to conscious capitalism. it is absolutely the number one issue where conscious capitalism seizing market defect. again, from the book, conscious capitalism identifies environmental sustainability as, quote, the achilles' heel of the freedom movement. and that's why the climate change issue is absolutely huge and it's going to be a challenge for conscious capitalism to deal with this issue. [applause] >> of course environmental sustainability is important but it's not the linchpin of the theory behind conscious capitalism. we can argue about global warming i happen to agree with ed. i am not in favor of these draconian cap and trade and i have different -- probably you and i are 99% of global warming so i don't want to be tagged with that as a key issue for conscious capitalism. can be pro global warming and conscious capitalism theory

doesn't succeed or fail on that basis. >> that would be great to separate it out. >> thank you very much, think of the panelists. [applause] from freedom fest 2,009 held in las vegas, a mock trial to determine whether free market capitalism cost the 2008 economic meltdown. jeff natural author of the peace for big government and stephen more, co-author of the end of prosperity based on the issue. las vegas mayor oscar goodman played the role of the judge and steve forbes, cnbc's charles gas for venal, whole foods ceo john mackey and economist doug casey participated as star witnesses. this is one hour and 15 minutes. >> ladies and gentlemen of the jury, we are gathered in this great sovereign state of nevada to decide the fate of the

economy and the trial of the century. in this hearing we hope to discover 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 in the great city of las vegas, the entertainment capital of the world before this court the prosecution accuses free-market capitalism and its descendants deregulation tax cuts unregulated laissez-faire and other forms of supply-side reaganomics as the principal cause of high crimes financial collapse of banks, insurance companies and real-estate investment trust, massive losses and 401k pension plans, the highest unemployment rate in decades and pain and suffering of average citizens throughout the world. that is just the indictment.

[laughter] >> that is the full five minute opening statement. >> now there yet, better watch yourself. [laughter] we brought before this court mr. stevan moore, one of the premier editors of "the wall street journal." [applause] who is the foremost exponent of supply-side policies of free-market capitalism. mr. moore, please stand before the jury. you and your supporters have been accused of multifarious high crimes against humanity. [laughter] how do you plead? >> not guilty, your honor! >> you don't have to say it so loud. [applause] [laughter] have a seat, mr. speed. [laughter] we will begin these proceedings with five minute opening statements. first by the prosecuting attorney mr. jeffrey metric, professor of economics at the new school of social research of

new york city, the editor-in-chief of challenge magazine and author of the case for big government. after his opening statement mr. moore will be given the opportunity to make an opening statement. you may reserve it 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. where is my jury? [laughter] where did they find this jury? [laughter] this is a jury of nobody's pierce. [laughter] did you pay to get in here? [laughter] let me give you a few instructions, ladies and gentlemen. you listen closely to the statements of the opening witnesses and at the end be required to determine whether a sufficient evidence beyond a

reasonable doubt by mr. moore and his supply-side free

possible. because that is your task even though you applauded for mr. stephen moore. [laughter] now i want you to know, jury, have a lot sympathy for capitalism. capitalism is dynamic, full of energy, it is critical to the prosperity of every nation since the industrial revolution. nobody wants to put capitalism under. capitalism is like an adolescent. it is proven that throughout the history of capitalism is an adolescent that needs supervision, guidance, and nourishment and i hear that you agree with me. [laughter] without that guidance we have gone through 30 years of reducing the guidance and that nourishment and i will argue that has led to the catastrophe that we face today. 10% unemployment, a banking

system that we thought was the pride of america that's now insolvent. the pride of the world in fact that's not basically insolvent except it was saved by government recently. i could go on and on. >> no, you can't. no, you can't. your reaching or five minutes, mr. madrick. [laughter] >> retail sales even recently kept going down so we are in trouble here. well what would you be told by the defense? you will be told what you have heard time and again. it wasn't capitalism, it wasn't on guided capitalism. it was government that told the berlin and investment bankers and commercial bankers to invest in risky securities that did not understand. it was government that told the banking system to set up a compensation system that rewarded people not to manage risk but to take too much risk.

it is government that old people and all of these new mortgage brokers sell mortgages to people who could not possibly understand that even when you can't understand them because he will make a lot of money and i can go on and on. >> you can't go on and on. >> i could go on and on and i am not going to go on and off. you will be told other things, you will be told a fanciful story how america grew up in its early days because there was a little government, laissez-faire. it's on true even under thomas jefferson there were rules and regulations about for civil 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 and primary schools. they built the sanitation

systems in the cities which allows cities to grow played free and become great sources of economic growth. the build your high schools -- >> mr. madrick -- >> give me just -- >> i can't. we are running a tight ship. >> you can tell me i have 30 seconds left. >> you have 15 seconds. [laughter] >> i will prove capitalism to tell you the price system and competition always adjust, always reduce excess, agreed, and adjust the system to work efficiently and maximize prosperity did not do so in this case, capitalism is important but it needs supervision, guidance and nourishment. it does not nurse itself. -- before, mr. madrick. with the juror number one please wake up. [laughter] mr. moore to do you wish to make

