back. these guys if they had their druthers they would bomb this book festival, fly planes into our buildings, giving they possibly can to try to bleed and humiliate and deface the united states and, frankly, every civilized country in the world. so this is sort of a broad history but it culminates i think with very sort of in depth reporting and profiles of ascension houthis guys are and what they want. ..

>> freedom fest is now in session for the trial of the most important subject of our lives, money, and thousand federal reserve implements our lives every day. judge kennedy is presiding at this hearing. all rise. [applause] >> let's hear it. >> hello, everyone. how are you, ladies and gentlemen, members of the jury, we are gathered here in the state of nevada to decide

central beng -- bank federal preserve to provide a healthy economy and banking system, stable prizes and a lender of last resort or is it responsible for a series of banking crises and lost of purchasing power of the very engine of enflaición. -- inflation. is this economy more stable or disstable? did the fed keep it from getting worse. they must decide this are we better off without the fed and if so what shall we replace it with. shall we go back to the classical gold standard. you love gold? can i hear a little bit of applause for gold standard.

representing the reserve, professor, let's hear it. big fan, big fan. [applause] >> that's right. he's a professor at social policy, he was a long-time columnist, of course, for business week and continues to write columns for "the new york times" international edition, and the founder of institute. very impressive, very impressive. author of ten books including everything for sale, and new york best seller.

debtor's prison. politics versus possibilities, oh, yeah, sell that to them no brief, why don't you. i hope you visit early. professor kuttner, will you please remain standing? good, very good. a monetary institution and the obama institution since the crisis, have been accused of supporting a monetary system that failed to monitor and repair a frag -- fragile banking system, bailed out wall street with programs, financed the obama administration, ruined deficits so that the national debt now exceeds $17 trillion.

holy underwear. how do you plea? >> not guilty. >> i've heard that before. first we will hear opening statements. yes. it's the name of the night, people. [applause] >> put your hands for robert murphy, author of the book choice, cooperation enterprise and human action. it's my favorite kind of action. i love animal action too. i'm a libretarian. i don't judge. senior economist with the institute for energy research, he's got so much energy he could be his own can of red bull. has taught economics at hillsdale college. very serious place.

dr. murphy is author of seven books, and they include politically incorrect guide to capitalism. he's been a long-time critic of the fed and each of the attorneys will call two witnesses whob subject to cross-examination. that's where it gets kinky. each side is going to make closing statements. we will have time for table tennis. look at the handsome collection of nevadans. they will rule on the case if the defendant is found guilty. i will impose a very harsh punishment. let me give you the injury a few instructions, okay? let's keep it clean. i know it is nevada. you will listen very carefully to the opening statements and to the witnesses and at the end of the hearing you will be determined whether there's

sufficient evidence beyond a reasonable doubt that professor and the defendants of the fed are guilty of malficient. is that understood? very good. you may begin with your opening statements. >> thank you, your honor. >> you're very welcome. >> ladies and gentlemen of the jury, distinguished guests, i stand here to bring the case against the federal reserve as the judge has outlined. i am going to bring extra witnesses to go step by step what the financial crisis was caused by and how the recovery was repressed by the federal reserve. in these opening remarks, i want to step back and just provide a more general argument against the federal reserve, let's look

at the reserve act in the act was amended say that the fed's duty to promote maximum employment, stable prices and moderate long-term interest rates. let's do that. has the feds fulfilled the duty. i think we can see that the feds have failed in that regard. we know that there's constant price inflation but we don't know is the fact of nature, no, it's a fact of the federal reserve's policies. from 1990 to 1913, it's hard to accurate determine this, if you had a consumer basket that was priced worth $100 in 1913 that same basket would be $108.

so the point is money used to be stable and purchasing power. and the point is since 1913, the dollar has lost 95% to 99% of purchasing power since that time. now some people will say, yes, of course. when we say stable prizes, we don't mean stable prizes, what we mean is stable fall in the purchasing fall of the dollar, and even in that criteria it has failed. there have been volatile periods and periods of relative moderate inflation. i'm sure all of us are familiar with the high inflation in the late 1970's but there's also from 1917 to 1920 each year the consumer price index rose 15- 15-17%. really the feds have failed in

