>> i've got this questionnaire, which take a look at a, answer

the questions and send the answers back to me. gets some polite applications from a few people. he doesn't hear from some others. he sends notes saying remember the question or i sent you could you enter? and he gets answers from eight people. pretty good cross-section of updating. bankers and businessmen, and the economists. one economist writes back after getting a letter saying, being fairly rude and impolite, edison rights, this was scott at wisconsin, edison rights to the president of the university and says you know this guy basically called me see now. maybe i don't understand money, but i'm trying to. but believe me, i'm not passed it. scott writes back a very humble apology.

bad news hits the newspapers. it causes kind of a statewide upset. there aren't very many supporters of scott. edison gets a lot of letter saying forget those guys, forget those whiny academics, they never know what they're talking about, the equivalent of that. edison starts getting these answers back. he hasn't really outlined his thing totally to us exports. he just kind of has thrown different parts of this questions out there. but they are able to kind of in for -- kind of infer with the basics of the plan are, and the basics of the plan are, would it create sound money if farmers could bring their crops to the warehouse and get immediate payment? and the general answer for most of the expert is, that would be pretty inflationary. it would have a couple of problems. number one, you don't know how many props might show up at your warehouse.

this kind of a scheme might induce a lot of props. they might even flow across the border. secondly, it takes money out of circulation when you need to come it puts money into circulation when you don't. it would actually kind of exacerbate cycles, not moderate them. thirdly, it would lead to political manipulation. y. 36 crops? why those 36? what have i've got a crop and it's not on the list? put my crop be put on? pineapples were not on. why couldn't have my crop on the? conceivable, doctors would say we have services, not crops, but why couldn't you put our crop on? so the fear was that political manipulation would cause more inflation. and, finally, the cost of

building and maintaining the warehouses with interest-free loans, storage cost to the farmers. so generally edison got a lot of negative comments from the people he considered to be the professionals. and he spoke with bernard farouk and roger babson, who today would be called technical analysts or chartists, statistician, market oriented. he predicted in 1929 crash. of course, that was later on. so in the end there wasn't a lot of support for edison's plan. but edison said well, you know, the support was for the gold standard but somewhat weak. people said it's not perfect but it's what we know, it's what we've got and it's what we have had. edison row 20 people, when he set up and get back to my day job, i spend a couple of months intensively at this but i do get

back to what i do well, but he said wait, he said in 30 years time my schema look much more attractive. and through the years economists from john mccain's to friederich hayek to john nash have all proposed some sort of commodity backed by. that doesn't necessarily make them right, make edison right. but it certainly opens up the purview that edison wasn't just this kooky guy, stumbling around in the dark. that with his inventive genius he may have had something to say about trying to stabilize perhaps if not prices, to stabilize farmers income. now, the federal government ultimately ended up doing that, and so is lobbying effort to congress behind scenes weren't really taken up further because the federal government ended up along the federal reserve to extend loans to banks based on

farm credit, as well as industrial loans, or loans for businesses. and that was the first example of the federal reserve act coming a little more expansion you, or you might say quantitative easing in allowing the federal reserve to extend loans based on different collateral than they had in the founding document. and then, of course, the federal government, other programs that supported farmers much more directly, and much more visibly than farmers could see, and consequently vote for. and so edison's which medicines the farmer but somewhat indirectly, and at a relatively high cost, were addressed more directly by helping farmers directly. and in a day when farmers were still a very strong former block

helping farmers directly publicly probably with a more efficient in terms of vote getting way to go about it. so in terms of what addison's view says to us today, well, number one, he was right about the gold standard. he was working in 1921. in 1933, the franklin delano roosevelt administration eliminated monetary gold in circulation. for all intents and purposes for the average guy on the street, that was the end of the gold standard. they also, for international transactions, revalued gold from just hundred $21 an ounce to $35 an ounce of gold. doesn't almost 70% inflation instantaneously. so is the gold standard just rocksteady guarantee of a stable

currency? and the answer is of course not. it gets to be politically manipulated, and has been and will continue to be. the only saving grace one might say, it's pretty obvious when it changed goals price, or the price of gold changes. but edison was right. gold was passed the. was put in its place? reliance on the federal reserve to manage money relatively stable a. and if you like what happens to the price level, the average price level through time since 1913, 1 dollar a purchasing power in 1813 is roughly seven -- well, roughly 10 cents today. that might be a little high. and so how has the fed done? well, money has depreciated one that may be any more stable