your opening statement at this time? >> ladies and gentlemen of the jury i submit it is not free market capitalism that should be on trial this evening it's socialism, it's a big government, its compassionate conservatism, it is chris dodd, barney frank, it's been bernanke, it's hank paulson -- [applause] your order is the people -- >> don't talk to me. >> if i hear any more help bursts like that i am going to put mr. moore in jail. [laughter] >> the people who move this country away from the free market system are the ones responsible for this crisis. let me submit to you all there is one reason 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 apologize for that. the times of the nation's history when our economy has faltered have been times we have

moved away from free market capitalism and toward socialism and big government and submit to you ladies and gentlemen of the jury for example it was in the 1930's when we had a massive new deal experiment it was a failure in every regard that size of the government doubled, eight years after franklin roosevelt was elected president and implemented his big government new deal policies the of an widener rate was still 15% in the united states. the new deal was not a success it was a failure because we abandoned free markets. now let's talk about the current crisis. is this a crisis of the free market system not working? i would submit to you ladies and gentlemen of the jury it was the result of government policies and in fact big government republicanism that helped create this crisis. the federal government grew by record pace under george bush and republicans in congress. the abandoned the principles they believed then and then let's talk about what happened in the money supply.

we had a massive expansion of the money supply and massive devaluatio of currency in the period from 2001 to 2007. the price of gold went from $900 an ounce. we debase the currency and no country has become rich by dpc its currency. i would submit to you all ladies and gentlemen of the jury the way out of this crisis is not these big government bailouts of the big government stimulus plans, not the 9 trillion-dollar debt plan barack obama has submitted and passed but returned to the free-market policies. it was one that turned around our economy the last time we were in a great economic crisis and turn around the economy through free trade and low taxes and limited government. we have to return to the policies that work. we know that when we let the engine of free enterprise work that america prosperous like no other country has. there has never been a time,

ladies and gentlemen, when any government 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 richard. big government is what makes people poor and terms countries into impoverished nations. thank you, your honor. >> thank you. [applause] mr. madrick you may call your first witness. >> i do, first witness and i think -- i lost my paper. i think this charles. thank you, and mr. bayless, for standing -- >> what charles please come before the court? [applause] >> wait a second, mr. gasparino to convince them.

one more move like that mr. gasparino you want people to testify, you will be in the can. >> raise your hand. do you solemnly swear to tell the truth, the whole truth and nothing but the truth so help you god? uh, yes. [laughter] >> all right, stand there and tell the truth. >> and you have to tell the truth to the jury. >> mr. gasparino, thank you. was there agreed exited on wall street in the last decade? >> yes. >> what -- >> excuse me, i have to give him the microphone. >> mic? >> i will take the gavel fell. [laughter] >> thanks. >> let me ask that again was their degree of wall street? >> there was some amount. >> how did it manifest itself? >> as it always does. people want to make money and in doing so, greed leads to access. >> how much money to people make?

>> a lot of money. >> for rick symbol? >> judy qaeda and $40,000,000.26, stan arnall made 50 million in 2006, right before the whole thing hit the fan. >> how well did their companies to? >> and 2007, merrill lynch was nearly bankrupt, and 2007, bear stearns nearly went bankrupt in the middle of 2007 and actually did. there was a run on the bank in 2008. >> explain how you think that capitalism is supposed to work. people, we believe people should ke whatever they can make because they are managing their companies, creating useful products, contributing to the prosperity of america. o'neal made enormous amounts compared their companies went bad. >> i want people to get back into my hotel room -- >> was capitalism working?

>> ed it was to a certain extent. you can't regulate greed, you want to prevent agreed. you have to essentially kill everybody on the planet because it is a basic human instinct some of us have more than others, some of loss to the stupid things but if you want to regulate greed, good luck. you need a bigger government and barack obama ever envisioned. >> do you think the compensation system contributed to that decision? >> absolutely, yes it did. >> so you don't think there is a way to regulate bad decision making on wall street that has to do -- >> well, you know, the way to do that is that government involved where you have for example if we are talking about the free market who do you think gave fannie and freddie and how do you think that franklin raines was paid before an accounting scandal? i think it was like $20 million. this is a government regulated agency that paid -- a trinkle and the perpetrator because i

believe he was cited by the sec -- fcc. $20 million. by the we did not put -- did not put to death either fannin or friday during these scandals, allowed them to continue in their ways until the nearly bankrupt it -- >> mr. gasparino -- mr. madrick, your time is running short so, please come answer -- -- danny and fri were made private corporations, weren't they? >> they were regulated by the housing urban development administration under the clinton administration which forced fannie and freddie for the first time ever to start guaranteeing subprimal loans. >> i may have to ask you with both my witnesses to treat this witness as a hostile witness. [laughter] >> mr. madrick -- >> they are not surprised -- >> the only problem is you are five minutes too late. [laughter] >> are we out?

