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. thank you, president obama blames his health care problems on republicans saying they have no krukkive policy. tonight, some gop alternatives. and the latest plan from the democrats today. big fiens for americans who fail to buy health insurance. huh? my question is whether the president is simply selling what the country doesn't want. plus in a market-moving event, a key chinese spokesman raises the money printing alarm about ben bernanke's fed policy.

and in response, gold crosses $1,000, the u.s. greenback plunges. confucius say where there's smoke, there's fire. and my question is whether this is an economic recovery and stock market obstacle. steve forbes and other experts will weigh in. we're going to talk to a five-star gold fund manager who will give us his top picks. fasten your seat belt, everybody. "the kudlow report" starts right now.@ good evening, everyone. congress is back at work today. topping their to-do list -- health care reform. will president obama push for law makers to accept the government-run option in a joint session of congress tomorrow

night in john harwood has the full story. hello, john. >> hey, larry. we thought today might be about the presidential speech in the schools. that turned out to be a dud. even the critics agreed there was nothing controversial in his remarks. nancy pelosi and senator harry reid met with him in the white house. she cautioned insurance companies they ought to take a deal on that so-called public option or they may be sorry. >> they would be better getting a public option now than one that is triggered. because if you have a triggered public option it's because the insurance industry has demonstrated that they're not cooperating, they're not doing the right thing, and i think they'll have a tougher public option to deal with. of course, the public option is only one of the outstanding issue that's got to be resolved. also you have the question of who and how is the health

insurance expansion of coverage going to be financed? a lot of democrats want to look at health insurance companies and high value plans. also, the question of what is the level of subsidies for those now uninsured? that's going to determine the overall level of the plan. max baucus has laid out a plan of about $855 billion over ten years. secretary robert gibbs said the president will be more prediscrepancyive than in the past, but he's still going to show some flexibility. >> there's not a rigidity. he's focused on the end and he's focused on results. i think that's what the american people will see tomorrow night. and that flexibility may be important. the white house has somewhat less incentive to be offering a detailed road map because they don't want to conflict with max

baucus. >> what are the stakes? things seem to be going downhill for the. the. >> well, i think they're not going downhill on this subject for the subjepresident, larry. the stakes and the issues are huge. he needs to get something done by the end of the year and his chances are good considering the sizes of his majority. the speech itself is somewhat less important than acting on the issue. his chances are still good of getting something done, notwithstanding the controversy between democrats and republicans. >> and finally, john, do you expect anything new? is there going to be kind of a shocking new thing in the speech tomorrow that's going to, you know, shake everything up? and create a different political situation? >> i do not expect that, larry. i expect it's more likely the president will draw together things with people who are paying close attention, there's now attention especially now

that baucus has put out his bill between providing a whole lot more detail that might conflict with baucus. you want to get the senate moving and the finance committee. >> it still sounds like a mess to me, but john harwood, we appreciate it. i look forward to meeting was w you tomorrow evening to talk about all of this. south dakota republican senator and chairman of the republican policy committee, mr. john thune. take a look at what the president had to say yesterday. >> i have people saying we're going to pull the plug on grandma and we're going to give coverage for illegal immigrants. i have a question for all those folks. what are you going to do? what's your answer? what's your solution? and you know what? they don't have one. >> all right, senator thune.

i hope you heard that. what are you going to do? what's your answer? they don't have one. how are you going to react? >> first off, we acknowledge there are things about our health care system and our health care economy that need to be fixed but we don't believe you fix those by allowing the government to take it over. there are a lot of things the republicans have thrown out there. we support medical malpractice reform. that costs our health care economy $100 billion to $200 billion a year. allowing small businesses to join larger groups and drive down the kos of purchasing health care. interstate health care, allowing people to purchase health care across state lines. tax equity from people who get insurance through their employers and those who have to buy it with after-tax dollars in the individual marketplace. there are a lot of good ideas out there that constrain costs. most of the things considered by the president adds to the cost. when fully implemented, these are bills that are going to cost

