>> ladies and gentlemen of the jury, we're gathered here in this great sovereign state of nevada to decide the fate of our economy in the trial of the century. and this hearing we hope to discovery those responsible for the financial crisis our great nation has gone through, the worst financial collapse since the great depression that has affected us all, even us of the great city of las vegas, the entertain. capital of the world. before this court, the prosecution accuses free market capitalism and its codefendants, deleague laying, tax cuts, unregulated has say fair and other forms of supply-side economics as the principle cause of collapse o banks, real estate

companies, massive losses in 401k and pension plans, the highest unemployment rate in decades and pain and suffering of average citizens throughout the world. that's just the indictment. [laughter] >> that's the full five minute open statement. >> i'm not there yet. you better watch yourself. [laughter] >> we brought before this court m-stephen moore, one of the premiere members of the editorial board of the wall street journal. [applause] >> who is the foremost ex-opinion sentence of supply-side policies of free market capitalism. please stand before the jury. you and your supporters have been accused of high crimes against humanity. how to you plead? >> not guilty, your honor. >> you don't have to say it so loud. [laughter] >> have a seat, mr. moore.

we will begin these proceedings with five minute opening statements. first by the prosecuting attorney, mr. jeffrey madrick. mr. madrick is a professor of economics at the new school of social research in new york city, the editor in chief of challenge magazine, and the author of the case for big government. after his song statement mr. moore -- opening statement mr. moore will the given an opportunity to make the opening statement. you may reserve until after the prosecution rests their case. mr. moore is the co-author of the book, the end of prosperity, and after the opening statements each attorney will call two witnesses who will be subject to cross-examination. then each side will make closing arguments. so, where is my jury in. >> right here. >> oh. where did they find this jury? [laughter] >> this is a jury of nobodies peers. did you pay to get in here?

let me give you a few strucks, ladies and gentlemen. you will listen carefully to the opening statements and to the witnesses and you will be required to determine whether sufficient evidence beyond a reasonable doubt that mr. moore and his supply-side free marketers are responsible for the financial crisis this country has suffered. is that understood? say you yes one and all? >> yes. >> now, mr. madrick, you may make your opening statement. >> thank you, judge. it's a pleasure to be here, judge. thank you. and it's great to see all my friends out in this gallery. [laughter] >> i appreciate all of you -- oh, at least one of you coming. as to the jury, it's great to see you. typically an attorney gets the opportunity to interview each of you as you well know, and you know that, too. right, judge? you know -- >> don't ask me questions, mr. madrick. make an opening statement.

>> i just want to be sure. i haven't had that opportunity, but i know you will be able to put just looking at you, to put all past prejudices, views, biases aside and view this argument as independently as possible because that's you're task. enthough you applauded for mr. steve moore. i want you to know, jury, i have a lot of sympathy for capitalism. capital jim is dynamic, full of energy. it's critical to the prosperity of every nation since the industrial revolution. nobody wants to put capitalism asunder, but capitalism is like an adolescent. it needs supervision, it needs guidance, and it needs nourishment, and i hear

agreement. without that guide we have ground 30 years of reduce that supervision and that nourishment, and i will argue that's led though catastrophe we face today. 10% unemployment. a banking system that we thought was the pride of america, that is now insolvent. the pride of the world, in fact. it's not basically insolvent. except was saved by government recently. i could go on and on. >> no, you can't. no, you can't. you're reaching your five minutes. >> retail sales, even recently, kept going down. so we're in some trouble here. what will you be told by the defense? you will be told what you have heard time and again. that it wasn't capitalism. it wasn't unguided capitalism. it was government that did it. it was government that told those brilliant investment bankers and commercial bankers to invest in risky securities

they did not understand. it was government who told the banking system to set up a compensation system that rewarded people not to manage risk but to take too much risk. it was government that told people, and all these new mortgage brokers, sell mortgages to people who could not possibly understand them, even when you can't understand them. because you'll make a lot of money on it. and i can go on and on, as you all know. >> no, you can't go on and on. you're using up your five minutes. >> you -- i can do on and on and i'm not going to go on and on you will be told some other things. you will be told a fancy fulfill story about how america grew up because there was little government. its untrue, even under thomas jefferson there were serious rules and regulation about the sale of property. the key to the american story,

accessible, cheap property, highly regulated by the federal government. the federal government built -- the state governments built the canals, the primary schools, the sanitation systems in your cities which allowed cities to grow, plague-free, and become great sources of economic growth. they built your high schools. >> mr. madrick. >> give me just -- >> i can't. we're running a tight ship. >> you can tell me i have 30 seconds left. >> you have 15 seconds left. >> i will prove today that capitalism didn't work, that that the advocates that tell you the price system and competition always adjust, always reduce excess greed and adjust the system to work efficiently and to maximize prosperity did nod do so. capitalism is important but it needs supervision, guidance and nourishment. it does not nourish itself.