>> 30 seconds, okay? >> let me ask you this, should these investment bankers -- why were they able to assess the prices of these securities they bought so aggressively? >> why weren't they? >> ascent -- let me continue this because this is my last question, isn't the capitalist system supposed to work through competition to adjust prices in a way that we don't get outside crazy behavior that lasts for years? it's okay to say we have to allow some exceptions but for years -- >> i would tell you the cure is worse than the disease. if you look at history there have been bubbles through mankind it's all about human nature. can't regulate this out. if you want to regulate economic bubbles you basically go back to when you had in the soviet union, that type of economy and if you want to regulate less than that, go to europe and

welcome 15 to 20%. >> federal reserve and the sec and the soviet union in your mind? >> i'm telling you if you want to regulate all agreed, if you want to regulate bubbles and financial -- >> you are becoming repetitive. mr. madrick, thank you. mr. gasparino, your subject cross-examination. [applause] mr. moore would you like to examine? >> mr. gasparino, good to see you. >> i am sure of that. [laughter] >> you're starting to scare me now. >> you seem bothered by these high executive salaries that some of these ceos are paid. >> i'm not bothered, just stating the facts. >> you have any idea how much money la bron james links? do you know how much money hannah montana makes every year? what a surprise hit 66 >> if i said yes -- >> what a surprise you to know that she makes over $50 million

a year? can i -- >> mr. moore don't ask how much the mayor of las vegas makes. [laughter] [applause]@ú o'neill well-managed his company and that o'neal was a great ceo? >> i am asking -- look, i am not here to defend ceos. i think that they should -- >> mr. moore, you are here to defend it yourself. [laughter] >> what i am asking is don't you

believe, sir, it should be the boards of directors and shareholders, not members of congress to determine what the salaries are of these companies after all the shareholders are the owners of the company, right? >> of course, but you forget one little piece. the government is a shareholder right now. >> that's the whole problem. >> the need a shareholder to play them out. >> i can play both sides of this. it's a sick. >> this is a squeal the witness. >> this is why people don't -- >> let me ask about housing crisis because you're an expert. would you agree with the promise that the housing sector in america is one of the most subsidized and regulated sectors of the u.s. economy? >> abs would become subsidized by various tax incentives, regulated left and right. there's 15 agencies that watch over the whole system. >> this is hardly a free market system in housing. we have got all of these

institutions from the tax deduction for housing, fannie mae, freddie mac, the federal housing administration that are pumping money into what became a bubble. >> absolutely right. >> may i submit to you it was the government intervention in the housing -- not the free market system that caused this bubble in housing. >> i think that you are asking for a very simplistic answer and it's not that simplistic because here's what you had, a confluence of issues. you had something known as securitization, and that was caused a lot ids regulation in the housing business and you did have government prodding them along. he couldn't have a double without the free market, you couldn't have the bubble without government. >> do you agree that fannie mae and freddie mac played a central roles? >> one more question if i may. you are an expert on markets and i want to ask you this question, sir, and i want an honest answer, please. to you believe the united states

government can run the car companies in america? >> no witold. >> thank you. i rest. [laughter] [applause] ..

>> let me ask you about executive compensation. give me some idea, give the jurors some idea about executive compensation has soared in the recent era. >> yet, it really has. 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 the 1980, that had grown to 40 times. by the year 2000, it 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 is something wrong there. >> has not shown up in equably improved performance for corporations? in other words, executives make six times more as a proportion of average workers than they did 30, 40 years ago. are companies six times as well

managed? >> until 2007, they appear to be. [laughter] >> do you think that all about executive compensation help improve management of companies? >> no, i don't. >> couldn't have hurt manageme management? >> yes. >> can you explain how it could have occurred with all of your experience? >> well, in my opinion, in my experience, is the ceo is paid too much, unlike say the lebron james, it demoralizes the rest of the organization. that you are part of a team, you're part of the larger culture. if a few people are taking disproportionate amount of money compared to everyone else, then it could be bad for the overall organization. >> do understand why people who are always defending ceo salaries are always talking about athletes like lebron james, unambiguously proved their worth and their merit

compared to many ceos? why do they talk about athletes all the time? >> because athletes are very well paid, so it's kind of by comparison reasonable. >> is a reasonable? >> i mean, a good ceo is worth quite a bit of money. but you have to take i make, you have to realize with external equity is, what a ceo is worth in the marketplace. but you also have to be concerned about internal equity, what they're worth relative everyone else in the organization. a good company pays attention to both. and strikes a balance that i think some part of that has gotten out of balance over the past 30 or 40 years. >> i don't know because i have an answer, but are you worried that sometimes compensation there is a short-term decision-making after a longer-term strategic decision-making for companies? >> i think that has happened in some instances, yes. >> is that good or bad for america?

so there can be some bad side to this kind of compensation? >> absolutely. >> do suspect that's what happened in the financial community in the last five or 10 years? >> yes. >> again, i didn't ask you this before, but do you have any ideas in mind, could stand on you make 50 million or 160 million to drive merrill lynch. not to mention all the other people, some make more money at bear stearns. does that upset you, a man who has built a brilliant worth, to build a business? does it upset you? >> no, 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 the responsibility of government but it is the responsibility of the board of directors and shareholders to make sure that those excesses are held in check. >> mr. madrick, do you have anyone question. >> one last.

