remain here until we have the all clear. there's no republicason to do a swinging. i'm jim cramer and i will see you tomorrow! cause a syrian sellout. nbc news is reporting that a u.s. led three day military strike against syria could begin as soon as thursday, but it could go longer. and the markets are already reacting very strongly. stocks finished way down while oil and gold shot up. we have the latest on this story from the political and financial angles including the call by wall street journal columnist stevens to kill bashar al assad. mr. stevens will be joining us in just a few moments. "the wall street journal" editorial page, meanwhile, is calling for regime change. the white house says that's not

what it wants to do. and i don't get that. another big story tonight is the debt ceiling battle. treasury secretary jack lew on cnbc this morning said president obama will not negotiate over the debt ceiling bill and now it looks like a battle royal is brewing in washington, d.c. these stories and many more coming up in "the kudlow report" beginning right now. good evening, everyone. i'm larry kudlow. this is "the kudlow report." in a major developing story, nbc news is reporting a strike against syria could come as early as thursday. aids say president obama and no longer questions if the syrian government used chemical weapons. the questions are what will the u.s. do and with who's help. nbc's richard engel joins us now from the turkey/syria border

with all the latest details. good evening, richard. >> reporter: larry, syria is showing no signs by being deterred of all of this talk of military action. in fact, just yesterday there was another attack that rebels say used chemical agents. a white phosphorous attack that doctors say killed at least 12 people. white phosphorous technically isn't a chemical weapon, but it is illegal if it's used to kill people. it's a burning agent, a burning smoke used by many militaries. in this case it was dropped on civilians according to the rebels. today syria's foreign minister said that the country by all means necessary if, in fact, it is attacked by the united states or some sort of coalition of western and arab states. and by all indications, some military activity is coming. a coalition, international consensus is being formed. today the arab league expressed its condemnation of the use of

chemical weapons. already france, turkey, the u.k. has expressed their support for potential military action. nbc is hearing that there will likely be strikes potentially in the next two days and that they could last three days with more cruz missiles being the most likely instrument of war, larry. >> many thanks, as always. richard engel from nbc. a new piece in the "wall street journal" says the military action should aim to kill syrian president bashar al a assad. retired army brigadier general, deputy assistant secretary of defense of the middle east and former assistant secretary of state. welcome, gentlemen. brett stephens, thank you for coming on. it was a hell of a piece. i enjoyed it. should president obama decide to order a military strike against

syria, his main order of business should be to kill bashar al assad. also his brother and principle henchmen. expand upon that for us, brett. what's your thinking here? >> if the purpose is to express our horror and revulsion at the use of chemical weapons and to impose penalties on those who use them in a way that the lesson will be learned by other dictators, then have you to impose a kind of international death penalty on bashar assad. nothing else will do. certainly not the kind of strikes that this administration seems to be contemplating which is mainly aimed at making a political statement rather than actually achieving any kind of effect either on the assad regime behavior or its ability to continue to wage the horrific war on its own people. >> brett, let me follow-up with this point. the editorial page wants regime change. jay carney from the white house said absolutely not regime change. it seems like the white house is

deliberately, i don't know, putting a softer spin on this action after this incredible, you know, immoral use of chemical weapons. what could their motive be? what's their strategy here? >> i'm actually stunned by the administration's behavior. if you've been reading in the papers today, you hear precise information that the strikes are going to last three days, that they're targeting about 50 sites, that they're looking at divisions connected with assad's union of the republican guard, you might as well tell them this is where we're going to strike. they seem to want to be taking a symbolic action rather than to achieve a military result. the president who says he uses military force so deliberately and cautiously should put american airmen in harm's way. >> john, i'm about as surprised

and not bl understanding all of this as brett stephens is. white house also is saying today, this is coming from nbc news, that this is designed, this three-day action or whatever it is going to be, to send a message to assad. okay, send a message. listen to this, rather than topple him or cripple his military. they want to send a message that they don't want to topple him and they don't want to cripple his military and we have no idea how they expect to get to the chemical warfare depots. i don't get this at all. >> well, first of all, the british have been expressing we must be seen to be doing something. i think that's exactly what this administration is trying to do. they have boxed themselves into a corner saying we must do something because we established a red line and we'll lose faith if we don't do something about that. they're showing that the chemical weapons in and of

