groups and free market people that hardly ever deal in monetary policy.
There may be some, there are some others, but a principal libertarian economic education group that deals with the monetary policy in the business cycle has to be the Mises Institute.
And that, I think, is where we have to look for the answers.
Now, you've been there at the Mises Institute, I guess, around a year or so, but you've known about it for a long time.
And of course, Lou Rockwell knows very much about this.
But how do you see the progress?
Are you still getting a lot of young people to come?
And can we give the people a little bit of hope about this?
Mises says you have to change people's minds.
You have to have people sit down and study theory, but you still have to make that theory palatable to the common man so that they accept it in their own best interest.
So how do you think the Mises is doing at this particular moment?
Well, I think there's huge interest in the Austrian school now.
And in part, that's due to the crash of 2008 and the recognition by millions of people around the world that central banks weren't working.
In part, that's due to your two presidential campaigns where you brought monetary issues from the back burner of being this boring, wonkish thing for Washington think tanks into something that affects everyday people.
So I think that was a tremendous coup on your part.
And issues like what we see happening in Greece right now, all of these things are creating an unrest among people.
And they know that something's wrong, but maybe they don't know exactly what's wrong.
They know on some level that we can't print or just create money and become prosperous from it, but they don't exactly understand the full mechanics of how central banks work and how they devalue currencies.
So I think in a way, we're in a great spot.
We're sort of like when only 10% of the population had mobile phones.
You know, the sky is the limit.
Still, a very small fraction of the public has much knowledge about monetary policy.
And really, to me, Central banking is the great evil of our time.
It made the horrific wars of the 20th century possible.
It makes profligacy in governments around the world possible.
It creates huge distortions and misallocations and malinvestment in the global economy.
So, you know, it doesn't, you know, people want to talk about gay marriage or they want to talk about whatever social issues are on the front burner.
But to me, central banking is the issue of our day and it's the most important issue of the 21st century.
Well, I want to tell viewers to pay a lot of attention.
If you have not visited the Mises Institute website, you should.
If you're looking for books, go there.
You can get all varieties of books.
The small little book like The Law or The Human Action that Mises wrote, but then Murray Rothbard's book.
And the Mises Institute has carried on a tradition that I believe in many ways Leonard Reed started, and he was influenced.
I was influenced by him.
And that was small groups in education.
And I know the Mises Institute does this.
So anybody who wants to learn something can.
They can get the literature.
This was not available in the 1950s and the 1960s.
It was a struggle.
So right now, it's a lot easier.
Leonard Reed achieved it when he didn't have these tools.
So right now we need to use these tools.
And Jeff, I am so delighted with what you've been doing at the Mises Institute.
So you keep up the good work because the answers will be found in good ideas.
The real fault will come from bad ideas.
It's a world of contest between ideas, and it makes all the difference in the world.
Jeff, thank you very much for being with us today.