>> thank you, mr. madrick. would juror number one please wake up. [laughter] >> mr. moore, do you wish to make your opening statement? >> i do. >> very good. >> thank you, your honor. ladies and gentlemen and gentlemen of the jury. i submit its not free market capitalism that should be on trial this evening. it's socialism. it's big governmentism. it's comp park nat conservative, its chris dodd, it's barnie franks -- >> your honor, it's people at that time move if i hear miami outbursts i'm going to put mr. moore in jail. >> the people who moved the country away from the free market system are the people responsible for the crisis. let me submit to you all there's one reason that the united

states has become the richest country in the history of the world. it is because of the free market capitalist system and we should not apologize for that. the times in our nation's history when our economy has faltered have been times when we have moved away from free market capitalism and towards of socialism and big government, and i submit to you, ladies and gentlemen of the jury, that, for example, it was in he 1930s when we had a massive new deal experiment and big government. it was failure in every regard. the size of the government doubled during the new deal. eight years after franklin roosevelt was elected president, and implemented his big government new deal policies, the unemployment rate was still 15% in the united states. the new deal was not a success. it woulds a file failure because we a ban donned free markets. let's talk about the current crisis amp crisis of the free market snip -- not working? no. it was a result of big

government policies and big government republicanism that created this crisis. the federal government grew by a record pace under george w. bush and they abandoned the principle this believed inch let's talk about the money supply. we had a massive expansion in the money supply and a massive devaluation of our currency from 2001 to 2007. the price of followed went from 3 been an ounce, we debased its currency. i submit to you all, ladies and gentlemen of the jury, that the way out of this crisis is not these big government bailouts, novelty the big government stimulus plan, not the $9 trillion debt plan barack obama has submitted and has passed, but it will be a return to the free market policies. it was ronald reagan who turned around ore economy the last time we were in a great economic crisis and he turned around our economy through free trade, low

taxes, limited government. we have to return to the policies that work. we know when we let he engine of free enter surprise work that america prospers like no other country. there's never been a time, ladies and gentlemen, when big government, either in the united states or anyplace in the world -- and i would challenge jeff madrick to point to any example in history where big government made people richer. big government is what makes people poor and it turns countries into impoverished nations. >> thank you very much, mr. moore. [applause] >> mr. madrick you may call your first witness. i lost my -- i think it's charles gasparino. >> would charles gasparino please come before the court. [applause]

>> wait a second. don't talk to the jury. try to -- >> marshal, one more move like that. you won't be allowed to testify. you well by in the can. raise your right hand. do you solemnly swear to tell the throughout, the whole truth and nothing be the truth so help you god. >> huh, yes. >> just stan there and tell the truth you how of the the the truth to me and the jury. >> mr. gasparino, thank so mump. was there greed exhibited on wall street in the last decade? >> yes. >> excuse me. have to give him the mic. >> i will take the gavel, though. >> thanks. >> let me ask that again. >> there is would some amount of

greed. >> how did it manifest itself? >> as it always does. people want to make more money, people cut corners, and greed leads to excess. >> how much mid-moye did people make. >> hay made a lot of money. >> for example? >> jimmy cain made $40 million in 2006. stan o'neill made $50 million in 2006. this is right before the whole thing hit the fan. >> how well did their companies do as a consequence. >> in 2006 merrill link was nearly bankrupt. in 2007 bear stearns nearly went bankrupt and actually did. it was a run on the bank in 2008. >> explain to me how you think capitalism is supposed to work. we believe that people should make whatever they can make because they are managing their companies well, creating useful products, contributing to the prosperity of america. can o'neill made enormous

amounts of money compared to most of us. their companies went bankrupt. >> was capitalism working? >> i think it was to a certain extent. you can't regulate greed. you have to essentially kill everybody on the planet because it's a basic human instinct. some of us have more than others. if you want to regulate greed, good luck. you need a bigger government than barack obama ever envisioned. >> do you think that that -- the compensation system contributed to bad decisionmaking? >> absolutely, yes, it did. >> you don't think there is a way to regulate bad decisionmaking on wall street that d. >> well you know, the way to do that is to have government involved -- for example, talking about the free market. what do you think gave us fannie and freddie, and how much do you

think franklin rains was paid? i think it was $20 million. a government regular lated agency that paid -- i call the perpetrator because i believe he was cited by the sec that paid the guy that involved in an accounting scandal $20 million and did not put to death fannie or freddie, and allowed them to continue in their ways until they -- >> mr. gasparino. mr. madrick, your times running short here so please, answer his questions. >> i got -- fannie and freddie were made -- >> they're regulated by the housing and development administration, under the clinton administration which forced them to start guaranteeing subprime loans. >> judge, i may have to do this with both my witnesses, to treat

this witness as a hostile witness. >> mr. madrick. >> i'm not surprised. >> mr. madrick, you're five minutes to late. >> oh, okay. >> are we up? >> 30 seconds. >> let me ask, should these investment bank -- why want they able to assess the prices of these securities they bought so aggressively? >> why weren't they? >> well, isn't the -- let me continue. isn't the capitalism system supposed to work through competition to adjust prices in a way that we don't get outsize, crazy behavior that lasts for years? it's okay to say we have to allow some exceptions, but for years, sir, i would tell you that the cure is worse than the diseach if you look at history there have been bubbles throughout the history of mancini. it's all about human nature. you can regulate it out. if you want to regulate out

economic bubbles, you go back to what you had in the soviet union, that type of economy, and if you want to regular late regulate -- regulate it lighter than that, go to europe. >> there's no division between the u.s. -- difference between the u.s. and the soviet union? >> if you want to regular late out greed and bubbles and finance -- >> you're becoming repetitive. >> off will get the sowfey -- >> mr. madrick, thank you very much. mr. gasparino, you're subject to cross-examination. mr. moore, would you like to examine? >> it's go to see you, sir. you seem to -- >> i'm sure of that. >> you're starting to scare me now. >> you seem to be very bothered by he kick testify salaries. >> i'm not bothered. just stating facts. >> do you have any idea how much money he prop james makes. >> i don't care. >> he makes $40 million a year. >> no my father made $40,000 a