themselves are a separate case so we have to address that. we need to punish bashar for using the chemical weapons and we need to demonstrate to anybody who contemplates using chemical weapons in the future that there will be military consequences, yet they don't want to do so much military action to solve the problem in the first case. i thought the article in the "wall street journal" this morning nailed this completely. the problem is that i'm more concerned about the regional reaction, number one, iran will sit there and scoff at our lack of doing anything other than lob a couple of cruz missiles down range. they'll worry about america's commitment to the middle east will say this is the best they can do? so i'm a bit confused, like all of us are, about what the administration is trying to do. >> yeah. syria, if this is the best punch they can throw, i'm sure syria can take it. just my thought.

i expressed this last night. i'm no military expert, lord knows. if we're going to bomb, why don't we take out the government palaces, the government office buildings, military barracks, various military hears. why don't we make it plain that we're going in to take out the chemical weapons. apparently we have weapons that can do that. maybe the army in syria will get so darn angry that they'll take assad, put him in jail or even worse, assassinate him. do you see what i'm saying in why aren't we hitting everything along the way instead of making light of this? why don't we hit tremendous shocks and punches rather than weany jabs? >> that was the point i was making in my column today. we should be striking the symbols, the physical symbols of presidential or regime authority in syria both for the symbolic importance and also for putting assad on notice when not only his presidential palace, his get aways on the mediterranean sea

and the syrian mountains go up in smoke. it is imperfeative that we make assad pay a dear personal price i think ideally with his life for engaging in barbaric behavior and the use of chemical weapons against your own citizens. otherwise, we're inviting him to use chemical weapons and we're inviting other regimes to use them as well because they know the west will not react. that's what the president seems to be doing now. i hope this is a big head fake and he intends something more serious, but it doesn't look that way. >> that's the thing, we'll give you the last word on this. it may not be a head fake, number one. it may not stop assad from using chemical weapons again in the future, number two. i mean, if this is the best punch we're going to throw at him, the guy is going to be around. i simply do not understand, general, why we aren't using

all -- if we're going to do it, why not a 30 to 60 day bombing mission? isn't that what clinton did in kosovo and the balkans years ago? why not do it day after day after day until the syrian high command sees that it's futile? >> i think for two reasons. number one, i don't think they really have yet thought about what happens after bashar al assad falls, that they've got a plan the way that like all military plans, once you achieve victory, there is a post war period. number two, they're afraid of inviting comparison to what happened in iraq after the fall of saddam hussein's regime. they haven't thought their way through this, and i think what we're seeing is an abundance of caution on their part and, quite frankly, while we may think it's caution, our enemies and our allies in the region think it's weakness. >> all right. we have a little more time. brett stephens, let me come back to you. again, on this issue of multiple

strikes. if you can't take assad out, if you can't kill him, if you can't kill him, do we know, do we have the technology, i assume we do, basically we can hit all of these individual buildings as you were saying, his country place in the mountains? do we know, you know, these tomorrow mohawk missiles will go up to the traffic lights, stop, make a right turn and go down the chimney? these are awesome weapons of war. what would hold us back from making use of that? apart from the politics of it, what would hold us back from really just decimating damascus and all the environs. >> the only issue that's holding us back is the politics of it and all the administration has a fear of repreefg the iraq war, i don't see how because nobody's talking about boots on the ground. the real fear they should have is of reprieving what bill clinton did in 1998 with another three-day strike on saddam

hussein, it was called operation desert fox. it was seen as a political distraction on the eve of his impeachment. it strengthened saddam hussein's hand internationally, not weakening it. a de minimis strike is going to reap the worst of both worlds. it won't achieve anything, it will make assad look like the victim. >> isn't this even a show of weakness to russia and iran, syria's biggest backers? we're endid gauggaged allegedly dispute. i read in the papers that president obama is going to in fact meet with putin when he goes to saint peter'sburg for the g-20 meeting. isn't this a show of weakness to russia and iran? >> the iranians are all in, hezbollah is all in. it will stake its renewed efforts in sir yeah they have