a couple trillion dollars that's a big expansion of government in washington which is why i think so many people across the country have reacted so negatively to it, and why the president is throwing a hail mary pass to try to sort of get back on offense. >> so there are republican plans. there are republican options, and that's basically your point. let me just ask you, you mentioned this. interstate insurance deregulation. it seems to me if there's one thing that would help patient and consumer competition and cost control it would be to deregulate the interstate insurance market. i think -- just tell me if i'm wrong, if that were on the table, it would pass. moderate democrats, republicans, others would pass. why isn't that in the bill? it's a classic gop proposal. why isn't that in a compromise bill? >> i think right now, the democrats are trying to do this with democrat votes. they're trying to appeal to just enough republicans to get them onboard. but i think the reason for that, larry is they want the centerpiece of this to be the

public plan option, a government plan. and so go to this pivot, the other idea of interstate competition, some of the things the republicans have put forward takes them away from where they want to go. a lot of democrats in congress want a single-payer system. this is something they've asp e aspired to for a long time. they see this as a window of opportunity to get that. and until that's proven wrong, until that gets pitched and thrown overboard, i think all of these other ideas are going to get left on the cutting room floor. >> do you think the government insurance option will be thrown overboard? how do you expect mr. obama to talk about that tomorrow? >> i think tomorrow night is designed to shore up waivering democrat, and it's also to sort of for optics to the american people, try to get back on offense. and it seems to me at least what he will talk about is his support for a public plan option but he might endorse a trigger or some concept designed to enlist the support of a handful of republicans.

i think most republicans are going to view that as repackaging and relabelling a government plan, but nechls, it will sound different and perhaps more reasonable to people. so he may come out and advocate for that and hope to attract a few republicans. i don't think it works but it seems to me that may be the direction in which they're headed. >> house speaker nancy pelosi was out there attacking the insurance companies today. how is this going to play? >> it's always popular to attack insurance companies. that was kind of their narrative. we're going to go out and attack insurance companies because they're unpopular and i think he'll use some poll tested messages and phrases tomorrow night, going after the insurance companies and the pharmaceutical companies. and even the medical device manufacturers are going to be tacked under this latest it ration that senator baucus has come up with. i think they're going to continue to go on the attack. but i think the american people realize even though they may not like what they're paying for

your health insurance, you've got to have a private market delivery system and one of the reasons private sector insurance costs so much is there's so much cost shifting because of programs like medicare and medicaid that don't pay providers enough for them to be able to cover their costs. >> you mentioned senator baucus, the chairman of the senate finance committee. the latest iteration puts large fees on individuals and families if they don't play with universal health care. also slaps a large $6 billion fee on health insurers. if your judgment right now, how's that baucus bill going to work? is it palatable politically? >> i think it's going to be hard to sell. it also includes medicare cuts which i think is going to be very difficult to sell. and i think these fees or taxes -- i call them taxes because that's what they are. by the way, the insurance company fe fooes are a lot more. that's one aspect of it, but there's a whole bunch more that would be assessed on

pharmaceutical companies and medical device manufacturers and individuals. i think it would violate his pledge not to raise taxes on people under $250,000 because clearly that's what this would do. it seems to me it's going to be very hard to sell this. >> marc stein said president obama has given 111 speech, press interviews and news conferences. still can't sell it. you're talking about the large cost of the plan. many people seem to be in revolt against the big government aspects of the plan. question, senator thune, is this thing just too liberal? is this just too liberal for the here and now? >> it's a huge expansion of the federal government and it's also a huge new cost. i think people right now are very concern the about expansions of government when we're running trillion dollar deaf fits as far as the eyes can see, larry. >> we appreciate it as always. coming up, michigan representative peter hofstra is here to share additional health care solutions.

i don't know, is it too liberal? is it just too big? that's the issue tonight. "the kudlow report" will be right back. she wants to make up. we decide to turn in early. we just know. announcer: finding the moment that's right for you both can take some time. that's why cialis gives men with erectile dysfunction options: 36-hour cialis or cialis for daily use. cialis for daily use is a clinically proven low-dose tablet you take every day, so you can be ready anytime the moment is right. tell your doctor about your medical condition and

