c-span: who followed milton friedman's thought? >> guest: well, milton friedman only enters the--he, of course, the libertarian free marketer and so on. he comes into the book mostly as a--as somebody for them to look up to in the '70s. but also for somebody like clint bolick--he--his work on the voucher movement. he and clint kind of got in--were involved both in that. but i--milton friedman--i don't make him, you know, a huge mentor figure in the book. c-span: you quote him in here. is that an interview that you had with him? >> guest: yes. i had an interview at his incredibly beautiful san francisco apartment. yes. but we talked mostly about the--this generation of conservatives and how it was different from the previous generation. and he talked a lot about what was going on in the '70s. pot holes, bur--long lines of--at the b--at bureaucracies, the sort of dis--dissatisfaction with government that was so prevalent in the '70s. and so, yes, it became very easy to develop a more conservative view--or anti-government view. c-span

melissa: but there are also a loof people that are afraid of the milton friedman idea that over time when you print money in print money and everything that we are doing, everything readjusts to its own level. you cannot trick markets and you end up with this inflation. with everything we have done that would be huge. >> the problem is when you build expectations prices will keep going up. people have forgotten how bad the 1970's were. ronald reagan called it the thief of the middle-class. creches someone living on a fixed income, someone who is not able to demand higher and higher salaries. melissa: and my concern is that once it becomes unleased and we see it happen there is no way to stop it at that point. >> that is right. if you slow down your purchases and take it to zero you will make asset prices fall but you will not make consumer price inflation stop. paul volcker really had to raise interest rates through the roof and subject the economy to a long, hard recession which was in some measure responsible for carter on a serving one term. you know, i think we are headed in that

conservative economist milton friedman. because the tendency has always been to respond too late and too much and to create a subsequent period of bumps. in my opinion, the right way to respond-- the most desirable way to respond to recession-- is to have a policy of steady monetary growth. as a result, recessions will be mild and will correct themselves as the effects of various forces unleashed by the recession work out. you won't have a perfectly steady economy but a much stabler economy. i don't believe that. with all the information we have about the economy, there should be feedback. you should feed back into the policy process what you can learn from the economy and then adjust policy not every day, but over a cycle or in light of various crises that hit the economy. you should adjust it in light of the information. i would say you can't iron out the little wiggles in the business cycle, that countercyclical policy may be useful if the economy gets very much off track. we have monetary and fiscal tools for dealing wi

melissa: but there are also a lot of people that are afraid of the milton friedman idea that over time when you print money in print money and everything that we are doing, everything readjusts to its own level. you cannot trick markets and you end up with this inflation.thine that would be huge. >> the problem is when you build expectations prices will keep going up. people have forgotten how bad the 1970's were. ronald reagan called it the thief of the middle-class. creches someone living on a fixed income, someone who is not able to demand higher and higher salaries. melissa: and my concern is that once it becomes unleased and we see it happen there is no way to stop it at that point. >> that is right. if you slow down your purchases and take it to zero you will make asset prices fall but you will not make consumer price inflation stop. paul volcker really had to raise interest rates through the roof and subject the economy to a long, hard recession which was in some measure responsible for carter on a serving one term. you know, i think we are headed in that direction. mr. obama's

friedman and thomas sole and other conservative thinkers so i was very interested in engage from that point of view and continue to consider myself sort of a free market libertarian but i come to over the course of my experience in writing and observing politics in washington come to realize that it's not something that is fixed by one party or the other and what i've seen it being the problems that we face in this country you know in terms of generating prosperity so the american people can can enjoy a quality of life protecting civil liberties national defense i've come to the realization that washington d.c. as much as we want to believe in hope to believe that it's a town animated by ideas and that that we're seeing a great clash of ideas in washington what we're really seeing oftentimes i think is a business transaction the analogy i used in the introduction of the book is that politics in washington is a little bit like professional wrestling if you have no exposure to it the first time you watch it and you see the two guys in spandex sort of going at it hitting each other with

at the head of the monetarist attack was economist milton friedman. in my opinion, given that there is a federal reserve, the best way for it to operate would be to set targets for a single monetary aggregate and stick to those targets and keep to them as closely as possible. and those targets should be set so as to go from wherever you start to a rate of growth in the money supply which is consistent with zero inflation. schoumacher: on october 6, 1979, paul volcker announced that the fed would no longer target interest rates, but would focus instead on targeting the money supply itself, restraining it until inflation was broken. in a speech before the national press club, he stressed his determination to stick to this long-term course. volcker: will the fed stick with it? my short and simple answer to that question is "yes." and i don't intend to qualify -- i don't intend to qualify that answer. but i do want to be clear, clear about what the "it" is that we intend to stick with. [ laughter ] "it," in the sense of our october 6 actions, is restrain