had so far every reason to believe that they can achieve what they're after and the president is giving them nothing, giving them no reason to be dissuaded. there are geopolitical stakes involved in syria that go beyond syria. they involve all of syria and especially they involve iran. make no mistake, the israelis will be looking carefully at what this administration calls unaccept annual behavior because he says time and again to president obama that nuclear land is unacceptable -- chemical weapons are unacceptable and look at the small price they're paying for using them. >> we'll use it. general kimmett, brett stephens, we appreciate it. now it's time to take a look at the strong market reaction. will stocks keep sliding while oil and gold shoots up? or might there be more to these markets than just syria? we have an expert panel to give you answers. as usual, free market capitalism is the best prospect to success.

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nbc new york says the syrian electronic army is behind a hack attack of "the new york times" and twitter. nbc's new senior investigative producer bob windem joins us now. >> good evening, larry. the situation is this. the syrian electronic army, which does have very clear ties to the bashir assad regime, launched what is not their first attack on u.s. media but carried out attacks that should down "the new york times" and essentially put a real crimp in the operations of twitter. what is interesting to u.s. officials here is not so much the targeting because u.s. news media sites are notoriously vulnerable, but the timing. here we are days away from perhaps a military attack on syria and syrian regime is essentially saying, this is the sort of consequence you can expect if you carry out a

physical attack, that is, a cyber attack. >> and what -- this has happened before. what is the betting that it's going to happen again? how seriously do we take this threat? i mean, i couldn't tweet this afternoon for sure. i guess i didn't take this whole thing seriously until you reported it. so now that you have, how long is this going to last? what is our reaction going to be if any? >> well, i think the first thing that you're going to see tomorrow is a lot of concern about whether this is just going to be limited to media sites, which is essentially, you know, somewhat of an annoyance. the question is whether they ramp it up in the days ahead to attempt attacks on things like critical infrastructure. that is what the u.s. government and u.s. cyber experts around the internet are going tore looking for. what is the next level they take it to.

if it is limited to news sites, i don't think people will be that concerned. if they move beyond that, you'll start to see concern. always -- i shouldn't say always, but what you're starting to see now across the states that are u.s. adversaries is a growing cyber capability in hopes that they can somehow defer physical attacks with cyber attacks. >> do you think just real quick robert, we appreciate your report very much, do you think they're going to hack into the pentagon? we're about to start a military action. do you think they're going to hack into the pentagon? >> i think they're going to try. what normally happens is you have a public site that's not that difficult to hack into, then you have the classified site where all the good stuff is and those have been pretty much invulnerable through attacks from hackers as well as from national entities like the syrian electronic army. >> thanks.

nbc's bob win windrem. we'll get to stocks. good day for oil and good day for gold. the situation in syria is rattling our market everywhere. that is next up on "kudlow." nascar is ab.out excitement but tracking all the action and hearing everything from our marketing partners, the media and millions of fans on social media can be a challenge. that's why we partnered with hp to build the new nascar fan and media engagement center. hp's technology helps us turn millions of tweets, posts and stories into real-time business insights

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because the future belongs to those who challenge the present. geopolitics rattling markets. all right. oil closed at an 18-month high,

$109 a barrel. gold finished at a 3 1/2 month high. meanwhile, the dow finished down 70 points to close at 14,776. the dow, by the way, is down 234 from yesterday. however, the dow is off 909 points, roughly 5.5% going back to august 2nd. also today the s&p off 26 bucks to close at 1630. the nasdaq off 79 points to 3579. so let's talk about all of this. joining us now, danielle hughes, ceo of divine capital. scott nations of nations share. we welcome back lou. danielle, let us begin with you. we've gone through all of the numbers. i want to ask some of these questions. a lot of these market movements started before syria. for example, oil was riding