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more on constructive, positive, additional health care solutions. we're going to talk to the former chairman and ceo of honeywell corporation. we're also going to try to get in futch with congressman peter hofst hofstra. and here's a question, you're running honey well, what particular angles can you give to this debate. >> there's a lot of technology now where you can accumulate vigilnesses and there are best practices to treat these illnesses and as a consequence,

you can truce costs. if there was more tension devoted to making the system administrator effective and efficient, that would take care of a lot of costs. >> best practice is preventive health care? >> how to treat disease and how to avoid disease. >> how do you get your employees to be cost conscious in terms of what they ask for and procedures, diagnostics, you know, the whole nine yards. how did you get them to realize there's no three lunch. >> we brought the best health plans we could. if they couldn't, we charged them more. we put in wellness facilities. so people knew we were concerned about it. and as a consequence, they cooperated. >> it just occurred to me, the

third player principle, the business gives you a free lunch or the government gives you a free lunch is the root of the whole problem. seems like there's a free lunch. co-pays. do you see co-pays in the national health care service? >> there will be co-pays, but there's too many opportunities to make it an unlevel playing field? >> meaning? >> the private companies, or the corporate insurancers are going to be disadvantaged. if you can buy health insurance le forless, that's where people are going to go. and they rely on big numb boefrs people in order for the numbers to work properly. i think it's an option that's unattractive. i don't think it's going to happen because i don't think the american public is going to stand for it. but nonetheless, there may be an aspect of it. we'll see how this thing survives. >> risk pooling, you've got some

kind of illness that disqualifies you from insurance companies. i think that's a fair issue. how do you get around that? how do you develop true risk pooling so we can help those who have so-called precondition or precondition illness? >> as you know, in some stass there's medicaid that takes care of that and that's going to get expanded for any alternative that gets adapted. that risk is offset against people without these kinds of diseases and therefore the cost remains relatively tenable. so the combination of medicaid through the states as well as bigger pools i think can go a long way. >> states aren't thrilled with that mandate. uncle sam, we ain't doing too good with medicare and medicaid either. can we afford that risk pooling subsidy? >> well, that's a good question.

at some point in time there has to be a device in which we include them but at a cost that's rational. >> there seems to be really a national consensus about interstate insurance deregulation. >> blue cross and blue shield can operate among all state. the way to foster that is to let them go across state lines. >> this is a republican proposal, a moderate democrat proposal. just put it in. >> who's going to oppose it? it's got to make the system more competitive. that's what you're looking for. >> let me bring in andy bush.

listening to the new max baucus proposal, what happened in the market today? what happened in the stock market? it's not a good day for health care as i understand it. >> no, that's right. they were hit because of the proposals. the 50% cut is for this plan and what it means for their companies. >> what's the 50% cut, andy? >> for the drugs that are going to be included. if you want your drugs to participate in the medicaid program, they're looking at a 50% cut to the prices of those drugs. >> go ahead. those are drugs that they're not currently selling to those people now. there's a gap in there. and if you -- fit costs you $5

to stamp out a pill and you're charging $35 for it and you cut the price or people weren't going to buy it otherwise. it's not a hardship to the pharmaceutical companies. by the way, merck and other drug companies were up today. the other thing i mention about max baucus is how many of these companies are domiciled in the state of montana? how many drug company, how many health insurance companies? how many of any of these companies -- >> how many are there? >> i'm assuming zero. >> i thought montana was copper and mining. >> you can hit insurance companies for $6 billion based on where they have market share, but guess what? that's going right back to the consumers. >> larry, why is the government dictating price terms on drugs? i'm a little confused by that. >> it takes a long time to develop drugs. you've got get your research