stable pricing or purchasing of the dollar. has the fed done good job stabilizing the economy, preventing crises? there's the great depression, recession. happened on the feds watch. some defenders of the fed will go further -- okay, if you throw out the great depression, if you throw out the great depression -- i love golf. >> thank you. [laughter] >> someone got the joke. if you look at postworld war ii volatility, just on that focus, people will say gnp or gdp was more stabilized but actually there's a 2012-page paper, economists, including cristina romer has said a lot of the

criticism of 1913 era is based on faulty statistics. they were looking at commodities series more generally as if you look output as a whole even focusing on the world war ii period on the u.s. economy has been less stable than it was -- >> thereone-minute warning. this is your one-minute warning. >> they teach that in law school. >> they do. >> just looking at statistics here, statistics published like cristina say that there's a plausible case that it has been stable than before the federal reserve. in terms of two major policy objectives, stable prices and economy the feds have clearly failed. finally, let me just point out that it's ironic that we are

arguing do we need central planning when it comes to money. if we are picking any other topic, yesterday when there was an economist, when he alluded to the needs of federal government to run health care there was booing, and yet for system reason, the one area where politicians are necessary, the one area where we can't trust the market is money. that doesn't make any sense, i submit to you ladies and gentlemen of the jury. the federal reserve is unnecessary institution, my expert witnesses will show that it's exacerbating. the feds are guilty. >> come here, come here dr. murphy. hold on. i'm totally impartial. that was impartial hug. >> everything is greater from this point. >> well done, thank you very much. we are going to hear from

defendant robert kuttner. order, i will have you thrown out of here so fast it'll make your head spin like exorcist. sorry. >> ladies and gentlemen of the jury, i am not here to argue that everything that the federal reserve is sound policy, only that we are much better off with a central bank than without it. to demonstrate why, let me take you back to the 19th century. a period where we had no central bank, only the gold standard and the money supply dictated by the actions of gold discoveries. gold determined the availability of credit and this was a period when hard money was scarce, banks issued notes of

reliability and call in loans just when farmers needed. the quantity and cost of credit for no relationship to the economy's needs as roger recounts in new book, america's bank, the economy isolated between credit booms and credit busts. panics broke out every couple of deck aids -- decades. depressions have lasted 4-5 years, all driven by monetary volatility and credit crunches. it was only after the panic of 1907 that populists, rural interests and business leaders and wall street bankers who distrusted and detested each other agreed that some sort of central bank was necessary. for the first time since andrew johnson had killed the second bank of the united states, we have to compromise.

central banking system was based on united states. markets cannot perform for themselves. cannot do for themselves to overshoot or undershoot. this was a balancing act to provide credit, when the economy becomes overheated. secondly and even more importantly the fed functions as a lender of last resort as a crisis such as collapse of 2008 and a lessor crisis such as the flash crash, latin america crisis or the october 1987 stock market crash, it did not do lender of last resort so well

after 1929 because it had needed the current tools nor current sophistication, but it has an institutional memory and learns from history. third ow the fed is one of the federal regulatory agencies that seeks to limit the unfortunate habits and conflicts of interest that often create products for their own enrichment and create bubbles and then crashes. the better the fed does that job of keeping financial markets honest, the more it can keep interest rates moderate to make capital available that the real economy needs without setting off. finally since 1978, the fed has also had a dual mandate to try to promote both high employment and price stability. and i'm happy to report that janet yellen is doing that job better than predecessors.

despite new technologies, money markets cannot regulate themselves. on the contrary financial engineers to create dart pools of supermoney everything from exploding mortgages, products -- >> one-minute warning. >> used that against that against their country. i say this in full knowledge of the fact that human beings and public officials and i have been a critic of the fed, the fed has been too close to wall street. history reports that in a case of money creation the parols are more extreme than the risk of regulatory excess.

thank you so much. >> if you had to choose from janet yellen and peter as a spouse, who would you choose? >> i only have to be one of central banker. >> it's a hypothetical. >> thank you. >> thank you very much. [applause] >> thank you. very good, professor kuttner. dr. murphy, please call your first witness. >> yes, your honor, i would like to call john allison to the stand. [applause] >> let's hear you participate. this is not a library. >> mr. allison, please raise your right hand and place in the copy of your favorite room.

do you swear to tell the truth, the whole truth and nothing but the truth so help you and ran. [applause] [laughter] >> mr. allison, could you state your occupation and policy? >> i am recently retired from the caito institute. i was ceo for over 20 years, the longest ceo serving. >> perhaps have you written any books that are relevant. >> i have, i have read on the financial crisis and financial cure which was wall street best seller. >> very good. could you explain -- a lot of people think that the fed made a good job, they take these crises as given.