year. i'm sorry. >> do you have any idea how much hannah montana makes? >> if i said yes, i should be in the -- >> would it surprise you to know that she makes over $50 million a year? >> right. she didn't ruin the economy. >> don't ask him how much the mayor of las vegas makes, okay? [laughter] >> now, i want to -- here's my question to you, sir. can we agree that someone who runs a major company with thousands if not ten of thousand office employees, who has oversight over bills if not dentals of bills billions of dollars, if that company is well managed, do you have a problem witch that person making as much money as hannah montana makes, and a-rod. >> are you saying that stan o'neill well managed his company? are you saying jim cain was a

great ceo? >> i'm asking -- >> look. >> i'm not here to defend ceos who ran their companys into the ground. i think they should -- >> you're here to defend yourself. >> what i'm asking you is, whoa -- don't you believe, sir, that is right it should be the boards of directors and the shareholders, not members of congress who determine what the salaries are of these companies? the shareholders are the owners of the companies, right? >> of course. you forget one little piece here. the government is a shareholer right now. >> well, that's the whole problem, right? all right. >> they needed to be a shareholder to bail them out. this is sick. >> this is a squealy witness. >> people don't trust me. >> let me ask you about the housing crisis, sir. you're an expert on this. would you agree with the premise that the housing sector is one of the most subsidized and

regular lated sectors of the economy. >> regular lated left and right, subsidized, 15 agencies that watch over the whole system. >> so this is hardly a free market system in housing. we have all of these institutions from the tax deduction for housing fannie may, freddie mac, that-punching money into what became a bubble? >> absolutely. >> so may i submit to you sir, it was the government intervention in the housing market, not the free market system, that caused the bubble in housing? >> you're asking for a very simplistic answer and it's not that simple. you had a confluence of issues. you did have something known at securitization and that was caused by deregulation in the housing business, and you had government prodding them. you cooperates have a bubble without the free market, without government. >> do you agree that fannie mae and freddie mac played a role.

>> substantive role. >> one more question. you're an expert on markets and i want to ask you this question and i want an honest answer, sir. do you believe the united states government can run the car companies in america? >> no, i don't. >> thank you. i rest. >> all right. thank you very much. thankthank you, mr. gasparino. you may step down. mr. madrick, please call your second witness. >> where is the bailiff? >> i'm right here. john makey of hole foods. will john macky please come up and face the court. [applause] >> please raise your right hand. do you solemn my swear to tell the truth, the whole truth and

nothing bet the throughout so help you god. >> i always tell the truth all-though it usual live gets me in trouble. >> let me ask you about executive compensation. give me some -- give the jurors some idea of how executive compensation has soared in the recent era. >> yeah. it really has soared '. historically, if you go back to 1965, the average fortune 500 ceo made 24 times the average pay of their workers. by 1980 that had green to 40 times and by the year 2000 had grown to 300 times. the average fortune 500 ceo makes 225%, the average compensation of ceos in the other 13 largest industrial nations. so, seems like there's something wrong there. >> has that shown up in

equivalently improved performance in corporations? in other words, executives make six times more as a proportion of average workers than they did 30 or 40 years ago. are companies six times as well managed? >> until 2007 they appeared to be. [laughter] >> do you think that all that executive compensation helped improve management of companies? >> no, i don't. >> could it have hurt management? >> yes, it could have hurt. >> cue explain to the jurors how it could have hurt, with all your experience? >> well in my opinion and experience, if the ceo is paid too much, up like, say, lebron james, it demoralizes the rest of the organization, that it -- you're part of a team, part of a larger culture, and if a few people are taking disproportion

nat amounts of money, then it could be bad for the overall organization. >> do you understand why people who are always defending ceos salaries are always talking about athletes like lebron james, who unambiguously proved their worth and their merit compared to many ceos? why do they talk about athletes. >> because athletes are very well paid so it's by comparison seems more reasonable. >> is it reasonable? >> i mean, a good ceo is worth quite a bit of money. but you have to -- i make a distinction -- it's important to realize you have to worry about what the external equity is, what at ceo is worth in the marketplace, and you have to be concerned about internal equity, what their worth relative to everyone necessary the organization, and a good company pays attention to both, and strikes a balance. i think somehow we have gotten out of balance over the last 30 or 40 years are you worried that sometimes this compensation leads to short-term

decisionmaking as opposed to longer term strategic decision making for companies. >> i think that has happened in some instances. >> i was that on balance good or bad for america? >> bad. >> so there can be some downside to this kind of compensation. >> absolutely. >> do you suspect that is what happened in the financial community? >> yes. >> do you have any ideas in mind? could stan o'neill making 50 million0s 160 million to drive merrill lynch, cain, not to mention the people under cain, some who made more money at bear stearns, does that upset you that a man who built a brilliant business and work his proverbial rear end off to build that business? >> it doesn't upset me. it's not how i choose to run whole foods market, but it's not my responsibility or i question

it's the responsibility of government but its the responsibility of the board of directors and the shareholders to make sure that those excesses are held in check. >> mr. madrick, nye -- any more questions? >> free market advocates like milton freeman argue that competition will hold these in check. he allows occasion lit getgets out of hand but the competition will hold excesses and checks. in my view the haven't. do you think there's something awry in that idea about markets? >> i don't think the problem here is marks so much as we need reforms in corporate governments and i think boards of directors and shareholders are doing their job appropriately. >> thank you, sir. >> mr. moore. do you have any cross-examination? >> sir, i just want to be clear on this, and thank you so much for being here. you're one of america's great

entrepreneurs. if i understand you correctly from your -- absolutely. if i understand correctly, you're making the case that board of directors and shareholders have been derelict in their duty, especially the boards, who set compensation? this is not a failure of the free market system, is it? it's a failure of the duty of the compensation boards. would you agree with that? >> yes. >> well, i don't see how, then, this has anything to do with an indictment of the free market system. let me ask you this. when did you start your company? what year? >> 1978. >> 1978. what your sales this year? >> about $8 billion. >> say again. >> $8 billion. >> you're an incredible american¢ story. sir there are many countries that do not have free market capitalist systems. north korea, brases sill, ethiopia, russia. do you believe, sir, you could have create an # --