cost past and people think the margins are too big and there it's a popular political discussion item. they ought to lef leave it alone. we have peter hofstra here. you have a solution, sir. despite the fact that the president says republicans have no solutions and is describing you personally as the problem. that's not fair. but you do have a solution. first of all, cost and control. how do you deal with that issue? >> well, actually, the way you deal with cost and control is you put the consumer in charge of the purchasing decision. right now it's not the person being insured. allows consumers to make choices. >> they will drive quality and costs. >> how do you do that? >> break the tie between insurance and the employers. right now, if you take a look at

the tax code, the tax code provides a very specific benefit to employers. with after-tax dollars, it's inherently unfair. it's difficult for those individuals to do it. then we also limit competition. we make it very difficult for consumers to buy products on the marketplace. >> let me get this right. it sounds like you want to deregulate interstate insurance and you want to give the break to the individual? >> absolutely. >> mr. hoekstra, can you stay with us for a second. we're going to take a commercial break. you have some other ideas. andy bush and big sneed are still with us. we've got much more to do on ott bama speech tomorrow. coming up later on "the kudlow

report." it's a market moving event. a key chinese spokesman raised the money printing alarm about ben bernanke's federal reserve policy. so you know what? gold crossed $1,000. the u.s. greenback plunged. it all looks like inflationary trouble to me. can that be an obstacle? and what is the chinese role going to be?

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hmo is down 1.5% and drug companies down 1% . %. the former ceo of honeywell to give out, pardon the phrase market commentary. we are mack mizing capitalistic television programs. risk pooling for so-called preseasons and ill health, could you walk us through that. >> create a risk pool. congress is already creating

risk pools to spread the cost for people who have high cost benefits or service required in the future. encourage the states to develop these risk pools, to spread the risk on these individuals that are going to need an extreme amount of care. the mechanism is in place. if it needs to be tweaked, let's fix it. if we need to deal with that problem, without throwing out the baby with the bath water which the president is suggesting. >> can we deal with that? >> i think congressman hoekstra has been a nice spokesman for this subject for a while. one, i don't think you can pass the tax break to the consumer because employers aren't compelled to offer insurance. if they don't, it puts an enormous hole in the provider community. >> can you respond to the concern? >> tying insurance to employm t employment, it was never intended to be that way. that was a system developed 60

years ago to get by another -- world war ii where the government mandated wage and price control. let's get back to, you know, i go out and buy my own health insurance. i buy my own car insurance. why won't people give me the same opportunity to buy my own health insurance that fits my family, my lifestyle, and which, when i change jobs i don't want to wait for an employer to give me another one. >> i tell you one reasons you don't want to do it is you don't have the law of numbers. you don't have the purchasing capability to get the cost levels that employees now enjoy as a consequence of being -- >> let companies compete for my business just like they do in life insurance and car insurance and let different organizations come together and create new pooling opportunities. open up the market, remove the restrictions on market

competition, and we will be able to address those issues. sure if we say everything else is going to stay the same and we're only going to move the tax break to the consumer, of course it won't work. but if we open up the market for competition and new forms of entities to come into this business, i'll tell you, we'll attract thousands of companies who want my business and will compete for it each and every day. >> hold on one second. peter hoekstra, i see plenty of car insurance ads. they're good ads, very clever ads. i never see any health insurance ads. why is that? >> we've restricted the access to sell in individual markets, plus we've restricted the financial ability of me to go out and buy it, recognizing when i get from it my employer, he's paying with it before taxes, i'm paying with it with after tax dollars. we've built up this system that no longer is an effective way. we got a lot more entrepreneurs in the marketplace today.