would you agree with that and the fed needs to be there to rescue the situation? >> i do not. i do believe in premarket. i think the cycles are good in the sense that markets have to get rid of foreign companies. certainly in the last financial company fed plays a role. in early 2000, head of fed was called a maestro, he didn't want that to happen and wanted to go in good terms and created negative rates and that was also facilitated by two giant cooperations freddie mac and fan -- fannie mae. the fed provided the money to create the bubble. by the way, the bubble wasn't

just in the housing market, the commodities market, the stock markets, where the money comes from -- >> just for the benefit of the jury can you elaborate on that point. policies encouraging the sub prime lending and banks give mortgages to people that not might otherwise not qualified. >> the bubble got focused in housing because of freddie mac and fannie mae. the federal government created bubble that was way beyond housing market. there was a bubble in many markets. and that simply math mathically impossible without feds creating money to make that happen. >> i'm sure some defenders are going say, we don't know where the crisis is going to come

from, given that housing was overvaluated, would you agree with that? >> no. argumently definitely nearly 80 we had worst economy. the rule of law was suspended. the feds -- the reason they were absolutely unclear to anybody in the market shows to say leihmann and wachovia. when washington mutual failed, they decided to pay. we created a housing boom. we needed a correction. a lot was done by the panic that was unnecessary. there was no rule of law and in

the beginning it wasn't as bad as the early 80's, by the way, i don't -- they didn't call it the secondary affect. >> i wonder if you can comment on the notion that banks deregulated. that might have contributed. do you agree with that? >> absolutely not. massive increase under george bush. we had the patriotic act. massive increase in regulation. if you can go count the pages, the massive increase in regulations, banks were misregulated,s no deregulated. a lot of people point and paid no role in the financial crisis.

banks like washington, countrywide had no obligation. maybe citigroup was a little worst. the industry was not deregulated. it was missregulated. >> do you think that the federal reserve it was up to her ideal that she expresses in her words? [laughter] >> no, i would go beyond that. i had the opportunity to talk to ceo. i've asked him a simple yes, do you believe in price control. in other words, could a group of experts in washington, d.c. set the right price for an automobile. absolutely not. that's crazy. well isn't the feds setting a

price and the group of experts know from the competitors, we set wrong. they had no answer. >> well, thank you. i have no further questions for this witness, your honor. >> very good. would you like to cross-examine the witness? >> you have five minutes. >> and then turned it into securities. when you say those securities were priced accurately by financial markets -- >> i would say they were underpriced in general, but primarily because they were marking the market. when you have one competitor,

government-sponsored enterprise that has 50-70 market share, they were under pressure to have at least have loan portfolio. they had to keep buying deeper and deeper. so that was bringing down the pricing on the whole market. >> would you say they were accurately priced before they collapsed or after the collapse? >> they were only priced accurately after the crisis was over and the market cleared. when the rule of law was suspended, the price fell over than they would have in a premarket and they were too high because freddie mac -- and a huge amount of money the fed was creating. >> so could you describe as a banker what occurs in a credit crunch when one institution is so uncertain of the ability of

another institution to pay back its debts that things freeze up? what is that like on a trading floor? what actually happens? >> i have never been through that, certainly didn't have in 2008. >> it didn't have -- happen in 2008. and the bank deposits went up. you can look at the numbers. what was happen is allowed the institutions getting punished by the markets and getting ready to fail, how much damage would have been done by that is a hard thing to know, but if we hadn't created -- i'm fairly confident we would have had a more severe short-term correction but better off today. i don't really know what the feds should have done.