fashion. so it's kind of a two edged sword. i think the last thing that is really interesting about edison's scheme is if you look at what the federal reserve is buying today, for example, in the recent financial crisis, buying toxic financial assets from financial firms, and insurance covers at the time, and so on, they're basically, the question is how much of those markets back to secure his would be in a bushel basket that the fed is paying cash for? did they determine the price by the average of the last 25 years? we don't know. but the fed is opened up the array of assets it purchases under quantitative easing, to include a lot of assets, well, they are not farm crops, our crops of one sort of another produced by one firm or industry or another.

and they've done this in order to bolster the financial industry. this isn't a disposition on is the fed right or wrong. it's if you look at this in a particular way, it looks a little at a sony in, and it gives the old inventor his due, maybe his prediction wasn't that far off. now, all of the correspondence and materials that the book is based on comes from the thomas edison national historic will park in west orange new jersey. and they were incredibly helpful. there's another group at rutgers headed up by paul peschel, the thomas edison papers project, and i participated, co-authored for academic papers on this with douglas wells at the university of washington at tacoma, and one of the papers was my co-author and colleague here, eric.

eric. bike assisting people in the world haven't read all four of those papers. win, and i wanted to tell the story, i wanted to tell the story in a way that would appeal to the intelligent reader, not a trained economist. so if you looking at this site will come that book is probably over my head, it probably isn't. but i think it's kind of a fun tale. it's a lively episode of edison's life and what i think also gives us an appreciation with issues and the motivation of the man to try to use his inventive genius to help solve, not just the problems of lighting for electricity which, of course, those are huge, but in many spheres of people's lives. the last thing i think, and although should probably take a lesson from this, he knew when to quit. if something looked ultimately as if it was interesting and still be may be worth pushing

but they were pushing against a lot of resistance, give it up, that someone else pick it up. you might be ultimately proven right, but you can't work too hard, get to boston one idea. so i think it shows -- get too lost in one idea. he chose edison being in a context setting, thomas edison, money, who knew? so i'll open it up to questions. [applause] >> very interesting talk. i was struck by the apparent similarity of some of his ideas, some of the populist ideas of the late 19th century, similar deflationary episode that people

were struggling with, farmers were very much the backers of populism, very much against the banks of new york, a bit of anti-semitism, all this conspiracy talk. did you find any connection between addison's ideas and the populist? >> well, there are. and is probably one of those things edison had a bit of an idea because he was living through the time. in the 1870s and 1880s, a southern alliance, which was a farmers group, proposed what he called some treasury plan, which was a warehouse commodity storage plant. i don't think edison knew about the. he never kind of referred to it and said well, i'm borrowing from the plan. and we first learned about that thanks to a tip from my son, stephen, who was reading about it in high school.

but that also feeds into what was going on, and the whole populist movement and the free silver movement, and all these different money movements of the time. and the free silver movement, you know, it's kind of apogee being williams jennings bryan, you know, you will not press down upon labor this golden crown of thorns, i'm paraphrasing. i have the 1896 democratic convention. but the free silver movement was all about the rising political power of the west. as the territories became states and got two centers, they say when they became very influential, especially in the senate, because they had as much political power, and so the mining, especially in nevada, actually introduced by william randolph hearst father was one of the first senators of nevada, the mining interests in nevada were pushing very much for a free silver movement to basically guarantee the price of

silver. so edison is kind of coming out of, not that he knows all of this, but this incredible turmoil driven by monetary questions, political questions, and so by the time he comes up with this scheme, in a way it's almost, and they found this in the federal reserve act, it's almost like people didn't want to revisit and we fight the fight they had in the 1860s, 1870s, 1880s. but there are these plans and other plans, but just all these different crosscuts that he kind of lanes on, not even realizing all of this stuff has happened because of course he's had his head in the stock ticker and the lightbulb and the electrification and the movies and the victrola, so he comes at it without the great background

reading a little bit, done a fair bit of study. most academics would've said but gee, he didn't even look at all this stuff. so there is this huge story out there, and some very nice accounts of it. and the offshoot of that, too, is federal policy help was the accommodation sometimes of monetary eyed, the land allyson gold act as opposed to come you know, bimetallism, but also what they're doing with terrorists. -- tariffs. you could put a tariff on imported on their competitors. it was easy to put terrorists on mechanize goods than it was on farm goods. so the farmer sometime was caught in middle, could get a higher price for his output a have to pay higher prices for the protected machinery.