$8 billion company in a nation that does not have a free market capitalist system? >> no. >> i rest. >> thank you very much. >> mr. mackey, before you're excused i'm going take the prerogative to ask you a series of questions. you're the ceo and chairman of whole foods. >> yes. >> what would it take for the mayor of las vegas to get a whole foods in his downtown? [applause] >> be careful before you answer the question. [laughter] >> well, whole foods doesn't take government -- we refuse to take government payoffs so that doesn't work. >> wares my marshal. >> you have to turn the economy around, sir. >> you're bordering on contempt

here. >> i recommend cutting tacks. >> thank -- cutting taxes. >> thank you very much. >> mr. madrick, do you have any other witnesses? >> i do not. thank you. >> does the prosecution rest, then? >> the prosecution necessarily rests. >> thank you very much. all right. mr. moore, do you have any witnesses you want to call? >> your honor, i don't even feel i need witnesses after this travesty. >> okay. >> free markettallallity. i would like to call the greet and steamed publisher of forbes magazine, steve forbes. >> very good. [applause] >> you're adjourned. >> mr. forbes, raise your right hand. do you solemnly swear to tell the truth, the whole truth and nothing but the truitt -- truth so help you god? >> i do.

>> take the mic. >> steve, it's great to see you -- >> please, don't be familiar. call him mr. forbes, will you please? jury, ignore that last outburst, all right? ...

>> thank you steve. [applause] >> i will call him not oscar, the oscar. >> we have seen a great financial collapse in this country over the last nine months ago the prosecution is trying to make the case that this is the result of the failure of free-market economics. can you point out some examples are of for you believe there was actually a failure of government intervention, either in housing policy or regulatory policy or monetary policy that created the crisis rory actually di be the away from the free-market system? >> yes, there is no way we could have had a bubble housing of the size that we did and all of the of the things that happened. the federal reserve had kept a strong and stable dollar.

[applause] and, the printing of too much money, the excess liquidity, the artificially lowering of the price of capital led to a disaster just as those kinds of policies lead in the 1970's, so that is the primary villain number one. that his government. fannie and freddie in a two-year period under road, guaranteed a trillion dollars of junk mortgages. those for government sponsored enterprises and congress thwarted every attempt to make a reform. it was the fcc overseeing accounting that allowed the regulators and auditors to put in this mark-to-market accounting the devastated bank balance sheets and turned flood into a tsunami. if we had those mr. moore in the early 1990's or early 80s when we last had banking crisis we would not have the disaster we have had in recent months and then i won't even mention short selling. not enforcing the rules against

naked short selling after burrowing shells before you sell them. that again was the failure of government, not free enterprise of and you have those kinds of government mistakes, no-- make no mistake he will have a disaster. whether it happen on wall street, housing rebels were those kind of derelictions you will get a disaster. >> certification, isd your motto on your plane, and what you call the motto that forbes magazine? >> capitalist tool. >> capitalist tool and you say that unapologetically, sir? >> absolutely come entre panera lafree markets and remember capitalism did not invent human nature. the bottom line there is no other system precisely because mr. moore the system was invented not by government, not by philosophers. that came after the fact. was spontaneous and allow to happen and that is why it worked. >> two quick questions. force is there any truth to the allegation by the prosecution that tax cuts for the rich cause

this economic crisis? >> tax cuts that the early part of the decade in 2003 just at the tax cuts of the 1980's, the kennedy tax cuts of the 1960's by lowering the price of productive work risk-taking and success enabled the economy to flourish in each of those periods of time. >> what happened to revenues? >> revenues actually went up, not down. when you create a vibrant economy, jobs are created, incomes grow. >> there is no evidence there that the tax cuts under bush or reagan or kennedy caused the budget deficits? >> it is like saying you get a $10,000 raise in he spent 20,000 common know that is not a crisis of revenue. that is the spending problem. congress needs to have their credit cards taken away and we would have a surplus. [applause] >> one last question please. to cement my case sir.

>> this is the fourth last question. [laughter] just state yes or no answer to this next question. you have witnessed mr. ford's what is happened in the last three months with bailout plans, with stimulus plans, with that, with the 10 trillion-dollar budget. do you blitzer there is any chance that these policies will cause an economic recovery? >> not to use the patchable were today will cause a sustainable economic recovery. did not workforce in the 30's, did not work for japan in the 90's and won't work for us today, no. >> thank you sir. [applause] >> mr. madrick, we would like to cross-examine. >> thanks for being here. it is nice to see you. we are neighbors even if on the opposite side. >> it is good to see you. >> any great companies in sweden, any great business enterprises in sweden or france

or germany? >> there are great enterprises all around the world, except for perhaps north korea but the key question is not just a handful of grade enterprises. the key question is how many small businesses are created? how many jobs are created in the private sector? >> you don't think there are jobs created in those countries? >> there are jobs created but if you look at the facts of the last 25, 30 years in the private sector the united states proportionally has created far more jobs than had been created in western europe and scandinavia. >> please tell the jurors what has the median wage of male workers done in the last 40 years since the reagan's, since president reagan was president? >> if you actually count the real world wages and not some of the ways government account wages and the way government deals with statistics, the standard of living in the united states has increased enormously. only those who look to government statistics actually believe that working america today has a lower or the same