careers are no longer tied to a single company for 20 or 30 years. we open up this marketplace, we will have competition, we will improve quality and we will lower cost and most importantly, we will put me, we will put consumers in charge of this process, not insurance companies, and heaven fored by we put the government and government bureaucrats in charge of this process, and believe that we're going to drive down costs and improve quality. >> you heard the distinguished mr. hoekstra. what he did carefully monitoring our intelligence agencies, helping to keep america safe the last eight years. what do you think? did he make the sale with you? >> he -- i think he makes a good point. it's a little idealistic. to get from where we are to where he wants to go, it's long. we're going to have some intermediate steps to get from here to there. >> something no one is talking about, which i think is very

ungenuine among the leaders of the house and senate is we are naturally going to spend an awful lot more money within the next 10 to 20 years just because we're living a lot longer. >> good! isn't that good? >> well, it's a fantastic thing. it's great thing. >> there's a study out by a former nobel prize-winning economist from the university of chicago, and he is saying we must spend much more in the private sector on health care. precisely for the reasons you gave. in other words, the baby boomers are maturing. the incomes are rising and the technology, especially the biotechnology is absolutely fantastic. >> six years ago -- >> and therefore, if we have to put constraints on it, let's try to constrain government spending and fix the bankruptcy and medicare and medicaid. but let's let private spending -- this is a health growth industry. this is our greatest growth

industry, bill smeed. 400,000 new jobs during the last year in a terrible recession. >> six years ago, chronic illness passed acute illness as the leading killer. that means baby boomers are going to live a long time with a lot of aches and pains. and rather than what they've told you pharmaceutical products are the least expensive way to deal with chronic illness and only make up 10% of the hoal cost of health care. >> there is this section in there for catastrophic illness. at least baucus recognizes people from 25 and under don't need most health care insurance. they just need the catastrophic. and most people around this country . that's what they would accept. that's a bargaining point and that's something you can compromise on. >> good point. mr. hoekstra, i want to ask you about this concept that we need more health care, not less.

this is america's greatest growth industry. the jobs are growing between the doctors, the hospitals, the pharmas, the biotech companies. we should have one third of the economy. it would be like stopping automaking at the turn of the last century. can't we figure out a way to liberate the great american private sector health industry? >> i sure open so. what we'll do is attract investment and customers from around the world to come to the u.s. for the best quality health care in the world. it's a place where we have a competitive advantage and we can expand it. >> do you agree with that, lar sfli the idea that we spend too much on health care, i beg to differ. i think this country can produce unbelievable more health care, growth, prosperity, economic recovery. >> i think the issue is this -- with more productivity, you can have lower cost and better health care. we have an enormous amount of waste in the health care system in this country, and there's nobody addressing it. that's going to have to happen first. >> and the government is just

going to have to insure the chronically uninsured. vouchers or tax credits or some darn thing? >> it isn't going to be up to the states. the state whovs it hate it. it's cost them enormously more than they ever -- >> republicans concede the 10 million or 15 million chronically underinsured or noninsured will have to have government assistance, is that a gop concession? >> i believe that is a concession that the gop is willing to make. that recognizes that that is a huge cost and something that probably needs some level of government support, yes. >> so take out your crystal ball, mr. hoekstra, is there a deal or is this going to be a partisan democratic plan going down pop i think this is going to be a partisan deal. someone mentioned earlier, i'm idealistic. i want to move towards the consum consumer. democrats want to move towards government control. i don't know how you reconcile those differences. >> all right, we appreciate it.

thank you. you're kind to join us here on the set. coming up, china sounds the money printing alarm. a shot across the bow by leading chinese official. and guess what? gold up, the dollar down. we could be in for a lot more of that. it could be an obstacle to the stock market and the economy. we are going to talk to our great pal steve moore and david gilmore. how big a threat is the china skard and the china put underneath gold?

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energy, copper and dpold closing just under $1,000. sharon epperson has the full run down. >> you should have seen the glean in the glie sop of the gold traders behind me as we saw gold go over the $1,000 mark. oil trading up above $3, above $71 a barrel. a lot of that seemed to be fuelled by new money come into the market. gold goes through key resistance levels last week.