before syria and gold was rising before syria. i just want to ask you, i'm going to get the panel's opinion about this, is there something going on in those commodity markets besides the war? >> there has been. there's been weakness. we saw weaker housing and global goods numbers very recently. compound that with the concern about syria and you've got a very, very nervous market. but i do think the people have been concerned about what's happening in the economy. we've seen terrible numbers running up to last week and the beginning of this week, so i do think there's a big concern. people are starting to back into defensive means and defensive things like gold and oil. >> 18-month high in oil, 109 bucks, this is west texas crude. a lot of people think, i was doing some reading on this this afternoon, a lot of people think when oil gets to 115 or thereabouts and stays there it's a real negative for the economy. what's your thought on that? >> it's absolutely going to be

difficult on the economy. it's going to be difficult for anybody who buys gasoline. you're right, larry. these markets got a little bit of a head start before sir yeah for gold and crude oil, that head start was egypt. as far as our stock market is concerned, our bond markets are concerned, they've been heading lower and that head start was the taper. i think that because of all of this the taper is going to be pushed back. larry, today's move was over done i think because the united states is going to act the way that the world's only super powers should act. it will act the way any great country acts. >> i hope you are right about that. >> we just did a segment on that. i hope you're right. welcome to the show. let's talk gold for a minute. gold has been gradually rising and rising after getting slammed for a year or so.

might gold tell us that whoever the next fed chairman will be a super dove? could that be a message coming from gold? >> it could be. i think it's more likely that gold was completely sold out the massive panic to dump gold worldwide except by india and jewelry buyers. it was one of those few cases where panic seized the market. >> could you think the market will go back up? how high will it go? >> it's all in cost of production. we see that most of the mining companies have been reporting modest earnings so that right now i think the gold companies could do well at 1400, 1450 bucks. everything will depend on what

the federal reserve system does. that was the agent whereby the gold went from 250 to its original high at 1900. >> i called it the end of the world trade. beyond inflation. just the end of the world. >> at 1900 bucks, it was the end of the world price. we're down, what, 25%. >> yeah. yeah. >> we cannot under estimate this issue of syria. be cautious about any intervention in syria. first, russia is not the same russia that existed when we bind serbia into the stone age. this is a resurgent power. they have sand missiles in syria. we've been at war now for 20 years. we've been in the middle east at war for virtually 20 years. i think we have to examine this evidence very, very carefully and congress has to be presented. >> hang on one second. danielle, let me come back to

you. another factor today that surprised me in the markets, in the currency markets, danielle, you know what, it wasn't the dollar. it wasn't dollar that was strong off of the syrian tensions, it was the japanese yen and it was the swissy frank. in fact, the dollar fell a little bit. that surprises me. what do you make of it? >> it surprises me as well, larry. typically in this type of situation what you're going to see is people running to safe haven kur ren sis, like the u.s. dollar we'll see a depression in the risk currencies like the canadian dollar and australian dollar. oil, interestingly, will move up in tandem with the dollar. this typically happens when you see it happen in the middle east. oil moves up, the dollar moves down. also, you know, you've got this headline risk that who else but russia is going to do? what north korea can do.

what iran may do in the case of a u.s. involvement in this conflict. that's got this market very, very nervous. >> scott, there's one other point i missed. i'm no military expert. leading the nbc news reports on this very lengthy discussion, okay, people are talking about a three-day action perhaps beginning thursday. that may be the end of it. >> it's gone on for four days, five days, six days. it could go on for a while, stop for a while and come back on. do you follow what i'm saying? measured responses on a number of times. that poses a longer term risk for the stock market. it's not like three days and you're out. what's your take on that? what if that happens? what if this action takes a month or two or longer? >> you're absolutely right, larry. it's never good for our stock market when stock traders look at the world map and worry about

geopolitical problems. if they go on for a significant period of time, that's even worse. the reason today's move was overdone is because part of what's going on with the rhetoric out of the white house, they're trying to get the allies in the area on board. they did that with the arab league. they're trying to get the russians on board. i'm not certain that the white house is telling us everything they're thinking. i think they're going to go in convincingly. i don't think this will go on for several days beyond the three days that's being discussed. one thing they need to do, larry, they need to tell the syrian military that saying giving us the excuse that i was only following orders is not going to fly. >> that opens up a whole other can of worms. we'll leave it there. we will see how long this action goes. it could go longer than just three days, that's all i'm saying.