so it just goes only different ways your that question would keep people busy for a long time. >> anybody else? >> edison and other quests, the dollar. purchasing power. unrealistic or possible? >> when we look at the short run, it's rather disappointing result with prices flipping all over. in fact, we don't even know. we are headed towards a big deflation, paul krugman for example. the fed should be more activist, more quantitative. other people think waiting minute, they set up a situation where they may be able, rising

inflation in the future. what they are really debating is a, we don't think the purchasing power of the dollar will be stable to some of us think it will default, some of them think it will be rising depending on they think whether there will be a deflation or inflation. can you guarantee that in edison's analogy that when you buy a poker chip at the table for a dollar, that when you catch a backend you get 1 dollar for it? poker chip analogy. sadly i think the answer is no. you have to put your faith and trust in the federal reserve's creation of money, and the fractional reserve banking system. being able in a sense to get where people's desire to hold money is going to go, where the rate of production of output are going to go, and then the short run is, you are trying to do something that can be done. in the longer run, there's probably hope for a stable

currency. but that may rely on different standards, different principles, operating principles for a central bank, for monetary authority, or for a move towards competing private money for some totally different standards. and again, that's a huge question. but we get very used to thinking of government provided monopoly money as the only alternative. and it may in the end not, but i'm not here to beat the band for you another program. but if it can be done, no one has done it yet with paper money. and with all these historical examples of, from the chinese of 1100 to the germans in the 1920s, to zimbabwe in 2002

2002-2008, argentina is the next coming hyperinflation. [inaudible] >> i wanted to mention that i really enjoyed your book, in particular the history about the federal reserve which i wasn't fully aware of the. my question is, what is the link between monetary policy and economic policy? and is it different today than it was back in edison's time? >> by economic policy deeming a fiscal policy or federal, federal fiscal policy? >> exactly. >> fiscal policy technically is -- latin root word meaning perspex that it's the government purse. money and using tax revenue and money out through expenditure programs. and typically attended by the legislative and executive

branches, three budget process and wrangling that we see comments on the monetary policy is how many dollars are out there? and that's basically under the purview of the federal reserve system, which is what is great about congressional act, it's an independent agency, independent of the fiscal authority. and so technically those policies could be different but for an economy of course it's better that they be coordinated. for example, in some theories if there's high unemployed and you believe the government can do something about it, they should try to do something about it with both. if they shouldn't have to something about it with both policies, they should at least courtney. but they're not always coordinated, and sometimes, and i would say today is one of those concerns, that fiscal policy, and you hear this at go, ben bernanke now the chairman of

board of governors of the federal reserve system, when he goes to congress and he says you guys have to come up with a credible fiscal plan going forward that is credible so that people can see you have a plan to bring the revenue and expenditure streams into balance, because right now the expenditures are saved 1.1 trillion greater than receipts, he says, he says that for the following reason, not because he wants to say we are doing it really well and you guys are just thinking out the fiscal policy. he is saying that because if they continue to run these large deficits, the only way they can finance is by borrowing because the deficit, by virtue of the fact it exists says hey, we are not taxing enough to recover it. what do we do? when we borrow we're going to issue ious or bonds. bernanke and the fed are

concerned that the day is going to come when they are the only people left to buy those bonds. and that forces their hand. they're being put into a tighter and tighter corner, and if the day comes that, except at very low prices people will buy those bonds meaning very high interest rates, and, of course, i interest rates, you know, run against having any ability to fight a recession or reap the recovery, so if the day comes, the fed is the last buyer of the federal government bonds, not that i think that day is near, but bernanke want to send a message, don't rely on us because the way they buy those bonds is they print money. that then becomes edison's warehouse scheme, right? now i'm buying bonds from the u.s. government, how many fit in a bushel basket, and here's the cash and the fed warehouses the bonds. and the money is out there