like a fireman started a fire, they burned down half of the town. [laughter] >> what a great analogy. >> let me understand what you're saying, your testimony is that the collapse of 2008, leaving aside freddie and fannie which i completely agreed with you, were badly run institutions specially after they were privatized. >> you say that now. >> your testimony is that the federal reserve created the collapse of 2008? >> my testimony is that the feds created the bubble that let to the crash. they were like -- they took us on a party to the caribbean and encouraged us to drink a lot and then we had a hangover. the reason that it turned into a panic was because of the arbitrary rule of law, markets can't operate when you don't know what the rule of law is,

when they paid off the washington mutual's depositors. people can't handle that. maybe once they punch in money, maybe that was okay but it was, again, after they burned half of the town out. >> what would have happen if there had been no central bank and a panic like this broke out as panics did break out -- >> one minute. >> there was no central bank to provide lick -- liquidity, what would have happened then? >> we had state-owned banks and they were regulated in a different insufficient way. secondly, when they did have panic, they had much more severe reaction. they were very short. i would argue that if we had in canada, there was no banking crashes and they had no central banks going through the

depression and in scottland they had 100 years with totally private bank that put in money, there was no central bank at all and no serious correction. i would say we wouldn't have had the bubble and we would have had little corrections all along. market is going to correct, but we are never -- you can't make that big error without except with -- >> thank you very much for your testimony. >> one more last question from the judge. okay, so to say we are on the caribbean cruise and they give us so much booze that we get so sick, was the sinking that the banks were too big to fail like us being too sick to vomit? [laughter] >> you can call that analogy. i've never thought about it in those terms. [laughter] >> thank you very much.

john allison. very good. dr. murphy, please call your testimony, if you will. >> se, your honor, i would like to call to the stand mr. steve forbes. >> steve forbes. nay -- any forbes in the house? >> do you swear to tell the truth, the whole truth and nothing but the truth so help you god. >> yes. >> all right. >> mr. forbes, could you please state your occupation and your qualifications and provide your testimony to us today. >> editor in chief and chairman of forbes media. been following federal reserve almost sin inception.

the fed was created in 19 13 but the mechanism was put in place before that. i authored a book called "money. ". >> let's follow up on the last term. how is the federal reserve -- well, the federal was there. it's better than having nothing. you argue that it made things worse, can you explain? >> all caused by government mistakes, massive terrorism government policy. in 1970's it was the fed that printed the money that caused the terrible inflation and rigged havoc around the world.

people say the head of the fed didn't stop the inflation, yes, he stopped the fire and put it out by why set the fire in the first place. you have it as john allison pointed out. the fed went on a bing again. the other thing that's not fully recognized that since the crisis of 2008-2009 the fed is the principal reason why we have problem today and big governments and big corporations, pricing of credit, but starving credit for small and new businesses, the so-called interest rate, that sounds great, but as they used to say in the soviet union, the health care is free but you can't get any. >> i'm confused. low interest rates and feds are

doing what it can to bolster the economy. can you explain that? >> when you had an anemic patient, you blood the patient, that does more harm than good. right when you have before it deteriorates but you don't get housing function anymore. what they've done by messing them up, they made the short-term credit unavailable to small and new businesses by mispricing credit, banks are under -- if you don't know what the price of something is you're going to get less out in the marketplace and in terms of what the federal reserve has done is bank regulators and the federal reserve is the biggest bank regulator. they count on banks when they make loans as risky and at the other hand they applaud when you

lend to the government. the government gets free money. at the end of the year, the federal reserve turns over all the interest, most of the interest after expenses on portfolio. so it's like you have a mortgage and the end of the year the bank pays you back the $10,000 of interest, boy, that's pretty good. uncle sam gets back from the federal reserve trillions of dollars and uncle sam rebates interest back to the treasury department. good deal for the government, bad deal for the american economy. >> mr. forbes, i find this hard to believe. you're telling me when the federal government established the federal reserve, created banks, let's call it, they did so to benefit itself. [laughter] >> governments is always selfless. reminds me after world war i

when british had the largest navy in the world, downsized the navy and while it was downsized the agency running the navy got big internalger, that's what yon the government. >> you have 30 seconds. >> one final question for you, mr. forbes. you may have heard that the defense argue that the fed needs to be there to be lender of last resord to provide liquidity. >> it's done right, yes. the bank of england showed that if you had a credit crisis you could go to the bank in above-market interest rates and you're out of it. that can be done out of it in weeks. you could have, not in the u.s. but in other countries you had banks coming together and pulling money and making

emergency loans. so you didn't have an effective lender of last resort. the banking systems are quite capable of doing it, if they know the rules of the game. you save and let the bad go and preserve the good. >> very good. >> no further questions, your honor. >> your witness professor kuttner. you want to stand over here. great. >> mr. forbes, are you on the forbes 400 list? >> no, that's why i read forbes. i'm trying to get on that list. [laughter] >> i wish you every success. i was intrigued that you said that the fed was somehow responsible for the collapse of 1929. >> no, no, i didn't say. i said the great inflation of the 1970's.

