right here. [inaudible conversations] if

>> host: goes them to after words. with day-to-day is kwasi kwarteng who was born in london and he is here to discuss his new book "war and gold" a 500-year history of empires, adventures, and debt." it has received rave reviews already and turning the past 500 years into a rollicking narrative. good to have you here. but is usually not the description you get for sure but thises decide to get you up? >> guest: my major was in history.

but when they look at 2008, the financial of crisis loads of books but they all looked at short term perspectivesu3w they looked at the banks are the heads funds or credit derivatives. but i said take a step back about the global system of the policy is one of the features today is to remind people for 400 years we had a cold bath currency and then in 1971 when nixon famously went off that. >> host: you have an eye for the dramatic moment. >> but tell me about that moment when that was

interrupted. >> that keep moment for any historical narrative that people just think oh my god this is what is happening. and august 15th on a sunday was that moment in interrupted bonanza. is then instructed the show in then good of the most significant events were the things to have happened in the history of money. and then to shut the of gold window where people simply cannot come into fort knox to say here is $100 i want to the gold value that is of consequence of the problems the federal government got

into with the of vietnam war to pay for the great society. it just did not work out. there was a trade deficit people like the french and the brits would change dollars into gold. , intent was very skeptical aboutnoh that and would actually decouple the dollar from gold in that way. and british public finance the 100 years before. it is difficult to imagine that now but the old victorian era of the 18th-century.

>> with a stable interest rates limit and very stable fiscal policy and what happened in the first world war. in the british parliament fighting through massive spending that this is the extraordinary thing. and up to that point they have huge amounts in the national debt went up 10 times. in benefit was through to do whatever it took to defeat germany. >> with the push full effect of war with the book order

and chaos. >> or by a commodity standard this is how much with the a external value. when a the arguments to put for word is when you don't have any kind of mooring to commodities paper money just at the mercy of the printing press it says that was a mistake we should give back to the gold standard but[p i am not trying to write a good the narrative how to explain that there is some force in the argument made some say more structured thank governments to print money.

>> but that 10 year experiment has failed. and they are committed that is very resonant in bonn paul would probably run for president do you think that we should? >> i will talk about that initially but to get back from that is for the chinese to decide they could reinstitute the gold standard tomorrow. this means it is x amount of gold but then it would become the complete refers we're the ones to keep the value low that would be a complete reversal but in

terms of that they have the reserves but the points i make of the gold standard it was britain that guaranteed it was running great export says it was the manufacturer of the of world floodings the global markets. and it meant they could keep the gold standard but really they don't have that much gold but people relied on the stability of the export strength of britain for the 20th century the united states rand surpluses. the u.s. was exporting more than it was importing and building a preserves.a1w

in the united states guaranteed the gold standard. the old bretton woods settlement was based on this the view of the dollar at $35 an ounce. added is from where they come from in the last 25 years. they expect the currency to be much lower. lookit 1980 the lawn was maybe a dollar thank god does low but they deliberately had cheap yuan with a low value of the currency to drive exports of

have it build the economy through the export growth. but what i am saying is the current system is very valid title. and to explain in 2008. i mentioned the fact as many predicted this would happen to print money to get the unstable system. >> host: what about the war of 2008? >> it was not that

complicated but with jpmorgan and hope that is not a swear word. [laughter] i was a banker and the ftse down the appreciable amount it was too low were interest rates. this is really cheap money. following what happens is as a consequence what happened was people wanted you. if you're a banker in the midwest. that'd is absolutely right.

and then to buy a treasury is. i have to get some interest-rate or some yield. it with that some of prime lending the pork credit decisions to expand credit loans so they could never afford to pay. that is what causes this instability. because i found exactly the same thing in england in the 1920's. it was south american. that after that they went back to'' said then the low interest-rate environment

but then to buy the u.k. government debt you only get small interest rates. with that crazy bolivian government bond of crazies speculative argentinian stocks and they blew up. >> host: so now how to destabilize it to stop another bubble? >>u7 there should be more a bishop for international coordination look at britain was the -- britain blood's but essentially delegates that came to bretton woods

to see what it should be it was effective. but in this current crisis we have not been able to reach the level of international corporation with the lack of leadership at dealing less confident of what can be done. i think that is what has come about and in a way in the 2008 crisis with low gold leadership the was itself is running huge deficits that we can talk about later a and the u.s. has been slightly berndt with foreign commitments civic the capacity to provide that leadership is much lower now.