danielle hughes, thank you very much. scott nation, thank you. lou learner will be with us for a while and come back later in the show. folks, the other big story tonight, the battle over the debt ceiling. treasury secretary jack lew says the white house wants to negotiate. we'll have a republican response to that. i think there's a brawl coming in washington and we'll cover it up next on "kudlow." now, would you go? man: 'oh i can't go tonight' woman: 'i can't.' hero : that's what expedia asked me. host: book the flight but you have to go right now. hero: (laughs) and i just go? this is for real right? this is for real? i always said one day i'd go to china, just never thought it'd be today. anncr: we're giving away a trip every day. download the expedia app and your next trip could be on us. expedia, find yours.

treasury secretary jack lew challenged congress today to raise the debt limit. my colleague john harwood in an exclusive interview that the white house position is firm. take a listen. >> we're not going to be negotiating over the debt limit. congress has already authorized funding, committed us to make expenditures. we're now in the place where the whole question is will we pay the bills that the united states has incurred, and it is just -- the only way to do that is for congress to act, act quickly. what we need in our economy is certainty. we don't need more suffering. we don't need another crisis. congress should come back and act. >> house republicans, however, are opposed to a clean debt bill. speaker boehner will ask for more spending cuts. plus, he will not relent on the budget cutting sequester so far

as i know. secretary lew spoke about the sequester, too, take a listen. >> let me make clear on sequestration that we think the right thing for the country is to replace centers of across the board cuts but i should remind you that they're designed to be so objection annual that thable that they would spur discussion. >> joining us now for the republican response, house member marcia blackburn from tennessee. welcome back. >> thank you. >> let me just ask you, when i listen to this, are we headed for good old-fashioned washington brawl here? mr. boehner has quoted he's out barn starming in idaho. he says for a debt ceiling increase he wants more spending cuts and there is going to be negotiatio negotiations. what is the obama administration thinking? will there be a clean bill? >> no. we have the 2% across the board

cut in discretionary spending. what we did was to see that had a positive effect on our economy. larry, i'm one of those. i think we need to do a 5% across the board cut. that would be a nice next step. we have too many bureaucrats with too much power and they're making the lives of american business people miserable. when i talked to a lot of small business owners in my district, they say overregulation, over taxation, over litigation makes it impossible for them to hire, to create new jobs, to do research and development, to invest and grow those businesses. so mr. lew has got this one wrong. >> many times you've heard the president say this and mr. lew said this, let's replace the sequester. that's their mantra. let's replace the sequester. do you think the republican conference will approve of getting rid of the sequester?

>> no, i do not. the across the board cuts, we made 5% there. you have already had the department of defense and our military take two rounds of cuts. they've been quadrupled with the cuts. we need to start to backfill some of that money. look at what's happening the concerns with syria, iran and egypt. the missteps of this nation in foreign policy and defense policy, we need to be careful. what we need to do is look at entitlements, medicaid being the largest. do some necessary and needed reforms. medicaid, food stamps. we need to make certain that we put some solvency and stability in our trust funds which are medicare and social security. government takes first right of refusal. you get the leftovers. they make the commitment to you. our seniors need to make sure

they get the money back. >> what happens now? i was talking to a republican staffer who said how surprised everyone was that the debt ceiling will be reached in mid october. he was thinking november or maybe later than that. now you've got a continuing resolution to fund the government. that all ends september 30th. you have october 1 date. you may have an october 15th date on the debt ceiling. it's not a big window. can everything be put together or will there be two bills, a cr and a debt bill, or will you have one large omnibus bill? >> i think you may see two separate bills. i also think you're going to see the issue of obama care, delegging, defunding obama care. you're going to see that as we go back in. you have to delay it in order not to have your taxes, fees, penalties, mandates, medicaid expansion, exchange subsidies get out the door. you want to defund it. be sure it doesn't have any money.