friedman and thomas sole and other conservative thinkers so i was very interested in engage from that point of view and continue to consider myself sort of a free market libertarian but i come to over the course of my experience in writing and observing politics in washington come to realize that it's not something that is fixed by one party or the other and what i've seen it being the problems that we face in this country you know in terms of generating prosperity so the american people can can enjoy a quality of life protecting civil liberties national defense i've come to the realization that washington d.c. as much as we want to believe and hope to believe that it's a town animated by ideas and that that we're seeing a great clash of ideas in washington what we're really seeing oftentimes i think is a business transaction the analogy i used in the introduction of the book is that politics in washington is a little bit like professional wrestling if you have no exposure to it the first time you watch it and you see the two guys in spandex sort of going at it hitting each other with

friedman taught us expansion of money was inflation. what they are forgetting is that in that formula, what matters is not just the monetary base. it's also the velocity of money. i that someone signed the fed is printing money, but for every bank that is not lending whereas in the 2000's there were, that is doing the reverse, that is the printing money. all the fed is doing is making up for all of the the monetizing that is going on in the fundamentally broken credit system. as that starts the heal the fed will get out of the position it is in. john: i hope you are right, austan goolsbee. thank you. >> god bless. john: up next, fed governors being tortured and murdered. it did not really happen, but it is a new best seller about the fed. ♪ ♪ john: i hate to admit this, but as important as the faded and i have avoided doing shows about it because the fed is, well, boring and confusing. but i ask people what it was, this was really a typical answer. >> what is the fed? >> the fed? john: the fed? >> f-t-d-fed, the federal government?

friedman taught us expansion of money was inflation. what they are forgetting is that in that formula, what matters is not just the monetary base. it's also the velocity of money. i that someone signed the fed is printing money, but for every bank that is not lending whereas in the 2000's there were, that is doing the reverse, that is the printing money. all the fed is doing is making up for all of the the monetizing that is going on in the fundamentally broken credit system. as that starts the heal the fed will get out of the position it is in. john: i hope you are right, austan goolsbee. thank you. >> god bless. john: up next, fed governors being tortured and murdered. it did not really happen, but it is a new best seller about the fed. ♪ ♪ john: i hate to admit this, but as important as the faded and i have avoided doing shows about it because the fed is, well, boring and confusing. but i ask people what it was, this was really a typical answer. >> what is the fed? >> the fed? john: the fed? >> f-t-d-fed, the federal government?

up pass and everything milton friedman and says, is seen as i get some point we will see out of control inflation as a result was a boy on right now. melissa: so far it has been very good. it has held down to around two or 3 percent, and that's great. when inflation starts it happened suddenly, and they're printing of this money. melissa: and no one has ever done what we're doing right now, the new unusual measures that we have no idea how it is going to turn out. this idea, folks out there capaneus the fed. we do need them for some basic stuff, i would say. number one, standing behind the currency. you look something like eight. you really don't trust, you kind of go off the great and go this point. >> i bought some and the price and happy to say just went up. people don't count on it for the long term, so it feels like we go back to a system where we do barter. you cannot count on a currency in some situations, and crazy, i'm wrong? >> you are saying the existence of the central bank which is basically printing $4 trillion means you can count on the currency. from the inflation hittin

friedman taught us expansion of money was inflation. what they are forgetting is that in tha formula, what matters is not just the monetary base. it's also the velocity of money. i that someone signed the fed is printing money, but for every bank that is not lending whereas in the 2000's there were, that is doing the reverse, that is the printing money. all the fed is doing is making up for all of the the monetizing that is going on in the fundamentally broken credit system. as that starts the heal the fed will get out of the position it is in. john: i hope you are right, austan goolsbee. thank you. >> god bless. john: up next, fed governors being tortured and murdered. it did not really happen, but it is a new best seller about the fed. ♪ [ bagpipes and drums playing over ] [ music transitions to rock ] it's one more innovative reason serious investors are choosing fidelity. get 200 free trades when you open an account. it's not the "juggle a bunch of rotating categories" card. it's not the "sign up for rewards each quarter" card. it