>> not at all. as a robust offender of the free enterprise system but arguably today it is still the leading international the idea that british politicians should dash bankers to close down the city of london is insane that is the great strength that is borne out by the historical record. with is the fascinating!j4(p&c"e understanding of that portrayal at the window that

it was the end of this self. in to talk about fiscal responsibility. in the unparalleled skiffs of communication so people could relate to to them and his idea idea of government spending he related to alcohol in his father was an alcoholic to talk about we're on a binge and we have a hangover that was the metaphor that he you stand if you look at the record then yes you are right because of defense spending and the cold for that was a

time when people on the conservative side here in america from the expenditure event with eisenhower to raise income and taxes they went to congress and raising taxes to balance the budget that was old school conservatism approach it was only in the '60s where the conservative movement with the endless tax cuts because

they would increase revenue but did not focus on the expenditure side. if you reduce taxes you have to jy'ru(q expenditure it is note used to raise money without looking at your spending. and a focus on tax cuts. the you cannot just budget of on dash balance the budget in tax cuts they have to go to gather some a measure to describe to escalate incompetent but bush is attacked from the left-hand of right. >> because he is fiscally incompetent looking at that period brendon deficits

quite aggressively they were compounded pilon though left in the right and could pave hawk sullen public expenditure in terms of spending but it was not a but the think to take canada heritage rendition and before 2008 to criticize bush for spending too much money. >> host: that led to a the tea party. >> that's right to. it is save legitimate protest the cycle of deficit expenditure.

the debt in the deficit were going through the roof and people forget that in my country as well. i've remember when i started working they said the 30 year bond would be abolished because the government was not barrault bring any more money now is a complete reversal of that position.bet in the of clinton era? who knows about 2016 but just look at the numbers where the budget was. it rows of little bit but not as fast they would say a

lot of the problems for deep-seated but you're on your in if you read what he is saying to abolish the national debt. >> and that is the environment in 2001 that somehow freed discovered motioned the economy was growing every year am public expenditure and it was optimistic estimate -- estimates. but that the federal reserve share to come to congress in

2001 is extraordinary given where we are now. that people actually thought they would have abolished the federal debt by 2014. >> host: what is your view of alan greenspan? >> guest: the most important thing with their personalities is that he loved jazz music. and would suggest he took a jazz player approach7kó to manage the economy. in thin to say there was no plan. that was the plan and he was very savvy about markets and responded very quickly to what the markets were doing.

in early in his tenure is essentially in his own mind save to the western world because of the crash of '87. >> that was the tricky play at that time to ponder huge amounts of liquidity in the system and averted a disaster. but then you play those again if you have a policy very early the temptation is essentially what he did and i would argue by 2002, the 2003 to the low interest rates then people investing in the high risk product.

>> but he describes as the interventionist. in to set the ball rolling and with the people with the federal reserve they were assessed with 1929 the one lesson they have learned? >> to have done research too obsessed with the idea it did not do enough rand contracted the money-supply. but that was very much their response. >> guest: to do it really believe was slightly risky as they did.9ñx but perhaps from those

lessons and the people pointed out is they've made it worse by a shrinking of money-supply. >> but fifth the endless bailouts, i think created its own stability and a vast section of middle america. the tea party was initiated or given fuel by a the bailouts errant monday and that is what people got across about. and we still see the ramifications of that now. >> host: talk about that break-in thatcher era to put things into a simpler manner.

now we have a system currency that is untethered. but then to comprehend so the average american, how do we get back to what people can understand? . .

balanced budget budgets was mae britain and america very powerful countries over the time in which they held to a global affairs, so i think that it is very timely and important and i

asked one or two people about this. i tend to have as a conservative politician i tend to be more hawkish on public spending and perhaps some of my other colleagues but this is certainly something that has been talked about. >> so, broadly speaking in the terms of the public debate is that a growth versus asperity? is that a useful way of looking at it? >> guest: the argumen >> guest: the argument about growth which was first a new argument in the context of -- 30 years and then we have to 60s when people started saying it was sort of lyndon johnson, jfk towards the end of his brief tragic tenure. we will get more growth and be able to balance the budget. what do i do? i have a deficit.