then the debate about the dollar. was gold pressuring the dollar or the dollar weakness across the board including gold, including oil? the fact that oil prices topped $71 a barrel, that helped some of the energy shares like exxonmobil and chevron. then goldman sachs saying yes, we're going to get $85 oil by the end of the year. all of this ahead of opec's meeting tomorrow. opec expected to stand pat on production levels. after all, they're way above quota right now. back to you. >> thank you ever so much. coming up, china sounds the alarm on helicopter ben's loose money. gold crosses $1,000. december gold hits $1,000. the u.s. dollar weighed down. david gilmore, steve forbes. they're going to come back after the break. i must tease you. i must have a quickie here, a quick whip around. dollar down, gold up. is this, steve forbes, the new normal? >> it's going to be a temporary normal as the federal reserve

gives the worst of both worlds, inflation fears. >> is this the new normal? >> no, this is casual causality. . >> is it going to reverse? >> i think we'll see dollar strength down the road, but right now, we have a week or two of weakness as people sort of try to get a sense of reserve managers and what they're up to. >> steve forbes, will the fed defend king dollar in my lifetime? >> they will, but we're going to have to learn a lesson before they learn stable dollar good. >> all right, we're going to start with that when we come back. thank you ever so much. hang with us, guys. we've got much more work to do. china, another shot across the dollar bow. you think american policy makers would start taking them seriously. they are our banker. um bill--

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are working from the road using a mifi-- a mobile hotspot that provides up to five shared wi-fi connections. two are downloading the final final revised final presentation. - one just got an email. - woman: what?! hmph. it's being revised again. the copilot is on mapquest. and tom is streaming meeting psych-up music - from meltedmetal.com. - ( heavy metal music playing ) that's happening now with the new mifi from sprint-- the mobile hotspot that fits in your pocket. sprint. the now network. deaf, hard-of-hearing, and people with speech disabilities access www.sprintrelay.com. all right, china pulling the plug on the dollar. huge market-moving story today.

china sounds the alarm on helicopter ben's loose monetary policy. and, of course, in response, gold crossed $1,000. the u.s. dollar plunged across the board. so to use steve forbes' phrase, are we going to have to pay the stew wigs in terms of weaker economic recovery? let me just put this up on the full screen. take a look at the remarks from a leading chinese spokesman. if they keep printing money to buy bonds, it will lead to inflation. and after a year or two, the dollar will fall hard. then he goes on to say, gold is definitely an alternative, but when we buy, the price goes up. we have to do it carefully as to not stimulate the markets. this is from cheng siwei.

what do you make of that? a beijing put under the gold market, but he's blasting bernanke's policies, steve. >> and rightly so. one of the biggest mistakes of the bush administration was its weak dollar policy, aided and abetted by the video ral reserve. helped create a disaster. i would have thought for political reasons this administration would have gone off of that and gone back to a kennedy-reagan strong dollar but they haven't done so. the creditors are saying if you don't strengthen your dollar you're going to pay a price for it. very simple. >> steve forbes, talk to me on how we way the tuition? >> we're going to pay it in the fact that the credit system isn't working fully again. consumers still have a hard time getting credit. we're going to pay for unnecessarily slow growth, jobless recovery. that's pretty stiff. that's trillions of dollars in tuition. unnecessary. >> dave gilmore, you heard steve

forbes and you heard the chinese spokesperson, what do you make of all this? this is a nasty story and a market-moving story. >> the chinese are not of one view on the future of the u.s. dollar or government printing presses. inflation. we can name as many officials on the other side of this that say they have no plan to change their currency reserve mix. i think the practice, it's hard to discern through the tea leaves. china has a week yuan policy. it fixes its currency to the dollar, and it's left it relatively stable since the height of the crisis in 2008, and has done little to allow it to appreciate which is really the direction it should flo go in. >> but what do you say to this -- in the story, it says that beijing has, in fact, doubled its gold reserves to 1,054 tons. that means they are acting at the margins to diversify.