free market advocates like milton friedman argue competition will hold these in check. he will allow that occasionally it will get out of hand. the competition will hold excesses in check over time. in my view, they haven't. do you think there is something a ride in that ideological attitude about markets? >> i don't think the problem here is market so much as we need reforms in corporate governments. i don't think board of directors and shareholders are doing their jobs properly. >> that you, sir. >> thank you. [applause] >> mr. moore, do you have any questions? >> i wanted to club ms. thank you so much for being to picky you are one of america's great entrepreneurs are confined to jugurtha, from the -- absolute if i understand drop a comma you are making the case that board of directors and shareholders have been derelict in their duty.

especially the board to set compensation. this is not a d'elia of the free market system, isn't? it's a failure of the duty of the compensation board. would you agree with that? >> yes, i would. >> i don't see how that this has anything to do with an indictment of the free market system. let me ask you this, sir. when did you start your company? >> 1970. >> 1970. what are your sales this year? >> about $8 billion? >> sagan peered $8 billion to. >> sir, there are many countries in the world that do not have free market capitalist system. north korea, brazil, ethiopia, russia. do you believe that you could have created an $8 billion company and a nation that does not have a free market capitalist system? >> no. >> i rest. >> thank you very much. [applause] >> mr. mackey. mr. mackey. mr. mackey.

before your excuse, i'm going to take the prerogative as a judge to ask a question, all right? or a series of questions. you are the ceo and chairman of whole foods, are you not? >> yes. >> what would it take for the mayor of loss that is to get a whole foods in his downtown? [laughter] [applause] >> be careful before you answer the question. [laughter] >> no, whole foods doesn't take government. we refuse to take government payoffs, so that wouldn't work for. [applause] >> where is my martial? >> you'll have to turn the economy around and. >> you are bordering on contempt here. [laughter] >> i recommend cutting taxes. >> thank you very much. [applause] >> thank you. [applause] >> mr. madrick, do you have any of the witnesses? >> i do not. >> does the prosecution rests?

>> the prosecution necessarily rests. >> mr. moore, do you have any witnesses want to golf? >> i don't even feel i need witnesses after this travesty. but i'd like to call the great and esteemed publisher of forbes magazine, steve forbes. [applause] >> mr. forbes, would you please measure left in there. raise your right hand. do solemnly swear to tell the truth, the whole truth and nothing but the truth so help you god? >> i do. >> keep the mike. [laughter] >> steve, it's great to see you. >> under. >> please don't be familiar. call him mr. forbes, were you? [laughter] >> jury ignore this last outburst, all right?

>> may i question my witness, sir? >> i'm not so sure. [laughter] >> mr. forbes, steve, you and your father -- you and your father have built one of the great publishing dynasties in american history. i would like to ask you the same question that i just asked the previous witness. do you believe that you and your father could have built a dynasty that you have, what were your sales, sir, in the last fiscal year? >> they were as high as the year before, thanks to a governmental meddling in the economy, but to answer your question, in no other economy other than a free market entrepreneurial economy could forbes have subside. notches in the commercial sense, but what we write about people. so we will say good things about the mayor. i want to get out of your life. >> thank you, steve. [laughter] >> so i will call him not

auster, the auster. sir, we have seen a great financial collapse in this country over the last nine months. the prosecution is trying to make the case that this is a result of the failure of a free market economics. can you point out some examples, sir, where you believe it was actually the failure of government intervention, either in housing policy or regulatory policy, monetary policy, that created the crisis were actually deviated away from the free market system? >> yes. there is no way we could have had a bubble in housing of the size that we did and all the other things that have happened, the federal reserve had kept a strong and stable dollar. if it -- [applause] >> -- and the printing of too much money, the excess liquidity, the artificial lowering price of capital lead to a disaster just as those kind of policies lead in the 1970s. so that the primary villain

number one. that his government. fannie and freddie, in a two-year period, underwrote, guaranteed a trillion dollars of junk mortgages. those are government-sponsored enterprises. and congress thwarted every attempt to make a reform. when the crisis hit, was in the sec overseeing accounting that allowed the regulators and auditors to put in this crazy market to market accounting that devastated bank balance sheets and turned a blood into a synodic. if we had those, mr. moore, in the early 1990s or early '80s would laugh at a banking crisis, we would've had the disaster we had in the recent months. and i won't even mention shortselling. we're moving the road pops on shortselling, not enforcing the rules against naked short selling. you have to borrow cells charity for yourself. that it was a good of government, not free enterprise. so when you have those kind of government mistakes, make no mistake you are going to have a disaster. whether it happened on wall street, housing or elsewhere, excess money in those kind of derelicts you will get a

disaster. >> may i ask you your model, autoplay and your other -- what do you call the model that "forbes" magazine?@ú@úpñpñ the tax cuts of the early part of this decade, 2003, just as the tax cuts of the 1980s, the kennedy tax cuts of the 1960s, by lowering the price of productive work risk-taking and success enabled the economy to