let me get more money into pay off the deficit and the debt. you didn't really hear it until the early 60s and that's the point i make in the book. it's a secular thing that wouldn't ... because you don't have growth so we need to run the deficit to get growth. it is a slightly crazy argument and you hear it in the mnr argument that it's not a keynesian argument. he himself grew up in the victorian era and he was 31 when it broke out, so the whole

childhood in his youth was conditioned by this balanced budget framework. and that's he's had in exceptional times you can borrow money. but he wasn't envisioning that over time and the amount i use is if you have kids the victorian approach [inaudible] came to view was you can watch two hours if you need to and now it's gotten to the point that it is over time. so, for the sort of deficit in order to get growth i think is wrong because you have to understand him and his historical context and that historical context is outlined in the book is the uk government balanced the books and the

budget that is the key function of government and that was agreed by both sides what is interesting in this section you talk about the rhetoric for the republican politicians who talk about naming them and you talk about the economic nationalism. >> guest: the economic nationalism has always been a theme in america. the people like pat buchanan talk about this on the fringes of the debate that they were in the great protectionist country. we can argue about whether there was a right or a wrong thing and the fact is as someone described to me the american industrial base was built behind.

it's been about as easy the economic nationalism and the idea actually it's not just about economic nationalism but it's also about having a level playing field. so if i am exporting into china i probably have a 15% tariff to get my goods into china whereas if i can expor am asked porter a 15% subsidy so the trade is about equalizing the trading. again these things are always more complicated. ronald reagan is per trade as a great betrayer but he was a [inaudible] people remember all of these flooding america and harley-davidson was going bust

and he just slapped a tie here on these japanese motorbikes and so the domestic industry. >> host: if china had been named and shamed in that way would that have just been basic domestic populism? >> guest: the problem is that there is still a massive demand for these chinese goods and you cannot legislate against them. the naming and shaming, you could. this is a greenspan argument. if we imposed here is, we own china and malaysia and the southeast asian industrial base if you like what provide those goods anyway and it wouldn't help the u.s. many factors. that was his argument. but if you look at where china started its run and we mentioned this earlier. in the 1980s it was one and a half to a dollar. over about 20 years the rate went up to about eight and a

half. this wasn't an accident. this wasn't something that just happened. it was an act of deliberate policy. and the chinese, what would strengthen the chinese compared to ourselves and britain and america they have a very long term. so american politicians were accusing the chinese of the currency manipulation in the early '90s. they were saying you are manipulating your currency were driving your currency down to flood our markets. but of course as a new president cycle which kept doing the same thing -- they have a steady plan and that is what i try to outline in the book with the currency that they develop to forget this. but as late as a sort of late '80s 85, 86 china was running a trade deficit if you could imagine that they were importing

more than they were exporting and i refer to the various articles in "the new york times" which was saying they have a trade deficit and you could argue because they value it at e deficit became a trade surplus which has remained. >> host: you have a sophisticated knowledge in the united states historically but you've also spent a year at harvard -- >> guest: i spent a year in boston and cambridge massachusetts in 96 and 97, so i kind of lived through live thrf that crazy perco. a lot of my classmates were going straight into wall street. this was before the boom and a lot of them went into that and all that sort of thing,

consumption, high living and all of that sort of thing there was a kind of wild west took a gain of finance and certainly after 9/11 there was a market when the technical bubble burst and people forget that that was a difficult time for the market. >> host: what is the difference in the economic and political debate? >> guest: in america people are much more conscious of the spending idea and i was amazed. i used to cover the debate and look for the newspapers in britain before going into politics and finance. but yes. what amazed me about the congressional debates is that often they were getting about

$300 million. the budget with 1.3 trillion. and this was a very, very focused and passionate date and perhaps in western europe and the whole language and culture about the earmarks and all of those sort of terms. people continue to spending the money so you could argue all of that.

people have a more fundamental sense that the taxation comes from people and are spent by the government. absolutely right. we the people on one side and the government which is extracting money through the taxation, that is part of the kind of tea party view of life whereas in europe i think they would have a slightly more benign government. and so that view is on the government spending for us.