>> i see, i'm glad to correct that misconception. after that collapse sen secretary of treasury said that call of the cascading business failures would purge the rotten to that system. >> that crisis was caused by government. you can go to 1929-1930's that legislation started making way through congress. that's when the markets collapsed. the way the world works shows that when that legislation looked like it would be haltered which would destroy the trading system, stack market recovered. that was sin number one. sin number two was when the contraction started, they raised taxes, they did it in germany, britain, here in the united states they raised income tax

rate, we wondered why the economy continued to contract. government plays a role there. i don't worry about andrew mellon. i worry about what government does. >> okay, let's -- i attributed what you said to the fed. i want to talk about what government did or did not do in the 20's. if i read my history correctly, the 20's was a period of no financial regulation. the federal reserve was a new instuilings -- institutions and engineers in wall street invented gimmicks, borrowing from their own bank to peckulate loans from third-world countries and sold to customers, how was government implicated in the inventive activities? >> when you have a bad product

in the marketplace it eventually gets flushed out. we had stock market tumbles before 1929 and after 1929. >> for example, in 1962 we had the most terrible day in stock market history, but we didn't go in and raise taxes and destroyed the global trading system and the market recovered. in terms of the stock market crash, the stock market of 1929 not because of pools and the like, it crashed because we are destroying the global trading system. this is what happened with world war i, destroyed the world war trading system, we did eat in peacetime and shooting came later. >> it was not a bubble in your view? >> you may get a bubble but you have a correction and the thing goes back again. in early 1980's we had great enthusiasm for pc's, you have the shakeout then the industry came back again and in this

country in terms of automobile which is huge, a thousand automobile manufacturers, people saw great opportunities, so it gets flushed out and the winners will go on and prosper, you're always going to get ups and downs. the economy is not a machine, the economy is individuals. get over it. [applause] >> where is the inflation that folks have been predicting as a result of the feds -- >> have you seen the fries of arugula? >> well, you've had some inflation -- this is a big difference between us and the 1970's, you had enormous regulation on banks not to leverage results and the loans, that's why the money supply number has been anemic even

though reserves grow up price the rate. you have a combination of zero interest rates, why would apple can 150 billion of cash borrow of 40 billion, because they could. again, you allow markets to operate, they usually work pretty well. human beings are not perfect but better than government. >> they're not, but they are supersexy. [applause] >> hi-five from the injury. any more witnesses? >> no more witnesses, your honor. the prosecution rests. >> it is now your turn. who would you like to call first? >> i would like to call alex green. >> oh, alex. >> put your hand on the oxford where your face is apparently on

it. >> okay. >> all right. >> do you swear to tell the truth, the whole truth and nothing but the truth on your face? >> mostly. can i start with a confession? >> yes. >> i spent 30 years as a money manager and i am currently the chief strategist. would you say you're a left winger? >> liberatarian. >> that's the mating call right there. [laughter] >> you're happy to see me. >> do you think we are better off with the central bank --

>> i'm not going to argue that we are better off but because of what the central bank did -- >> why is that? >> because cash and credit are the life, blood of the economy. [laughter] >> where was i? [laughter] >> that's what i said this morning. [laughter] >> you with saying -- it was a mating call. >> so when the financial system breaks down and the point where morgan stanley doesn't trust merrill lynch, the whole system is in danger and if no one had stepped in and done anything and we had a collapse of financial markets in a deep deflation

depression, then business owners, investors and everyday americans would have suffered more than they did. >> but you heard the witnesses, the expert witnesses from the prosecution say that this is no big deal, market takes care of themselves and shakeouts are normal. why is this sort of credit crisis different when the whole money ceases out? >> when you have a situation like this where, for instance, we are three days from the banks not being able to distribute cash, even the greeks get 60 euros. it would have been bad news for americans. the fact that the feds stepped in and slashed rates and supported banks is a good thing, not a bad thing.