right there you would save 60 to $100 billion. if you were to set aside that program for a year's period of time. the president has agreed portions of it need to be delayed. defund the whole thing. set it aside. >> a lot of people want to delay. some people want to defund. i hear you on that. you know the president won't sign that bill so that's why i'm saying, you and i have been talking for a few minutes. you disagreed on overall spending, the sequester, now on the obama care. so basically what i hear is there is going to be a d donny brook. the president is dreaming if he thinks he's going to get a clean anything without intense negotiations. >> yes. the president has mishandled so many situations whether it's jobs, the economy, the issues around health care and obama care, whether it's foreign policy and benghazi. i'm one of those, i think before

the president gets anything else maybe he should go before the american people and tell them what he was doing when benghazi was burning and four americans were losing their lives? he would still don't know where he was that night or who gave the stand down order. so i think there is a lot of mishandling on the part of this president and it has caused so many questions among the american people and they don't want us to give them more money to spend -- >> right. >> -- and not be accountable for it, larry. i think people have had it. >> only nine working days in second and maybe only two weeks in october for the debt bill. that is going to be one heck of an operation for the budget. >> yes, it is. >> house member, marsha blackburn, we appreciate you coming on the show. it's time to take another look at the economy. where does it go if we have this expected long, drawnout fight over the budget we just talked about. that's next up on "the kudlow report." [ female announcer ] what if the next big thing, isn't a thing at all?

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more uncertainty. washington once again fights over the debt limit. folks, you heard me say almost nightly that for many other reasons there is no big rebound coming in the second half economy this year. actually, prospects for early

next year don't look much greater. here now is david gitzer. we'll bring back lou lehrman. welcome, david. >> hello. >> pretty good numbers. some people are making a case, not as good. the prices are slowing down. do you buy that? >> this time around they were slower than the last time. month to month weaker in june than may. given how high some of these prices have risen and how fast they've been growing, i don't want to see prices go up 20% a year in any cities. we'll be back to where we were in 2009. a little moderation. >> so you have a previous housing number. consumer confidence up slightly higher. terrible core capital business investment spending yesterday, absolutely terrible. what's your take on the economy?

2%? 3%? what do you think? >> next year comes in 2.5% to 3%. gradual improvement. we've been seeing very low weekly unemployment claims over the last month or so which is a big plus. sooner or later i think that will have to go back into the employment report. i don't know if it will come as soon be as the end of next week. >> lou lehrman, we had the tax hike in january and the obama care tax. very substantial tax increase. i also worry about the part-time workers that are coming out of these jobs reports because their wages are very low. what's your expectation for the rest of this year going into next year? >> i think the small business can overcome, even families can

overcome the marginal tax increases. what's important is the oil hike. the third and fourth quarter would be better than expectations, perhaps even close to 3%. the oil price -- the barrel price is over 110 bucks even though i think it's 109, 116 bucks. at this level, any further increase in the oil price, bearish for the oil industry. >> the oil price has been rising well before syria. >> that -- we talked about that a little bit in the earlier segment. that i believe along with the gold price was related to the wheels coming off in south africa, indonesia, india and in turkey with very little notice, you know, from american commentators. we have an exchange crisis in

the emerging markets and generally that is associated with a panic move by indigenous peoples in those countries into gold. and businesses into oil. >> that's the hidden impact of the whole tapering thing. very low u.s. interest rate. the fed's policy is not only providing liquidity to the united states but to emerging markets around the world. you pull that back and you see what we mentioned. >> they haven't done anything yet, that's the interesting thing. the emerging countries are tanking, india, indonesia, brazil, turkey. not spreading, i'm just saying. by doing this either on expectations or some home grown problems they haven't done anything yet. >> if you look at the stock, it's 50 today, you're convinced it's 60 in six months, you don't wait, you buy it now. the anticipation is what's driving it.