there is a mature -- there are deep-seated reasons for that. if you look at the origins of the united states it was a revolt against the government. it was a revolt against -- absolutely the taxation representation, but that is very much more deep-seated in the american consciousness than it is in europe. >> host: be sort of mentioned that he party at the time. who is the big political story in britain and the rise of the uk independence and what is your -- we are now in a three or four party system that we haven't had before. >> guest: it's interesting that you raised that because wee just had elections last week in which the party took the pole if that's the first time i think since 1986 when neither conservative nor labor, the two main parties have won a

nationwide election. it's a very significant. and we never know where this will end up. you could ostensibly -- the main reason is to try to get britain away from europe. they want us to leave the eu. but it is a much wider cultural revolt against the classes that they feel are out of touch that is the latest and isn't in its own bubble and is very much drawn from the same type of person even though they are different parties they are all the same. that's right. and it's very much antiestablishment rage in america people are very familiar with. they were parallel. westminster is much smaller than washington but it has the same sort of residence. these are the people that go to anti-restaurants and they wear fancy suits and speak a language

that we don't understand that completely cut off the constituents and essentially regardless of who is in power with the democrat or a book in the spending goes up and there is no responsibility or accountability in with you call main street saying we have had enough and there is a sort of popular insurgent aspect here. the leader -- >> host: smoking and drinking -- >> guest: absolutely. he gets photographed with a pint of beer in a way that no politician would dream or dare to do. so that is very much the view that people are out of touch and it time for sort of direct action and he calls his army the people's army for his troops and his party. he calls it the people's army and that is very much over the

hill coming and saying they've had enough. >> host: do you think that your party can learn from you? is it going to be about trying to bring them into the tank? >> guest: this is a 54,000-dollar question. i think and suspect that the center-right -- this is my own private view the center-right of britain needs to have an accommodation at some point because it's very difficult given the parliamentary system to see how the conservative party can get an overall majority without a lot of those voters coming back. and voting conservative. because they are generally in the disposition. i know people argue about this, but if you look at the counselors and the activists, a lot of them have come from the conservative party. >> host: what we are seeing at the moment is the u.s. 2014 primary has a lot of tea party challenges losing but that he party ideas being the narrative

is about the establishment of the party and a lot of the primaries in the republican party are candidates -- >> guest: the difficulties that we have is that they are not part of the conservative party. but he party generally in the u.s. as far as i can see and this is followed is within the republican party. they are fighting primaries within the republican party and within the republican party. whereas you get the field of other candidates in a separate party. that may well be a development of the tea party. but he party could end up being i suppose a party challenging the republican party and if that were the case i think they would have a serious problem because essentially it is testing the primaries and then you have the democrats and republicans be the kind of tea party representative. you have that i think with ross perot.

that was very much a similar situation where the third-party that is very much danger. >> host: we talked about the political class. do you see yourself as a professional? you've been in the parliament since what? >> guest: four years and worked in a bank for ten years. i think it is quite unhealthy and it should have professional. i can see why they evolved, but i think that you need to have politicians with a wider perspective. and that was always a great strength in the house of commo commons. they have many a background image looking up at the 20th century you have people like winston churchill who is a journalist writer and had quite eccentric characters and people from different walks of life into different professions and i think that added to the sort of diversity in a variety of you

didn't just hear the same voices. people are more specialized into huge culture of the special advisor in the american case working on the hill and i think that has sort of got its own momentum. >> host: user t you said the les in britain are all special politicians. >> guest: if yoguest co. if youm they are all within three years of each other. they went to either oxford or cambridge and they all dropped out of the universities and worked in politics. and that is a fact. the head of the uk comes along. guess he went to a private school but h that he doesn't acy have a degree. and so he can say i am not like bees guys. i actually worked as a commodity trader. i've done this.

he's been a politician as long as i can remember actually. but he has a sort of grain of truth and people who are angry are not looking for a forensic sort of truth. >> host: i'm very struck by the sort of obsession i obsessiy that britain or maybe just the british schooling that you yourself -- >> guest: is a very famous school. i have a slightly unusual background because my parents were immigrants which was a part of the old british empire. my first book was about the empire so.

in these elite institutions at cambridge university, and so i kind of got both sides. with that -- i would say people from the more marginal backgrounds do struggle to get a voice but i think it's very important in the political class that we open ourselves up and people that are active in politics. it should be a much easier way to people to be up t people to e through and get representation.

in a modern communications if you like you have to be quite specialized and decided to do that at a relatively young age. and that creates this class i suppose. >> host: is a three books that you've written in the last four years? >> guest: i have code written a couple of others. even so how do you manage to write something as thoughtful and wide-ranging. you have to work out how many flaws the house is and the external structure of the house. you have to work out how many rooms and bedrooms before you worry about --