standard of living 30 years ago, where there is health care, education, quality of life, the quality of housing, quality of cars. you name it, it is better today than it was 30 years ago. >> jessell the jury knows, when we disagree with-- >> by the way government statistics-- we don't want to look at them and when we agree with them we do want to set them. the median wage of mill workers is lower than inflation today that was before and let me point is seven ask you a question. there are always new products in america, weren't there mr. ford's? when there were new products, and in fact the reason period can't come close to comparing to the new products of the 1920's in terms of distribution. one n.a.d.a. five families on vicari in 1919 and three auto five wonton ottimo bill in 1929 and real wages measured by the government to in this particular case we don't like measured by

the government real wages went up when there were all those new products, victrola, electric refrigerators. >> mr. farms, do you understand the question? [laughter] >> you know the question. shalit ask the question? >> i think that is a cross-examination. >> median wages are down. median wages went up over the entire course of american history over 20 and 30 year. at but not this time around. why is it different this time around again? just tell the jurors please. >> in the 1920's were a fabulously productive, innovative decade and it worked because the tax cuts we have in the 1920's and the sound money policy in 1929 amid a series of catastrophic errors in 30, 31 the kiba is the great depression so that was the private sector work in the 20's. in terms of the median wage,

first of all the government survey concentrates on those who actually make reports to the government. it misses out on the companies so it is a flawed survey. if you actually look it tax returns and the irs did a study that came out a few years ago of people earning what they earned in the mid-1990s and what they earned in 2004 and actual tax returns showed that people's income went up particularly those in the bottom fifth and almost all of them, the vast majority went up not only in terms of actual wages but also in terms of proportionately moving up a quintile or two quintiles, so in that sense our government, the irs, the tax returns rather than a faulty survey which hasn't been updated in decades. >> i never thought i would hear it a forbes say he relies on the irs. we are choosing our statistics. let me ask you a couple of other

quick questions. you are talking about fannie mae and freddie mac. what proportion of sub-prime loans the date by? i wrote it down. in 2006 they created this crisis. what proportion did they buy and wall street didn't i? >> in terms of what fannie mae ended up geron team, it was-- sub-prime mortgages in what they call alt-a mortgages ended up, you don't look adjust their numbers. exceeded $8 trillion. wall street wrote this stuff and fannie mae guaranteed it. however, again, this couldn't have happened if the federal reserve hadn't done what it did to create that excess liquidity. >> just let you know fannie mae bought 20% of sub-prime mortgages. >> they bought them, however those are mortgages i think that they kept on their books. they kept this stuff--

>> mr. madrick is badger in my witness. [laughter] >> mr. moore, mr. forbes is not even sweating so sit down. [laughter] >> quickly, quickly steve, mr. forbes, the federal reserve has lowered interest rates before. the late 1990's we had a boom, the early 90's. if i could, still had the memory i had ten years ago, i could find a couple of other incidents as. why didn't we have a collapse in the depression them? >> it is all a matter of proportion. the federal reserve lowered interest rates in the 1990's but not in the skeel that they did in 2000. we did not have over a year for example of 1% of federal funds. that was a brand new thing. that was artificial, nothing to do with the market so the look of the federal reserve in fact in the past times, sometimes when the fed has lowered

interest rates artificially like the early 1970's was because it was printing excess money and setting the stage for chorus them the road this happened in 1974 and 75 so yes the fed is made, this wasn't the first time the fed has made mistakes but what confounded what the fed did this time were mistakes made on things like mark-to-market accounting, short selling, inconsistent reactions by the government, which hank paulson is the madison b. cannon of treasury secretaries for what he did. >> i have one last question. i know you have never seen a tax cut you did not love, but and i know you don't like some government statistics over others, but we have the fastest economic growth in the '50s and '60s and the fastest rising median household income, have lots of new products in the '50s and '60s and taxes were very high, weren't they? >> the overall tax burden in the

'50s and '60s was far lower than it was today and all so you didn't have massive property taxes as we do today and are income taxes while the rates were high, most people didn't have those high brackets. social security taxes, you have to include them, or infinitely lower than they are today but in the late '50s people's prosperity, people started moving to the higher tax brackets and the economy started to suffer severe recessions. we had a mild one in 1954, we had a tough one in 1958 and another one in 1960 which is why john can be put in a proposal to cut income tax rates 20% across the board. he was right, with the democratic party with learned from john kennedy. [applause] >> thank you. this thank you steve. >> thank you steve. i said, thank you steve. >> thank you.

[applause] >> marshall, where is my marshall? mr. moore next witness please. >> i would like to call your honor mr. doug casey. >> mr. casey. [applause] mr. hazy, would you please place your left hand on the bible and raise your left hand. [laughter] do you solemnly swear to tell the truth, the whole truth and nothing but the truth? >> so help me god? , which god? >> okay, mr. hazy i have your copy of atlas shrugs, would you please place your left hand on alice shrugged, place your left

hand, do solemnly swear to-- >> you will have to take my word for it. [laughter] >> mr. moore,. >> mr. casey thank you so much for being here today. the prosecution is trying to make the case that it was the failure of free-market economics that caused this crisis. you are a longstanding student and a lecturer and writer on american financial economic history. i would like to ask you this question for goodies see any evidence that was the breakdown of free-market policies that cause the financial panic that we have seen in the last 18 months? >> that is a false and ridiculous question in that we don't have a free market in this country. even since the downing of the country as you pointed out, what we have today is not capitalism so capitalism can't be on trial. what we have this fascism. fascism is a system, let me define the word, where individuals and companies on the