florist in each of those periods of time. >> what happened to revenue? >> revenues actually went up, not down. when you create a vibrant economy, wealth is created, jobs are created, income is going. guess what? government gets a cut. >> so there is no evidence that tax cuts under bush or reagan or kennedy caused the budget deficit? >> it's like saying you get a $10000 raise and you spend 20000. no, that is not a crisis of revenue. that is a spending problem. congress needs to have a credit card taken away and we would have a surplus of. [applause] >> one last question, please. this is to cement my case. >> mr. moore, this is the fourth last question for. [laughter] >> just a yes or no to this. >> there in a. >> you witness, mr. forbes, what is happened in the last three months with a bailout plans, with sinuous plans, with that, with a template and overbudget. do you believe that there is any

chance that these policies will cause an economic recovery? >> it will not, to use the fashionable work today cause a sustainable economic recovery. it didn't work for us in the '30s. did work for japan in the 90. will not work for us today. >> thank you, sir. [applause] >> mr. madrick we would like you to close out. >> it's nice to see. >> nice to see you. with our neighbors even on the opposite side. >> it is good to see. 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 great 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 over the last 25, 30 years, and the private sector of the united states proportionally has created far more jobs that have been created in western europe and scandinavia. >> please tell the jurors, what has the median wage of male workers done in the last 30 or 40 years since the reagans, since president reagan was president? >> if you actually count the real world wages and not some of the ways that government cannot wages, the way government deals with statistics, the standard of living in the united states has increased enormously. only those who look at government statistics actually believe that a working american today has a lord or the same standard of living 30 years ago. whether it is health care, education, quality of life, quality of housing, quality of cars, you name it, it is better today than it was 30 years ago. >> is so the jury goes, i know we don't, we disagree with

government statistics -- >> and by the way -- >> pleasers peevish we don't want to look at them when we agree with them. we do want to cite them. the meeting wage for workers as lower after inflation today. about what it was before. and, let me point this out and ask you a question. there were always new product in america, worker talks with the new products, at least, in fact, the recent period can't come close to compare to the new price of the 1920s in terms of destitution. one out of five families undercurrent 1990, three out of five oh dead on the mobile. in 1929, and real wages is measured by the government who in this particular case we don't like, measured by the government, real wages went up when there were all those new products. electric refrigerators. >> do you understand the question? >> there is a question. [laughter] >> you know the question.

shall ask the question, judge? >> i think that is a -- >> down over this period there are new products, median wages went up over the entire course of american history. over 20 and 30 year periods. but not this time around. why is it different this time around again? just tell the jurors, please. >> in the 1920s, were a fabulously productive innovative they. and a sound money policy. the 1929 we made a series of catastrophic errors from 30, 31, that gave us the great depression. so that was government. private sector work in a terms of the meeting which, first of all, the government survey concentrate on those who actually make reports to the government. it misses out on new company's. is a flawed survey pic if you actually look at tax returns, the irs did a study that came out a few years ago of people

earning what they earn in the 1990s, and what they earned in 2004. an actual path returns showed that people and come with that. particularly those in the bottom fifth. 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, i'd rely on another government, the irs, the tax returns, rather than a faulty survey that hasn't been updated in 30 years. >> i thought i would never say a forbes would say he relies on the irs. we are choosing our statistics. let me ask you another question. you are talking about amy and trademark. what proportion of subprime loans, letzig, i voted down. in 2006, they created this crisis. what proportion did they buy on wall street didn't buy? >> in terms of what fannie mae ended up giving team, it was

subprime mortgages and what they call off a mortgages, ended up coming villages look at their numbers, it actually exceed a trillion dollars to wall street wrote the stuff, and fannie mae guaranteed it. however, again, this could not have happened, the federal reserve hadn't done what he did to create that excess liquidity. >> just to let you know, they made bought 20% of subprime mortgages. >> they bought them. however, those are mortgages i think that they kept on their books. they started to drink the kool-aid to an keep this up because they thought it was way -- >> mr. madrick is a bad dream eyewitness. >> mr. moore. mr. forbes isn't even swingsets it down. [laughter] >> quickly. quickly, steve. mr. forbes. the federal reserve has lowered

interest rates drastically before and notches in the early 2000. the late 1990s. we had early 1990s. i can properly, if i do still have the memory i had 10 years ago, find a couple of other incidents. why did we have a great housing boom? why did we have a collapse and a new depression then? >> well, it's all a matter of proportion. yes, the federal reserve lowered interest rates in the 1990s but not on a scale that they did in 2000. we didn't 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 if you look at the federal reserve, in fact, in the past times, sometimes when the fed has lowered interest rates artificially, like the early 1970s, was because it was pretty excess money and setting the stage for horse down the road. has happened in 1974 and 75. so yes, the fed has made, this wasn't the first time the fed made mistakes.