floating, you know, floating around. and with the federal reserve is worried about i think probably rightly so is that it basically becomes subsidiaries to the fiscal plans of the federal government, and with the josie is a credible fiscal plan, at least listening to bernanke's words. >> yes. a question here. do you think thomas edison's proximity in new jersey where his manufacturing and home was to new york city, which is the financial world, wall street, et cetera, and the fact that he didn't always get finance for his production, do you think this is a possible reason of his interest in and of the financial system, or to the goals, necessary? >> i don't know if the location

was by certain think his experiences with the financiers, you know, all the big names, not the sons of the big names, but vanderbilt, jpmorgan, jay gould. he felt that he had gotten burned a few times. now, he also knew that while they were the only ones there, and you do get something up to get something, but what he didn't like and what a lot of people don't like going back to aristotle, and then i got transferred through st. thomas aquinas, you even see it in march, not that this is necessarily all great thinkers, but big thinkers, was the idea of paying interest. he just couldn't see. why did you have to pay interest with the view being towards that goal to let's say that i think interest on is just sitting there, it's not doing anything. he could see why you had to pay

for a victrola, because the thick collar comes and does something. but what is gold and evolved during? it's just sitting there. why should the banker, the money broker, the profiteer get to charge interest for? why should vanderbilt, though he want to be signed not the non-financial system but he wanted to get come he really thought with the interest of say, anyone to buy, devise the monetary scheme which would save the former from the interest terror. now, that's like going to a car rental agency and think hey, that car is just sitting there, why don't you read it to me for nothing? what does the car rental agency state? yeah, dave, that sounds like a great idea, here are the keys. they say the problem is a guy standing behind you, he might pay us to rent a car. and that's where edison and anti-interest people, you know, kind of missed the boat. the money is sitting in the bank

but the guy standing behind me when you said it just sitting there, the guy standing behind you might want to use it. so you've got to bid it away from him or her. the same way, that's what we don't get rental cars for free. they're sitting on the law. you can go see them but somebody might walk up in three hours time and rent that car. if you've got it, they can't rent it out. so i think edison, edison missed the boat a little, but he also, and ford wouldn't rent, or wouldn't sell cars on the installment plan into this finally forced into by chevy in the mid 1920s. forward didn't want the farmer, typically the buyer, to get in over his head. now, it's also true probably in a heavy a great society where two-thirds of your publishing live on the farm, how do you repossess a car that the farmer stopped making payments on? where do you find the car? in a 1600-acre farm. oh, it's around, good luck.

repo man just doesn't work as well. on the farm as it does in the city. but i think it was more the interest as opposed to just being located. i think was located close to new york city because the harbor facilities, the workforce, and he loved riding, there's evidence in the book, hey, if you're in new york come see me, we are only a few minutes away. call and we will give you directions. spent i think edison and ford were trying to be more pragmatic. >> well, i think we are all private test. that's one thing that is in actually wrote, that little quote. hey, the farmer will do exactly what the banker is doing. it isn't the intent that's a bad. it's the system that is better. so i am thomas edison, i'm going to invent a system that makes an act of good. because we know people are just people that are following the

consensus. let's see if we can design checks and balances and take some action the way where they don't profiteer and so on. >> i'm kind of curious about edison's political viewpoints in general. specifically the role of government. today you have sort of paul krugman on one side, very pro-fiscal spending and pro-government intervention using government spending, and actually government going and building highways, doing things in the economy physically. and on the other side you have ron paul and rand paul sort of against that, no role for government, we don't need the roads. we will do it all ourselves. it was sort of an ultimate fiscal championship that pay-per-view event, krugman on one side and ron paul on the other. will he fall in the general viewpoint of what the role of government is? >> -- where we default in the

general viewpoint of what the will of government is? >> let me can give you a couple of views. edison was one of these guys, he lived quite a long time, born in 1847, and because he is such a well-known and famous, they do these surveys, he would be america's most famous guy, the reporters would go to his house or lab on his birthday and figure every year and say what's the best, what's the big thing that happened over the last year? and in 1914, in february, he said you know the biggest things happen with the federal reserve act that was just passed in december of 1913. that was before the federal reserve was set out. nobody really knew what it was going to be, what it might turn into, what it is now. it's much different than what it was designed as. but he didn't say hey, congress out to keep their hands off of this do. he thought that was just what was needed. in order to curb prat