friedman taught us expansion of money was inflation. what they are forgetting is that in that formula, what matters is not just the monetary base. it's also the velocity of money. i that someone signed the fed is printing money, but for eve bank that is not lending whereas in the 2000's there were, that is doing the reverse, that is the printing money. all the fed is doing is making up for all of the the monetizing that is going on in the fundamentally broken credit system. as that starts the heal the fed will get out of the position it is in. john: i hope you are right, austan goolsbee. thank you. >> god bless. john: up next, fed governors being tortured and murdered. it did not really happen, but it is a new best seller about the fed. ♪ it's a growing trend in business: do more with less with ss energy.hp is help. soon, the world's most intelligent servers, designed by hp, will give ups over twice the performance, using forty percent less energy. multiply that across over a thousand locations, and they'll provide the same benefit to

friedman taught us expansion of money was inflation. what they are forgetting is that in that formula, what matters is not just the monetary base. it's also the velocity of money. i that someone signed the fed is printing money, but for every bank that is not lending whereas in the 2000's there were, that is doing the reverse, that is the printing money. all the fed is doing is making up for all of the the monetizing that is going on in the fundamentally broken credit system. as that starts the heal the fed will get out of the position it is in. john: i hope you are right, austan goolsbee. thank you. >> god bless. john: up next, fed governors being tortured and murdered. it did not really happen, but it is a new best seller about the fed. ♪ [ woman ] if you have the audacity to believe your financial advisor should focus on your long-term goals, not their short-term agenda. [ male announcer ] join the nearly 7 million investors who think like you do. face time and think time make a difference. at edward jones, it's how we make sense o

i go back to milton friedman's line is government spending is taxation. government doesn't create resources it redistributes resources. for every person spending money on the government there's someone from whom they're taking that money. it clearly would be good for the u.s. to reduce government spending. i would like to see it as you described earlier, larry, where we do a tax reform first and then get economic growth going. once you get that economic growth going, it's much easier to reduce spending. that's what bill clinton had happen. he had a tremendously good economic -- he was able to cut spending a lot. >> there's no one talking growth. growth, growth, growth. >> growth is it. >> growth, by the way, lowers revenues. i mean, growth lowers welfare. growth does -- >> it does everything. >> growth promotes leverage. you take the bubbling get deficit down by tens of trillions of dollars. >> exactly. >> you have houses, jpmorgan, morgan stanley, they're all very pes sim miss city. if the shutdown lasts we'll lose 2% of gdp, americans will become greece

those three left-wing keynesians, milton, friedman, hayek,ith, and frederick all say the same thing. there is a marvelous page devoted to them in this book. what they say is it is the number one job of government to have a healthy economy to break monopolies. it is first in order. then you mayirst, be able to succeed with other steps. we will talk a lot about the other steps today. but i wanted to start out by suggesting we not pull any punches. believing you can have a whereable oil market price will matter and competition exists in the presence of 78% of this cartel's they holdre of oil -- 70% of the world's proven reserves of oil, and they are horse that our transportation requires be 97% oil. of changingchance that and getting king abdullah to charge as something close to the rest of the world to what oil is worth as distinct from paying his young men not to work. there is no chance to succeed without breaking opec. >> thanks, jim. i will note the usual roundtable rules. if you want to break in and speak, turn your card over on its side. those of you not at the table, it if you h

you know coming years ago milton friedman took the position that because the nature of the two parties, one promising all these things and the other was paying at that with the republicans ought to do or the conservatives ought to do -- and this was back in the 60's and 70's is get off this job of raising money so the democrats can pass out gifts to the public and say we are not going to worry about that because nobody would let the deficits grow completely out of control. but they were talking at the different time in a different context but you're absolutely right. and that is that growth has to be the key. there has been historically in the debt and the deficit remember hubert humphrey used to say we owe it to ourselves. it doesn't mean anybody. nabil it to china perhaps or other nations. but wasn't that big and we could live id and manage it and there was no context whether this was good, better or different so it was never a voting issue. that's changed in the last few years because of the size of what's going on and the country that we are on the wrong track fiscal the and econom

they feel more comfortable with milton friedman or frederick hayyek. he's the one who got the noble prize in 1974. he was the intellectual guru for maggie thatcher, one of the key drivers of the ne-yo liberal -- neoliberal view from thatcher to reagan to ping. that's another story. that's what the "wall street journal" likes. i'm glad we got republicans to think about st. peter and the poor people as morality and not just politics. it's a larger dimension. these things are not solved by cost benefit, by the brotherhood of man that we talk about, and it's only by going back to the fundsmentals we can solve the problem in washington. there's another -- we raised the taxes on the wealthier, and we now are bringing over a million people from the bottom. that does not increase dramatically in the last 30 years from the top 1% collected, 10-12% of the income and now it's double that so at least we're moving in the right direction. the next educational, we passed a bill, took us two years, but to distribute funds significantly, not all of it, but we have a ba