but what combated with the fed did this time, were mistakes made on things like market to market accounting, shortselling, inconsistent reactions by the government, which hank paulson is the james buchanan of the secretary-treasurer with what he did. >> i get one last question. >> yesterday. >> i know you're nursing a tax cut you didn't love, and i know you don't like some government statistics over others. but we had the fastest economic growth in the 1950s and 1960s. and the fastest rise in median household and want to do 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 also, you didn't have massive property tax as we do today, and on income taxes, while the retry, most people didn't hit those high brackets. and social security taxes, you have to include them, were infinitely lower than they are

today. but in the late 50, peoples prosperity, people started moving in higher tax writers, the u.s. economy started to suffer severe recessions hit we had a mild one in 1954. we had a tough one in 1958. another one in 1960. which is why john kennedy put in a proposal of cutting income tax rates 28% across the board. they were ultimately faster to try. i i wish the democratic party would learn from john kennedy. [applause] >> thank you. >> thank you, steve. >> think, steve. i said thank you, steve. [laughter] >> love you. [laughter] >> where is my martial? okay. mr. moore, your next witness, please. smack i would like to call, your

honor, mr. doug casey. >> mr. casey. [applause] >> mr. casey, would you please put your left hand on the bible and richard wright and? [laughter] >> do you solemnly swear to tell the truth, the whole truth and nothing but the truth? >> so help me god? >> which god? >> okay. >> oh, what. >> i have a copy on atlas shrugged. >> risher write-in. do you solemnly swear to tell the truth, the whole truth and nothing but the truth, so help you ayn rand? >> you have to take my word for it. [laughter] >> all right, mr. moore. >> mr. casey, thank you so much for being here today. the prosecution is trying to make a case that it was a bit of

free market economics that caused this economic crisis but you were a long-standing student and a lecturer and writer out of american financial economic history. i would like to ask you this question, sir. do you 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's a false, even ridiculous question. we don't have a free market in this country. we haven't. even since the founding of the country, as you pointed out. what we have to date is not capitalism. so capitalism can't be on tropical pad is fascism. fascism is a system that let me to find where. [applause] >> where individuals and companies own the property, but the government directs its. so that the answer to your question. >> i don't understand. >> so if i understand you, sir. we can't blame the free market system for our economic others are dead because we don't have a

free market system. >> that is exactly correct. >> the next question i wanted to ask you. you are an investment guru, is that right? you provided a lot of good advice to people. would you advise the american people who are investors to invest in chrysler or general motors today? [laughter] >> was that a yes or no? [laughter] >> what we are facing right now is not just the most serious depression based. >> is that a yes or no? >> no. you are looking at something, this is the most serious thing since the 1930s. this is the most serious thing since the founding of the cut you. no, i could recommend common stock that i could recommend bonds. i can't recommend the u.s. dollar. no, none of these things. >> do you think the government did the right thing when a buildup aig? >> not only did it do another writing it did exactly the opposite of the wrecking. >> data to the right thing when a buildup bear stearns to?

no. >> when it bailed out the 12 largest banks in the united states to? look, i don't even acknowledge the right of the u.s. government to exist. [laughter] >> do you believe that the $800 billion, billion with -- >> wait a minute i am beginning to take this personally. [laughter] >> do you believe that this man should be the mayor of las vegas? >> i am giving you your miranda warnings now. [laughter] >> you have a right to remain silent, okay? >> you seem like a very nice guy but you ought to get on honest work. [applause] >> do you believe, sir, that we did mayors and governors? >> no, i don't. i think a thing that needs doing

based. >> should disband. >> and if entrepreneurs don't provide good or service then it is not!i !yú@ú,ñ >> it sounds like the wrong person is on trial here. >> well, with all due respect, this is a kangaroo court pick any court that could put -- 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 reflect that for your entire testimony you've had your hand on the bible. [laughter] >> that's like crossing my fingers, if you want.

>> one last question, if i may, sir. do you believe that this man has the right to put you in jail? >> don't challenge the. [laughter] >> no, i don't. no. is going to take an explanation that we don't have time for, but no. not believing in the state or government or what it has done. no. >> to summarize if we have a very limited government, or no government at all we would be a richer country? >> absolutely. this country would be already right at the level of star trek if we didn't have the government. i mean, to be the thing i am most amazed by -- >> even if barack obama as president? >> all right. smack i am not just amazed we are as prosperous a we are with the dead hand laying on the state on all the citizens in this country. >> do you believe, finally, that barack obama is the messiah?

[laughter] >> judge, i object. >> the messiah or the antichrist? >> i would like the defense to ask at least one serious question. >> i rest my quest gant case. >> i am not trying to treat is proceeding with all the dignity it deserves. >> and probably because we're more openhearted and what to do with even more dignity. but let me ask you this. is america a prosperous country? >> yes, in relative terms. >> the most hospers 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 depression in america? >> that's very easy to pick. anytime that you have -- >> when did you start?