property but the government directs it, so-- that is the answer to your question. >> if finders the end user, we can't blame the free market system for economic failures right now because the don't have a free market. >> that is exactly correct. >> the next question i wanted to ask you, your an investment guru, is that right sir? you provide a lot of good advice to people. with you would fisa the american people or investors to invest in chrysler or general motors today? [laughter] >> was that a yes or no? >> what we are facing right now is not just the most serious depression or-- >> is that a yes or no? >> no, this isn't the most serious thing since the 1930's. this is the most serious thing since the founding of the country, so no i couldn't

recommend common stocks, i can't recommend the u.s. dollar. none of these things. >> do you think united states government did the right thing when it bailed out aig? >> not only did do not the right thing, it did exactly the opposite of the right thing. >> did it do the right thing when it bailed out there stearns? did it do the right thing when it bailed out the 12 largest banks in the u.s.? >> idoni vinn-- of the u.s. government to exist. [laughter] [applause] >> you believe that the $800 billion-- >> wait a second, i am beginning to take this very personally. [laughter] >> you believe that this man should be the mayor of las vegas? >> i am giving you your miranda warnings now. you have the right to remain silent, okay? >> personally you seem like a very nice guy but he was to get honest work.

[laughter] do you believe sir that we need mares or governors? >> no, i don't. any thing that needs doing-- >> shoed this man. [laughter] >> of entrepreneurs don't provide the good or service than in is not desired by the markets of the answer is no. >> what you are saying sir is the citizens of loss they is could save a lot of money if this man did not have a job? >> yes. [laughter] and 50,000 people to work for him. >> that is assuming facts, not evidence. [laughter] >> it sounds like the wrong person is on trial here. >> well, with all due respect this is a kangaroo court. any couric that could have the

nerve to put capitalism on trial for the sins of another system is a kangaroo court by definition. >> i want the record to reflect that through your entire testimony you have had your hand on the bible. [laughter] >> that is like crossing my fingers, if you would. >> what must question if i may sir. do you believe this man has the right to put you in jail? >> doan challenge me. [laughter] >> no, i don't. know, it is going to take an explanation that we don't have time for but not believing in the state or government or what it does, no i don't. >> to summarize if we had a limited government or no government at all-- >> absolutely. this country would be of ready right now at the level of star trek if we didn't have the government. to me the thing i must amazed

by-- >> even if barack obama is president? >> i am just amazed that we are as prosperous as we still are with the dead hand of the state laying on of the citizens of this country. >> do you believe certification, finally that barack obama is the messiah? [laughter] >> judge, i object. >> did you say the messiah or the antichrist? >> i would like the defense duest-- >> irs my case. >> i am not trying to treat this proceeding with all the dignity it deserves and we actually, because we are probably more-- we will treat you with even more-- [inaudible] >> in relative terms, yes. >> the most prosperous country in the world? >> for the last 30 years based

mostly upon the kindness of strangers in china and so forth, yes. >> how long have you been predicting the pression in america? >> that is very easy to predict. any time-- >> when did it start? >> about 1978. >> when was this book publisher? >> 1978. >> you are talking about how regulation and inflation will lead to depression. >> inevitably. >> we deregulated-- i feel like frank sinatra. we the regulated, and then we had something called the worst economic calamity in american history. even though we burst some of those conditions you worried about. >> what are you talking about? >> did i misunderstand you? >> that was a cyclical recovery

andel i can tell you is in the real world actions have consequences and cost has the facts and regulation, inflation and the government in general it has brought us to where we are now and it's going to get much worse. >> we have been a very prosperous country. everybody on the jury believes we are quite an extraordinary, the-- country, full of economic opportunity and we did this despite they have a government, any kind of government and if we didn't have any kind of government we would be more prosperous. is there one historical example you can point to to make your case? just one? one example of a nation without a government that became very prosperous? >> i will say this. everytime without exception the richest and most prosperous countries in the world are the countries that have the lightest touch of government. in the past that it's been the united states so that is why we

are as prosperous as we are now. we would be more prosperous had we not have the government. >> i want to get into cystoscope analysis, and in fact i want. i know that you will just say those statistics are not good, i guess it will say that. if we got rid of government and i always talk about sweden but let me talk about a different country. if we got rid of government in our way which is almost as rich as we are and maybe even richer and they pay for childcare and the university is free and they pay for health care and they don't have 47 million people or the equivalent proportion without health care insurance. if they eliminated the government in our way, would they be way richer than we are? >> yes they would because what government does is it misallocates huge amounts of capital. yes the norwegians would be far better off without their government.

>> so, we have achieved this dedekind's all odds. we have achieved the state of prosperity in america against all odds. >> america's been relatively free compared to the other countries in the world. >> does the government have to protect property rights? the minimal necessary requirement to make a market where? >> if you are pointing at the government it should do three things, protect you from criminals within its bailiwick, criminals which is the police force, criminals from without which is the army and have the court system so we can adjudicate disputes without resorting to violence. >> i will stipulate to that. >> unfortunately even those three things are far too important to a civil society to be let to the kind of people that generally go into government, present company excluded. [laughter] >> irs, thank you sir. [applause] >> may i request a redirect?