>> you have about -- you have 40 seconds. >> well, this is a really interesting question. what is it that is different about money markets if we believed in most other markets are self-correcting, that's really the heart of this debate? >> usually markets are self-correcting because a seller will take advantage of prices that are out of whack and buyers will step in. >> sure. >> there isn't the cash available for people to take steps to be taken and you end up with a long dangerous deflationary situation that japan suffered for 26 years now. that's what scared the feds. it's very difficult once depletion takes hold. they took extraordinary measures to keep us from getting -- >> it's like economic herpes. >> it's all off. [laughter] >> thank you very much. dr. murphy, would you like to

cross, cross? >> yes, your honor. i believe -- you're not going to sit here and argue that we are better with the central bank than without one, did i understand you correctly? >> yes. >> that would have qualified you to sit on the injury. [laughter] >> should i change place? >> i hope your next witness actually agrees with you. >> okay. mr. green, so is your argument basically then that given that the fed may be a bad institution on the thing under consideration for this trial, put that aside, is it your position that given in the mist of financial crisis was the fed did was absolutely necessary? >> yes, it is in my judgment what the fed did was necessary, it was imperfect but is it better than having done nothing, absolutely. >> but can i push you further, are you saying -- you're open to

the idea that it would have been better had the fed not even been there in the first place -- >> no you didn't. >> perhaps it needed to do something rather than nothing but that the situation itself was partly because of the existence of the fed. >> can you repeat the question? [laughter] >> can someone read it back? the quick answer is no. let me rephrase. let me put it this way, we had other expert witnesses saying that we should not take the crisis as a fact of nature, the fed and officials had been picking and choosing bailouts. they're going torres -- to rescue us. do you agree with the spirit of that criticism? >> i disagree. the fed did leave interest rates too low for some time.

that was problem number one. they also exempted the first 500,000 capital and then the bubble got underway and animal spirits got loose. i don't blame all of that on the fed. the housing bubble burst and the collapse, that was the true call. >> we have like ten seconds. you guys want to hug. >> quick question, have you ever been to a bowling alley? >> a couple of times. >> would you trust a group of officials to regulate the pricing of bowling shoes? >> probably not. >> that's interesting. what kind of libretarian would say that.

>> he's good. i'm not even lying. >> professor kuttner, do you have a second witness you would like to call in. >> i do. thank you for joining us. [applause] >> very nice to see you. welcome to the courtroom of freedom. >> professor, can you tell us about -- >> are you going to swear me in? >> yes, i'm sorry. we need to swear you. >> bryan -- >> i was trying to save time. i'm trying to help with the program. [laughter] >> we don't really trust you. [laughter] >> here. you swear to tell the truth, the whole truth and nothing but the truth? >> you got it partner. >> you better not mess with

that. [laughter] >> we get the truth. would you describe for the jury the nature of your academic work? >> i'm an economist, i've been doing this for 45 years. more recently i've been doing some work on the volatility of output growth. i first did it for the united states and then for japan and then a bunch of countries basically postworld war ii data. the most recent in 1876 to 19 -- 2012. that's it. over a century of data. the samples divided into four different periods. postworld war ii to 1981 and 1981 to the present. >> thank you. would you say that the economy was more volatile when we didn't

have a central bank? >> the economy was more volatile in terms of real output growth. the world economy decided they wanted to go back to gold standard. they set some bad parties and they did not work. well, the central -- the central bank can play a role, when they do things correctly and controlling the movement of the economy. that's not always the case so we know that the great depression was the example -- i'm sorry. [laughter] >> there we are. you look great. >> that's the great depression was an example of when the central bank failed in their activities. can i ask you a question? >> you certainly may, judge. >> did we have more financial volatility before there were kardashians? >> i think the kardashians

contributed to the financial volatility. i think that's what happened. >> fair enough. [laughter] >> i was asking you what were the -- in the period when we had financial panic in the late 19th century every 10-15 years, what was the role of the absence of any central bank in these credit -- >> they couldn't step in and try to prevent a bank panic from getting out of control and lead to go a recession or a depression. >> you have one minute. >> if you look at the time period, you notice that during the gold standard and war period, we had many more cycles than we had after world war ii. the cycles tended to last about two years, a little less, since world war ii, the expansions have gotten longer and the recessions have gotten shorter and i remind the audience that we are looking at the seventh year of the current expansion, which is the average. >> so i take it you don't

endorse every single thing that the fed has done but on balance, do you think we are better having a central bank than having done good in. >> the fed has done lots of things that are not correct. it's like an insurance contract. you buy insurance on your home because there's a small probability that you might have a fire and lose the whole investment, so the fed is an insurance contract and gets the fire in the economy. >> thank you very much. >> dr. murphy. >> a lot of doctors here. >> can i take the fifth? >> i won't even mind. >> when was the federal reserve established? >> 1950. >> the great depression, the worst crisis happened on the feds watch? >> exactly. the most recent financial pails

in comparison. >> okay. ..