>> well, china as a central bank had very low reserves. and low relative to a mountain of kurn say re serve s need ed to have some gold . >> . >> but it sounds like -- another gold market is far too small to ab absorb shine chien that 's 2 trillion in re serve s. >> i understand that . that isn't the issue, though. it sounds like this spokesperson is really telling the truth. he says we don't want to buy it all at once. gold has been rising on and off for eight or nine years. steve forbes, what about the other side of the coin? he says in this interview, he says that china cannot tighten its monetary policy which he thinks is too loose until the u.s. tightens. he says we have to wait for

bernanke. other wise, if we raise rates in china, all the hot money will come into china and that will bubble up the chinese economy even more. now, steve, that complicates the whole story. >> sure it does. you should have stable exchange rates led by the dollar. china, as you know, outsourced its monetary policy to the u.s. in the mid-1990s precisely by linking the yuan to the dollar. and we've let them down. we've let ourselves down by having a weak dollar instead of a stable and sound currency. >> is there an inflationary bubble developing? i know it doesn't look like it now, but it didn't look it in 2003 either. >> off the fear of inflation, but you have deflation in rising unemployment. that's a nice mix that ben bernanke has given us. i wish he would take time out

from batting himself on the back and look at the state of the u.s. credit markets. some areas are doing well. others haven't developed from a year ago. >> coming right back. coming up, your gold. is that the right investment play? we've got an ace five-star gold fund manager to add to the mix. he's going to give us his investment strategy. this is a fascinating piece. basically it says they can't tighten in china until bernanke raises rates here. will he do that in my lifetime? but first, let geese to my high falutin friend dennis kneale to see what he's cooking up for the top of the hour. >> we have a whole lour on obama care and his big speech tomorrow in congress. can he save it? what will it mean for stocks in the broader stock market? we'll see at 8:00. >> we'll be right back. we are talking china and the dollar. dollar got hammered across the board, folk you know what i

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the u.s. dollar plunged across the board so the question is might the gold rally have peaked? hell no. i don't think the gold rally has peek paeked. david gilmore and steve forbes are still with us.

akpai, what's your opinion? has gold peaked? >> we don't have an opinion. we don't have a forecast on the price of gold. think about it this way, you know, think about yourself in a boat. it sprung a leak. water is come into the boat. you notice the waeter line is rising. the water line isn't really rising. it's the boat that's sinking. we think of gold that way. when gold is going up, it's not that you're making money. the value of the currency is going down. the price of gold i think is indeterminate. it's completely determined on the amount of money that's created in the system which, of course, we can't forecast. >> what's the stock market story? you have a pretty good rally in commodities across the board including gold. how do you read it? >> it looks clearly as if the financial markets believe in the reflags effort, and there's early evidence to suggest that the effort is succeeding,

whether it's temporary kind of easy comparables. we won't really know until the fourth quarter. but we don't really focus on the current six, nine-month outlook for our gold fund. we look at gold as insurance. as ben graham said, the future is uncertain. >> are you buying gold stocks? >> we have a gold front which i manage. and we manage first eagle global overseas funds in this we own gol stocks and gold bouillon. in the gold fund where we're getting in-flows obviously these days, we are continuing to buy gold stock. >> all right, so you are buying. steve forbes, does it matter if the dollar is going down or gold is going up? two sides to the same coin, isn't it, steve? >> it is. that's a right observation. gold has remained steady in value over time and what you're seeing now is fears about the

dollar. that comes from the federal reserve. larry, if the federal reserve and the treasury department made a credibility statement from here on they're going to strive for a strong and stable dollar like we had under bill clinton or ronald reagan for most of the time, john kennedy, you would see gold quickly go down a couple hundred dollars an ounce. >> would that mean better foreign investment dom come into the u.s. for economic recovery? >> absolutely. a weak dollar repels foreign investment. a strong and stable dollar attracts it. again, i don't know why this administration doesn't get it about something as basic as the u.s. dollar. >> confucius wasn't told me where there's snomoke there's fire. >> the yuan is pegged. the problem here is large l lar china.

really throwing -- >> i'm sorry to cut you off. i'm flat out of time. a little tease coming up tomorrow night, the president is going to make his health care push to congress. i'll be holding my own joint session right here. we have alexander, bayh, grassley and others. coming up, more of the report tomorrow morning at 11:00 a.m. me and betsy quick. we're going to do opec from vienna. i'm racing cross country in this small sidecar,

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