the fed has barely moved. >> forgive me. >> but there has been a change in fed policy. it's dramatically expansive in terms. we saw a 300% increase in credit expansion three years ago in qe 1. today we're talking about a trillion dollars in expansion but that is a 30% increase. decline in the rate of change is having now, has been, having a dramatic effect. >> that is tightening. >> that is tightening. it's the strength of the dollar. >> if you buy fewer bonds as the fed says it may, i think it's coming later this year, way later, whatever, if you buy fewer bonds, then they're going to be adding fewer reserves or money bays or whatever the monetary definition is. that also is a tightening. >> yeah. it leads to decline in excess

cash balances in the market. when they cannot be absorbed domestically, they're exported abroad. the economic and economic boon. >> now it's in reverse. >> yes. with lou's point about this de facto tightening, you're still optimistic about the economy. we had 100, 125 bases point rise in long-term interest rates, including mortgage rates. maybe that will hurt the economy, maybe not. there's a debate about that. does at some point this fed tightening move really put the crimp on the economy? in the second half of the year or the first half of 2014? >> i don't think so. mortgage rates going up. marginal buyers are dropping off. other marginal buyers are looking for adjustable rate loans because the front end is easier that way. everybody thinks about, you

know, rates go up this much, you shut off housing. >> usually rates go up people jump off the fence and start buying. >> absolutely. so on. so i don't think it's going to shut off housing. . i don't think it's going to shut off the economy. we have sellers who are writing that s&p 500 companies haven't had this much cash since modern times. they're not about to get squeezed for cash. >> david blitzer, thanks very much. we're going to talk about gold, the fed and the big picture about the u.s.a. he has a new book out "money, gold, the u.s.a." clients are always learning more

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is 2% growth, is that the new normal in our economy as the decline suggests? or are there policy measures we can take to make america america again? in his new book, "money, gold, history" lou lehrman asks what can be done to restore growth. what can be done? i want america to be america again. i don't believe this 2% growth stuff. i want 4, 5%. >> you know, 4% growth previously balanced the budget. >> absolutely. >> you and i -- >> absolutely. >> -- sit on the same seat. >> every increase in 1% in gdp

above the baseline saves $3 trillion in deficit. >> it's a matter of choice. as it is with individuals, so it is with nations. we choose our future, our destiny. there are certain causes that we can't avoid or overcome but so as a nation. what we need is a program designed by someone who's very optimistic about america. i don't think the present administration is optimistic about america. i think that they have accepted the new normal being 2%. we need, if you will forgive me, a regime change. >> right. >> we need a very optimistic, pro growth administration. whether it's a democrat or republican administration, it has to be a change from the present sort of pessimistic majority. >> i thought one of your important themes is to make the dollar tomorrow worth as much as it is today and to anchor the dollar with gold convertibility.

i've loved that. i want to add. you have three names. real quick if you would. larry summers, janet yellen and timothy geithner. it looks like the next fed chairperson will come from that group. will they make the dollar as good as gold? >> no, but i think that's also the difference among the three, the difference between tweedle dumb and tweedle dee. >> they are doing a good job but they are part of the consensus. it is not the kind of change that you're looking for, i'm looking for. >> it's not the kind of convertibility you're looking for. >> well, if we're going to have monetary reform, it has to be comprehensive. the federal reserve system in the hands of, again, well-intentioned people is without restrained. there hasn't been that since 1971. even that was a minor one. that gold convertibility which president nixon terminated in august of 1971.

what we need is a reform whereby the dollar is given a determined value. congress is given that power. >> all right. >> in distribution. article 1, section 8, and they should use that power to define the value of the dollar. >> i have a minute left. i want to ask you this. very important. what kind of government policies are we going to have? what kind of country are we going to have? are we going to have a country that produces new facebooks, new energy revolutions and things with entrepreneurship or are we going to have a country that produces new obama cares and the state takeover of the economy? which is it going to be, lou lehrman? >> we'll have regime change. the american people have been impoverished. they are aware that the financial class are getting the subsidies. they are wising up to vote for a big change whether it's in 2014, 2016. i'm patient enough to wait until 2020 but the change is coming.

>> all right. optimistic lou lehrman. i love that. his book, "money, gold and history." it's on sale. i look forward to that regime change. that's it for this evening's show. thanks for watching. regime change, that will be my watch word for a while. i'm kudlow. we'll see you again tomorrow night. when we made our commitment to the gulf, bp had two big goals: help the gulf recover and learn from what happened so we could be a better, safer energy company.

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