>> one final question for you. one of the previous witnesses alluded to the famous victim, in a time of crisis -- >> i didn't even know him. sorry. go ahead. >> stay in character. financial crisis but if you're going to have a central bank what it should do is to lend freely but any penalty rate of

interest. are you familiar with that victim? >> my view is that the number one job of the central bank is to be a lender of last resort. there's a lot of things they do. i know we have the humphrey hawkins act. i wish they would focus on inflation control, not get involved in unemployment. >> you said that was your last question. >> this is a line of questions. >> go ahead, one more. >> given that the fed will be there to provide liquidity as all of last resort you think the public should have oversight 40 like the current arrangement would even if congress calls ben bernanke, did these trillions of dollars in loan two, and he said, this is a paraphrase but close to the spirit, i can't disclose the recipients because that would defeat the whole purpose of the program. >> the issue is whether the central bank, if this sort is

hanging over the fed, that regulation may be change, government might decide to do this instead of this band the fed, get rid of the fed. that inhibits your effectiveness in implementing their policy. >> all right, thank you very much. dr. murthy, you may be excused. any further witnesses? >> i think we've made our case. >> pretty good. what other going to do? we are going to conclude with statements to the jury. first we will have dr. murthy and then professor kuttner. we don't have time. what about like one minute? this is out of my hands. this has just evolved into utter chaos. you don't know what's going to happen it freedomfest. that's why it's such a beautiful banana split.

will you transmit your thoughts to the audience and the jury? ready? that was awesome. very good job. thank you very much. ladies and gentlemen, you very, very's witnesses for the proceedings. it is up to decide the guilt or innocence of the federal reserve. it is your job to determine whether the preponderance of evidence supports the prosecution, that is if the federal balance has an excessively power institutions that they are a powerful institution, that is encourages irresponsible banking practices stimulated artificial goons that allow the government to grow by leaps and bounds since its inception, all the while appreciating the project of our current? >> or do you decide what to do this quest if you think the fed has done a credible job of keeping our economy strong and stable? protecting us from another panic on wall street or even another

great depression. foforeperson will tally the vots and announced the verdict. a decision by the jury can be my majority vote. it does not require unanimity as we discussed. is that clear? very good. any questions? here's what we're going to do. they are going to decide amongst themselves -- who is your foreperson? they've already written things down. to organize. it's like the oj trial. it's almost like they decided before they started deliberating. what fun. i love this stuff. it's a legal and binding. she's going to tally them in secret. how is everyone doing tonight? are you feeling good? are you feeling lucky? who is going to be the robert redford to your demi moore?

that's what everyone has to ask. you know what i'm saying. ever in the world, even better than last years of judge? >> who was last years of judge? >> i think you might be the best libertarian judge on planet earth, and the best looking. >> she's counting. it's like prom votes. who's going to walk away with the big crown? spent we like the jeopardy theme music. >> give it to the judge. spin members of the jury have you reached a verdict? >> we have. >> very good. will the defense attorney and his star witness, would you stand and face the jury?

>> bench council. >> that's okay. madame foreperson, how do you and your fellow jurors decide? >> we have nine in favor of guilty, too for not guilty, one for a polish the fed. fed. >> wow but those are some very powerful votes. thank you so much. all right there you have it. .net is guilty, guilty, guilty, guilty, guilty, guilty. professor can you and your fed supporters have been found guilty of subverting a public good, therefore by the powers vested in me, i hereby continue at all fed supporters to the dead horse prison. where you'll be under obligation to pay the toxic debt of all freedomfest attendees here

tonight -- that's right. [cheers and applause] who may have lost their collective shirts at the craps tables at planet hollywood. you can only get out of debtors prison at the federal reserve widely raises interest rates. marshall, take them away. >> i'm a lawyer. spinning there's a banquet tomorrow night, $95. >> all right. he's a lawyer. he's flush with cash. been night is young. are faster, doctor, jurors and, of course, our star witness and our freedomfest attendees, thank you very much. court is now adjourned. god bless america, you always ride on the eagle of freedom, hallelujah and good night. [inaudible conversations]

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