>> no, no rege reckford go have vaisse. >> you don't have authority over me. >> you may never get to the jury. [laughter] alright, does the defense rests? >> the defense rests, sir. >> i understand reluctantly but you to rest. >> i want to make a closing statement. >> since mr. madrick has the burden of proof he will go first. we will hold the to a strict timetable. if five minute time limit, no warnings. justice holmes once said if i had more time i would have made it more brief, so do it. [laughter] >> ladies and gentlemen of the jury i again urge you to read yourself of your previous prejudices and the outcries from the gallery. although i must say i enjoyed the gallery. we have heard a great deal of

rhetoric from the other side. we have heard virtually no analysis. we have heard about basketball players. we have heard about the fact that there is not a free market in ethiopia. could you ever start a whole foods in ethiopia? well, even i would agree it is probably pretty difficult. not as difficult as may be lost vegas. [laughter] is that analysis? have we heard from the other side at all about the ms. pricing of assets on wall street and we have talked about government and fannie mae. i have grief fannie mae contributed to this problem. are they the central issue? not remotely. just look at the numbers and i know when i bring up numbers people say, i did not like those numbers. let me tell you about a few other numbers. look at the numbers then the community reinvestment act. it had almost nothing to do with

this crisis. three republican appointees stated as much after they actually did the research. i would commend the jury. i would commend my opponent. i would commend the gallery and judge i don't have to bother commending you because i know you would do this, do some research into these issues. ask yourself why and the structure in america is rated 8d. this is america, rated 8d by the civil engineers. ask yourself why did so darned expensive to go to college in america. does that make sense to you? ask yourself why public education is on the ." you may have some answers and we probably would disagree. hess yourself though, who made public education work in america? steve, my opponents brought up one point and i want to make this very clear.

he said the government always gets in the way or something like that. let me point this out to you historically. there is no example of a major breach nation today that has not had something we can define as did the government. some very big government and i know many of you think life is not as good in france or sweden as it is here. don't tell that to the swedes or the french. they know the services they have and they know their country is prosperous. i'm not saying they do everything right and i am not saying by any means government does everything right in america but it is time to get some balance in this argument. what has happened to america is that we have lost their sense of balance. we have been dominated by an extreme ideology and ideology that is taken as much too far, and you see an example of that

today. you see an example of it, where everything that has happened is government's fault. not some of it, but all of that, where you can't-- where you use examples about free markets, examples like ethiopia, instead of examples like western europe. can you start a company in china today, increasingly you can. he company in india and america better wake up to that effect. they better wake up to the fact that other systems that regulate more, that pay for education have more efficient health care systems are going to start becoming much more competitive economically than we are and we had better start taking care of ourselves. and i am not going to become an ideologue. i am not going to tell you people and i'm certainly not going to tell the jury and i'm not even been to tell this woman who keeps lathing, that the only answer-- i always remember this

line from sinatra. certification, take your hand off the broad. [laughter] we are in las vegas, i can say that. >> what happens here stays here. >> we better take care roselle finn i'm not going to become an ideologue. i am not going to use lebron madison r. ethiopia or tell you fannie mae did it all in distorted the numbers are tell you everything is bad about private enterprise. i am going to tell you we had better get some balance in america and we have lost that. the consequence of losing that has been a severe economic cataclysms that we didn't need. we did not need to become-- who brought the soviet union? please charles, let's not jump from one extreme to the other. i am not talking about the soviet union that we need some balance. eucom everybody on this jury is paying the price for that and if we don't have government mr. forbes, steve, and since he

is my neighbor i can call him steve, if we don't get government intervening, economies go down farther and farther and farther. i would love to talk to you a little bit about the new deal. we don't have time and i hope we have another debate judge and i hope you are presiding. thank you. >> thank you very much. [applause] mr. moore. >> your honor it has been a pleasure to be here with you. i like you but i do not love you and i'm not going to hug you. >> thank god. notwithstanding your position. >> i would the siege the jury to think about this. please, i beg you, do not kill the goose that lays the golden eggs. back in is that lays the golden eggs is the free-market capitalist system. is the reason united states has

become the richest nation on earth. let's review some of the evidence that the prosecutor-- prosecuting team has brought today. force to set executive compensation. the free market system is not working because a lot of the executives are overpaid. i agree that many executives especially of failing institutions, mr. gasparino have this correct, many of them should not be paid anything. they should not get cold and parchute. they should get money back, but this was not a failure as all of the witnesses agree, this was not a failure of the free market system. it was a failure of the compensation boards of directors that should be overseeing the interest of shareholders. next, the case was made-- by the way i agree with the prosecuting attorney. he says we have lost our balance between the free market system and government. he is exactly right. the reason we lost the proper balance is we have seen in the

last 18 months the greatest expansion of government in the history of this country. we have spent $800 billion on a failed government stimulus plan that has not created one single new job in this-- and is causing the unemployment rate to go up to 9.5%. the prosecuting attorneys said we don't have a good education and health care system in this country. i have creek, we do not have good education health care this country. who runs those industries? the government does. the two industries in america that are most dysfunctional, education and health care, education is 90% run by the government in the health care system is 50% run by the government. the prosecuting attorney and his friends in washington wants the entire industry, the health care industry to be run by government. i would submit to you ladies and gentlemen that if we have the government running our health care system in america it will have all of the efficiency of

the department of motor vehicles and the postal service. we don't want that. our health is too important. now, infrastructure. the prosecuting attorney said we are not spending enough money in infrastructure. the problem with the infrastructure in this country and you are right, a lot of our infrastructure is crumbling. why? because the thing that politicians spend money every year on a bridge to nowhere. finally i would submit finally that if you look at countries around the world, let us not emulate the model that the prosecuting attorney says he's so much admires in his book, the case for big government. he wants the united states to look like europe. he has what i call euro and the. he wanted to look like france and germany and italy and spain and sweden. there is a problem with that model ladies and gentlemen. those countries that have higher unemployment rates, more people