>> guest: you have to work out the structure before you work out how your sofa is going to appear or with the garden will look like. you have to look at the actual structure and so once you have a structure, then the second thing about writing a book is titled whether it is a proverb but if you want to eat an [inaudible] >> you have to take a very gradual approach and the public that people think that you just wrestled out of thin air. i've done quite a bit here and when i spend my year away in boston. so these have been evolving for quite a while for the african continent and my home country so

there was always that sort of interesting and looking at, you know, politics in terms of finance. it takes a much longer time. >> there are certain moments in the week. monday mornings are quite good. saturday afternoons are good and then in the race centric advocate. you have to sort of book that you want to write and you can actually get there. if you don't have a plan that is practically impossible to do something like that given the pressures and constraints you

have and the amount of time that you spend on the constituency but my constituency is quite struck. the constituents are interested in the history. it's not something that i see as work. although extremely relevant. >> the historical perspective is something that i think of politicians -- >> guest: i think it is absolutely key to try to understand modern politics. "-begin-quotes the turtle to make the same mistakes. i said right at the beginning this isn' is a sort of politicis that. you're not judgmental. but does this help your political career and how does david cameron views --

>> guest: i didn't get up to -- but history and understanding history is more of a medium term, medium to long term thing then to try to get appointments week by week. but i think in the long run you have it set out what your beliefs are and where you're coming from in your intellectual hinterland if you like and i think that is going to help our political career in the end. and i think that certainly in britain -- i'm not sure that the united states but there has been quite a big connection understanding history and politics. we have had a long tradition of historians in the politics and politicians in history. churchill who i mentioned many times is the greatest example of that. he wrote reams of history throughout his career. and if he was on the show there would be six volumes. i have no idea how he managed to do that but other people like

jenkins was a writer and has written excellent biographies of british politicians. it's something that is quite connected in britain. there's a link between history and politics and i think that is quite healthy actually. he said politicians don't have the luxury of expressing doubt. but i sense that you use the word nuance. you do have a nuance of -- do they actually change? >> guest: i think if you look at this whole idea of government spending, but i was amazed at is the extent that we are living in the completely unchartered territory. as i said before the years there was a gold standard. it was really only in the 60s that people challenged britain and america. challenging the idea that we

have to get a budget every year into this idea that we are running the budget defici a budd have to pay back the currency money is quite new. this wasn't something that happened before 71 and certainly after 1971, the extent that we were spending more money wasn't as pronounced as it is today. just it doesn't have to be that way. more than ten years ago -- i think i first heard it in 2007 and then it became a kind of received phrase that you would think that existed but it didn't. it was new and of the extent to which today's situation and circumstances are relatively new was something that struck me. >> host: in your political

career -- i think that you have been floated as a -- >> guest: every politician of color, black, ethnic, whatever the british is touted and given as something that one wouldn't necessarily aspire to be. but we have to get through the election and hold my seat which i hope to do. the majority can come and go. that's something i have to keep an eye on. let's see where we are after 2015. the whole political sort of career debate in terms of where people are going is dependent on the party success. i'm hoping that the conservative party and my career will go in a different direction. if we are out, who knows what

will happen. >> host: you wrote another book. >> guest: i am toying with a few things. she was a key figure in the bo book. it was a great book. he had been working on it for a long time. but i think that was immediately a kind of iconic figure. someone that we would argue about for decades to come. i am nearly 40 that there are very few people in my lifetime in britain who have that sort of iconic status. i mentioned churchill that he died 50 years ago and this is before my time. from my generation whether you loved her or loathe her was a key figure in that very interested in her leadership style, not just that she was a woman that sh but that she had a nonconformance methodist background but she had a sort of

religious imagery and was almost like a preacher in terms of her style. >> host: she was an inspiration. she didn't really remember that and i remember the day that she left i was probably 15 and a half so that was a very long time where she was a sort of dominant figure in the whole decade where she was the prime investor. and i like her style of politics. i liked the fact that she stuck to her guns and she said and i was doing a bit of research about her she said i'm not a consensus politician. you could imagine three months before the election if you want to compromise and all of that stuff about for someone else. and i think it was something very attractive about that. i could see it creeping in because of the feeling that certain republicans who have been trying to trim their sails

and it's difficult for many people to see what the republican party is about and that we need principle and we need some kind of a conviction. the danger of that is that some people might not like your conviction. it is risky but there are certain ways in which -- she had incredible communications because i only mentioned reagan. they had a great communication, and i think that was very attractive at that time. it would be about the leadership stylstyle but i assure you it wt as this book. it was a shorter book but i am looking forward to that. >> host: it is a wonderful book. congratulations and thank you for being on "after words."