but those three left wing keynesians, milton, friedman, adams, smith and -- friedrich hayek, all say the same thing. according to the marvelous page in this book, what they say is it is the number one job of government to have a healthy economy to break monopolies. it's first in order, you do that first, then you may be able to succeed with some of the steps. we're going to talk a lot about other steps here today but i just want to start out by suggesting that we not pull any punches. believing that you can have a reasonable oil market where price will matter and competition exists in the presence of 78% of this cartel's holdings, olive oil, they hold 78% of the oil, and riding on a horse that transportation requires a 97% oil. there is no chance, zero, zip, knicks, no. there is no chance of changing that and getting king abdullah to charge as something close to the rest of the world to what oil is worth as distinct from pain his young men not to work. there is no chance to succeed without breaking. >> thanks, jim. i'll just note the usual roundtable rules. if you want to break in an

those three left-wing keynesians, milton, friedman, adam smith, and frederick hayek, all say the same thing. there is a marvelous page devoted to them in this book. what they say is it is the number one job of government to have a healthy economy to break monopolies. it is first in order. you do that first, then you may be able to succeed with other steps. we will talk a lot about the other steps today. but i wanted to start out by suggesting we not pull any punches. believing you can have a reasonable oil market where price will matter and competition exists in the presence of 78% of this cartel's holdings are of oil -- they hold 70% of the world's proven reserves of oil, and they are riding on a horse that our transportation requires be 97% oil. there is no chance of changing that and getting king abdullah to charge as something close to the rest of the world to what oil is worth as distinct from paying his young men not to work. there is no chance to succeed without breaking opec. >> thanks, jim. i will note the usual roundtable rules. if you want to break in and speak, turn your c

you know, years ago milton friedman took the position that because of the nature of the two parties, one promising all these things and the other one's paying it, that what the republicans ought to do, what the conservatives ought to do -- this was back in the '60s and '70s -- is get off this job of raising money so the democrats could pass out gifts to the public and say we're not going to worry about that. he said because nobody would let t the deficits go completely out of control. well, he was wrong about that one. but they were talking at a different time, in a different context. but you're absolutely right, and that is that growth has to be the key. and there has been and historically the debt, the deficit -- do you remember hubert humphrey used to say it doesn't mean anything. now we owe it to china or perhaps other nations. but it wasn't that big, and the average voter had no context in which to think this is good, bad or indifferent, so it was never a voting issue. that's changed in the last few years because of the size of what's going on and the sense in the country that w

you know, years ago milton friedman took the position that because of the nature of the two parties, one promising all these things and the other one's paying it, that what the republicans ought to do, what the conservatives ought to do -- this was back in the '60s and '70s -- is get off this job of raising money so the democrats could pass out gifts to the public and say we're not going to worry about that, he said, because nobody would let the deficits go completely out of control. well, he was wrong about that one. .. has changed in the last few years because of the size of what's going on in the sense in the country that we are really on the wrong track fiscally and economically. so that's not an argument against pro-growth policies because they are essential as is the optimism that goes with them. but now there's a sense that those deficits may make pro-growth policies unworkable because they take too much and suck too much out of the private sector. so i think the world has changed and the thinking of average americans has changed to some degree on these issues so that you got

. >> are you at milton friedman's university or austan goolsbee's university of chicago? do you know which wing you're in? >> reporter: i think the conversation -- i'm in the middle. i'm in the middle. but that conversation is going to as late because you'll have hank and warren who actually probably come from a little bit of both schools so it's going to be an interesting discussion. >> so as usual, you're going to occupy the center. >> reporter: that's what i like to say but, you know -- >> oh, thank you. >> reporter: everybody thinks -- >> joe, it's your line. i don't want to take it. everybody thinks they're in the center, right? >> liesman gave me the line. where you stand depends on where you sit. consider you stand on issues is where you sit on the right or the left. >> reporter: i still go back to -- look, hank paulson was an investment banker but he's someone who knows clearly how to negotiate and know what is a crisis actually looks like. i want to get his perspective to try to understand if he thinks we're headed to a crisis like the president suggested. maybe