on poverty. they have not created jobs. the united states for in the free enterprise system created 46 million new jobs. for that same time period yep created 5 million new jobs. we created nine times as many jobs as those countries that. we created much more wealth and so once of the point at think i am making is our founding fathers set up a system that was ingenious. i am not making the case for no government. mr. casey made that case very in passionately. i don't agree entirely with that. we do need a rule of law, we do need a court system, we do need wrote and obviously the national security system and the national defense but we do not have to have the government meddling in every industry and what is then the results finally, of all of this government we have seen immerged in the last six months under george bush and barack obama? we are now leading to our children, our most precious assets. i think everyone in this room

would agree that what we care most about is the future relief to our children. for the first time in history if we remain on course we are on right now our children, thanks to $10 trillion of government debt that we will have amassed over the next ten years under these big government policies that the prosecuting attorney ed meyers, under those policies every american born willen herod 150 to $200,000 of debt. i would submit your honor that this is fiscal child abuse. no great nation bleats that kind of debt to their children, so in closing, we need to maintain the free enterprise system. we need to leave to our children a system of limited government and a burgeoning free-market system that makes every but he rich. the great dream of america is not, is the prosecuting attorney would say to make rich people pour. it is to make poor people rich.

thank you. >> thank you mr. moore. [applause] >> alright, ladies and gentlemen of the jury you have for the witnesses and statements of both the prosecutor as well as the defendant. edisto up to you to decide the guilt or not guilty of mr. stephen moore and the defenders of free market capitalism, and supply-side economics. do you have a form in? alright sir the forman will tally the votes and announce the verdict. the decision this particular case convened by majority vote and need not be proved beyond a reasonable doubt with 12 jurors. it doesn't require a unanimous decision. i'm not going to try this case over again. [laughter] is that clear? >> your honor while the jury compiles the votes, i have been asked to announce that both the

prosecuting attorney and the defendant's attorney immediately after the verdict unless they are held off to jail will be in the back of the room signing their books. the little commercial plug-- our judge and their witnesses will be in the back. >> you are the worst bailet i have ever had. you are unbelievable. disregard that. unring that bell. >> we have posters of the debated this century available for signing in the back. and commercial, i apologize. >> mr. foreman have the juries reach a verdict? >> yes sir. >> mr. moore would you please stand and receive the verdict along with me. mr. foreman would you please read the verdict? >> your honor, after due consideration in the free market of ideas and after deep

deliberation, this jury has concluded not guilty. [applause] >> capitalism lives. >> i want to thank mr. madrick is the prosecutor and mr. moore. >> you have been a great judge. you did a fantastic job. >> your honor, your honor, i have been handed a notice from the white house. in the event of a not guilty verdict i am supposed to read this to you. >> let me see that. >> here you are. you may readed. >> are you going to tell me what i can do? [laughter] this is unbelievable. from the white house, 1600 pennsylvania avenue, washington d.c., 20500 deleted-- dated july the tenth pick of the honorable mayor of las vegas, and it is an

amazing message. the powers granted by the united states of american patriot act, the president of the ginn m hereby declares marshall law-- [laughter] in the city of las vegas, and mr. stephen moore and his free-market conspirators are hereby declared to be enemy combatants. [laughter] we therefore declare this court decision now and floyd. >> you have no right. >> and hereby reversed a ruling of this jury and condemn mr. steve moore and is free market cohorts to 151 years-- eight years, pardon me, eight years hard labor at the new barack obama gitmo center in washington, d.c.. gil liberally yours, barack obama. i will tell you what i am going to do with this message. [laughter]

[applause] members of the jury, whereas las vegas is located in the sovereign state of nevada, which functions under the constitution of the united states of the tenth amendment to the united states constitution states that the federal government has no jurisdiction over this courts and therefore i declare this official statement by the wife has to be now and foyt. mr. moore and zero codefendants are hereby set free at freedom fest and invited to partake in all of the entertainment and liberties of my fears city. long live the constitution and long live las vegas. [applause] case closed. >> thank you. >> this event was part of freedomfest, a libertarian conference held annually in lost vegas. for more information visit freedomfest.com.

>> this summer booktv is asking, what are you reading? >> peter osnos is the founder of public affairs books. mr. ross does what the plan on reading this summer? >> one of the first of siplin and reading is "k blows top" by keat-- peter crosson which is being published by public affairs but i see i have not had a chance to really get for everybody tells me is absolutely remarkable. he was a reporter for "the washington post" for many years and he tells the story of nikita khrushchev's visit to the united states in 1959 i believe, when he came here in the time of the cold war was at its peak and he was the quintessential russian

galumph. he came here in traveled the country and why not to i was an elected house of the corn stalks or and he went al to hollywood in went to disneyland and what he is caption in that moment of american history and told the story with what i gather is enormous great, good humor is also a history of a very good kinds of that is the first book i will read. thank you. the second book i'm going to read this chris ee-- buckley, mum and pup. all of us have heard a little bit about the book or seen one way or another what has it now famous line is what he said to his mother on a death bed. he looked at her as she was about to take her last breath and he said i forgive you. what i'm hoping is my grandchildren don't say that to me when the time comes but when i read the excerpts of the book in the near times magazine i realized how truly revealing it

is about the way in which families of a certain kind live together and how you come to terms with the fact that these extraordinary people that you grew up with have reached the end. it sounds to me like something really worth reading, so i will. >> to see more summer reading lists and other program information visit our web site at booktv.org. >> now, doug stanton talks about u.s. special forces who fought the taliban on horseback and achieve when the early victories following the invasion of afghanistan. the event, just over an hour, was hosted by the university club of chicago. >> welcome. it is a pleasure and