>> 1978. >> when was this book published? >> 1978. >> you are talking about regulation and inflation is a force would lead to depression. >> absolutely. >> i feel like frank sinatra right now. we licked inflation. we deregulated. and then we have something you call the worst economic climate in american history. even though we reversed some of those conditions you would about so much. >> what are you talking to? that was a cyclical recovery and all i can tell you is that in the real world, actions have consequences, cause has affect. and regulation, inflation and the government in general has brought us to we are now and it will get much, much worse. clas. . past that's been the

united states. we would be much more prosperous had we not had the government. >> i don't want to get into statistical analysis but -- and, in fact, i won't. i'm not even going to borrow to argue that. >> it's just statistics. >> i know you'll just say those

statistics are not good. did -- if we got rid of government -- i always talk about sweden but let me talk about a different country. if we got rid of government in norway which is almost as rich we are in g.d.p. maybe richer and they pay for child care and the university is free and they pay for healthcare and they don't have 47 million people or the equivalent with that healthcare insurance, if we eliminated government in norway, would they be way richer than we are? >> yes, they would. what government does it misallocates huge amounts of capital and it causes distortions in the marketplace, yes the norwegians would be far better off without their government. >> we had achieved this state against all odds, we have achieved this state of prosperity in america against all odds. >> america has been free against all the other countries in the world that's correct. >> does the government have to protect property rights, the minimal, the minimal, necessary

requirement to make a market work? >> look, if you're going to have a government, it should do three things, protect you from criminals within its bailiwick, criminals -- which is a police force, criminals from without which is an army and have a court system. >> i'll stipulate to that. [laughter] >> if the government did those three things i could live with those. unfortunately, those three things are far too important to a civil society to be left to the kind of people that generally go into government, present company excluded. [laughter] >> mr. matrick? >> i rest. thank you. >> i would request a redirect. >> no redirect. have a seat. >> you don't have authority over me. >> thank you. >> you know, you may never get to the jury. [laughter] >> all right. does the defense rest? >> the defense rests, sir. >> i understand reluctantly but you do rest? all right.

i appreciate it. >> not reluctantly. >> all right. >> but i want to make a closing statement. >> absolutely. since mr. matrick has the burden of proof, he'll go first. we're going to really hold you to a strict timetable. five-minute limit. i'll cut of off right at the button. no warnings. justice holmes said if i had more time i would have made it more brief. do it. [laughter] >> ladies and gentlemen, i again urge you to rid yourself of your previous prejudices and the outcries from the gallery. although i must say i enjoyed the gallery. [laughter] >> 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's not a free market in ethiopia. could you ever start a whole

foods in ethiopia? well, even i would probably agree it's not as difficult, maybe not as difficult as las vegas. [laughter] >> is that analysis? have we heard from the other side at all about the mispricing of assets on wall street? and we've talked about government and fannie mae. i agree fannie mae contributed to this problem, but are they the central issue? not remotely. just look at the numbers, and i know and i bring up numbers people just say, oh, i didn't like knows numbers. let me tell you about a few other numbers. just look at the numbers in purchasers and the community reinvestment numbers i'm surprised that didn't come up 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 to commend you because i know you did this, do some research into

these issues. ask yourself why infrastructure in america is rated a d. this is america. rated a d by the civil engineers. ask yourself why it is so darned expensive to go to college in america? does that make sense to you? ask yourself why public education is unequal. you probably have. you may have some answers. we would probably disagree. ask yourself, though, who made -- who made public education work in america? steve, my opponent, brought up one point and i want to make this very clear. he said big 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 rich nation today that has not had something that we can define as a big government.

some very big governments. 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 get and they know their country is prosperous. i'm not saying they do everything right. and i'm not saying by any means, government does everything right in america but it is time to get some balance in this argument. what's happened to america is that we've lost our sense of balance. we've been dominated by an extreme ideology. an ideology that has taken us 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 it. where you use examples about free markets, examples like ethiopia. instead of examples like western

europe. can you open -- can you start a company in china today? increasingly you can. a company in india and america better wake up to that fact. they better wake up to the fact that other systems that regulate more, that pay for education and have more efficient healthcare systems are going to start becoming much more competitive economically than we are and we better start taking care of ourselves. and i'm not going to become an idealog. i'm not going to tell you people and i'm certainly not tell the jury or i'm not going to tell this woman who keeps laughing, that the only answer, the only answer -- i always remember this line from sinatra. sir, take your hand off that broad. [laughter] >> we're in las vegas. i can say that. >> what happens here stays here. [laughter] >> we'd better take care of ourselves and i'm not going to become an idealog or use lebron james as an example or ethiopia

or tell you fannie mae did it all or distort the numbers or tell you everything is bad about private enterprise. not remotely. i'm going to tell you we better get some balance in america and we've lost that. we've lost that and the consequence of losing that has been a severe economic cataclysm. who brought up the soviet union. the soviet union, please, charles. let's not -- let's not jump from one extreme to the other. i'm not talking about the soviet union. but we need some balance. if we don't have government, mr. forbes, since he is my neighbor i can call steve, judge, if we don't have government intervening, economies go down farther and farther and i'd love to talk to you a little bit about the new deal, the statement that the new deal didn't work.

we don't have time and i hope we have another debate, judge and i hope you're presiding. >> thank you very much. [laughter] >> it's 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. [laughter] >> thank god! notwithstanding your position. [laughter] >> i would -- i would beseech the jury to think about this. please, i beg you, do not kill the goose that lays the golden eggs. that goose that lays the golden eggs is the free market capitalistic state. let's review some of the evidence that the prosecuting team has put -- brought today. first, he said executive compensation. the free market system isn't working because of a lot of executives are overpaid. i agree that many executives,

especially, of failing institutions, mr. gasparino is correct. they should not get embodien parachutes. they should give the money back if they caused the company to go into bankruptcies. 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 interests of the shareholders. next, the case was made -- by the way, i agree with the prosecuting attorney. he said we have lost our balance between the free market system and government. he is expect right. we have lost the proper balance. and the reason we've 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've spent $800 billion on a failed government stimulus plan that has not created one single new job and has caused the unemployment rate to go up to 9.5%. where is the evidence that all of this infrastructure creates jobs?

the prosecuting attorney said, well, we don't have a good education and healthcare system in this country. the healthcare industry, to be run by government. now, i would submit to you, ladies and gentlemen, that if we have the government running our healthcare 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 that we are not spending enough money on infrastructure. the problem with infrastructure in this country -- and you're right. a lot of our infrastructure is crumbling.

why? because these ding bat politicians spend millions of dollars everywhere to build bridges to nowhere. get the bridges out of here and we will have a much better system of roads, bridges and highways. finally, i would submit, finally, if you look at countries around the world, let us not emulate the model that the prosecuting attorney says that he so much admires in his book "the case for big government". he wants the united states to look like europe. he has what i called euro envy. he wants us to look like spain, italy sweden. it doesn't work. those countries have had higher unemployment rates they have more people in poverty. they have not created jobs. the united states under the free enterprise system from 1980 to 2007 created 46 million new jobs. over that same time frame europe created 5 million jobs. we created 9 times as many jobs. we created much more wealth and

so on. our founding fathers set up a system that was ingenuous. i am not making the case for no government. mr. casey made that case very impassionately. we do need a rule of law and we do need a court system and we do need roads and obviously, we need a national security system and a national defense but we do not have to have the government meddling in every industry and what has been the result finally of all of this government that we have seen emerged in the last six months under george bush and barack obama. we are now leaving to our children, our most precious assets -- i think everyone in this room care about is the future that we leave our children. for the first time in history if we remain on the course that we are on now, our children, thanks to $10 trillion of government debt that we will amass over the next 10 years under these big government policies that the prosecuting attorney so much

admires -- under those policies, every american-born, every child born today will inherit 150 to $200,000 of debt. i would submit, your honor, that this is fiscal child abuse. no great nation leaves that kind of debt to their children. and so in closing, we need to maintain the free enterprise system. we need to leave to our children a system of limited government and burgeoning free market system that makes everybody rich. the great dream of america is not, as the prosecuting attorney would say, to make rich people poor. it's to make poor people rich. thank you. >> thank you, mr. moore. [applause]nsz >> all right. now, ladies and gentlemen of the juaóz you've heard the witnesses and the statements of both the prosecutor as well as the defendant. it's5@÷ now up to you to decidee

guilt or not guilt of mr. stephen moore and the defenders of free market capitalism and supply-side economics. now, do you have a foreman? all right, sir. the foreman will tally the vir and announce the verdict. it will be by majority vote and need not be by proof beyond a reasonable doubt with 12 jurors. it does not require a unanimous decision. i'm not going to try this case over again. [laughter] >> is that clear? all right. >> your honor, while the jury compiles the votes, i have been asked to announce that both the prosecuting attorney and the defendant attorney immediately after the verdict, unless they're hauled off to jail, will be in the back of the room signing their books. [laughter] >> the little commercial plug here. >> you're fired. >> our judge -- >> no, you're the worst bailiff

i've ever had. [laughter] you are unbelievable. unless he's hauled off to jail. disregard that. unring that bell. [laughter] >> and we have posters of the debate of the century available for signing in back. end of commercial. i apologize. >> thank you. mr. foreman, have the jury reached their verdict. >> yes, your honor, they have. >> and 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. >> yeah! capitalism lives! [applause] >> all right. i want to thank mr. matrick as the prosecutor and mr. moore for -- >> you've been a great judge.

you've done a fantastic job. [laughter] >> your honor, your honor? >> just don't kiss me. >> your honor, i have been handed a notice from the white house. in the event of a not guilty verdict, i'm supposed to read this to you. >> let me see that, please. >> there you are. you may read it. >> are you going to tell me what i can do? [laughter] >> this is unbelievable. it's from the white house. 1600 pennsylvania avenue, washington, d.c., 20500. it's dated july the 10th, 2009. it says -- well, it's the honorable mayor of las vegas and an amazing message why the powers granted of the united states of america patriot act. the president of the united states hereby declares marshall law. [laughter] >> in the city of las vegas. [laughter] >> and mr. stephen moore and his free market conspirators are

hereby declared to be enemy combatants. [laughter] >> we, therefore, declare this court decision null and void. >> he has no right. >> and hereby reverse the ruling of the jury and condemn mr. steve moore and his free market cohorts to 151 years of -- no, eight years, pardon me, eight years of hard labor at the new barack obama gitmo center here in washington, d.c. illiberally yours, barack obama. well, i'll tell you what i'm going to do with this message. [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 and the tenth amendment through the united states constitution states that the federal government has no jurisdiction

over this court and, therefore, i declare thisé8)(rp& statement by the white house to be null and void. mr. moore and his cohorts are -- liberties of my hair 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 las vegas. for more informa