shooting and the military don't ask don't tell policy. to hear that interview in its entirety, go to c-span.org. . host: >> judy shelton, the last time you were in this studio was around april the 9th, 1989 -- 20 years ago.

i have not seen you anywhere since then. what have you been doing for the last 20 years? >> i guess i'm a hermit. i've still been thinking about all the things we probably talked about back then. and i think even back then, i was mostly interested in issues like international monetary reform. i was probably working only on the soviet union, which turned into a special case of an economy gone bad. but my husband and i live on a farm, effectively, just the right distance from washington, about an hour and 10 minutes. and so, i like to dabble in the intellectual and the political and the academic. but i would say, my personality is to just hide away in my little office with my computer, and i'm not a big socialite type. >> we're going to show some of the past interview that we did. but before we do that, let's go through just some of the basics.

where were you born? >> los angeles. >> where did you go to school? >> in the valley -- so i'm really kind of the classic valley girl, for sure -- a suburb of los angeles, san fernando valley. >> what kind of a family was it? >> great. great family. i have a great family. five kids. mom, very traditional, wonderful. stayed at home, took care of five kids. i don't think i ever fully appreciated then what a huge job that is. i thought it was kind of glamorous that my dad was a businessman and went out the door with a briefcase. so, i think i probably aspired more that route. >> i know you got a ph.d. from the university of utah. what year was that? >> '81. >> back off of that. where did you get your undergraduate degree? >> i went two years to ucla. then i became miss independent, left home. went to portland state university, which i quickly found out when you're paying for your college yourself, and you just go where you can afford, and i started working.

and probably, that's when i got serious. it was the first time i took an economics course. from then on i was a very serious student. i was offered a job at paine webber. that took me to salt lake city. i met my husband there. i continued and received my ph.d. in finance, wrote a paper that some very kindly professor decided was good enough to submit on my behalf to a competition. it won as best doctoral student paper. i ended up getting a postdoctoral fellowship at stanford at the hoover institution. >> what did you do there? >> i worked for a gentleman named martin anderson. he had just come from the reagan administration. he gave me interesting projects without a lot of supervision, which was perfect for me. he had me researching international debt and finance statistics. and one of the most invaluable things i learned right away is,

probe and find out where those numbers come from. is a country providing it? is anyone overseeing it? how honest are the numbers? >> you were at hoover for how long? >> ten years. >> lived there right in palo alto area? >> no. no, not really, not really. i ended up getting a fellowship to examine, in particular, soviet statistics. i was looking at the world. but the ones that came up as the most interesting numbers were on the soviet union. gorbachev had just come into power in 1985. the united states and the west were suddenly making loans to the soviet union. new numbers were coming out about how much they were borrowing from the west. and i proposed to do a very boring, very dry study of the impact of western capital on the soviet economy. but as i was doing that, i started thinking, why is it that defense spending is costing u.s. taxpayers so much money, and

then we're turning around with our nato partners and making loans to this soviet economy, and supplying goods that they might otherwise have to divert their own resources to making, instead of building nuclear weapons, against which we were paying a bundle to defend ourselves? so, it all became sort of a policy issue. and so, i ended up -- this paper turned into a book with a very sensationalist title, called "the coming soviet crash," that said, on paper, this country is going bankrupt. and then there were implications from that that even got me involved in defense issues. so, it got interesting. >> i remember seeing you give a speech on this network back in 1989. i thought it would take a few minutes too late things out as

corporate jets may be looking at them in terms of the economic situation and the soviet union so we have the overall requirement of perestroika and the cost of what is needed to get it off the ground. and then we were doing the book show, and we asked you to come. and we visited for one hour. and i want to show the audience and you -- >> oh, no. >> -- several clips, maybe, before it's over. you were talking about, back then -- and the thing to keep in mind is that on november 9, 1989, it was the fall of the wall. so, that was 20 years ago. but let's watch and see what you were saying back then. >> what do you think of the soviet union? >> i think that it's an idea that went wrong. economically, i think it's doomed. and i don't say that with glee. i've only been to the soviet union on one occasion, for a couple of weeks. i liked it very much. i was treated very nicely.

in some ways, i'm probably a closet slavophile. i like the russian language. i work at it every day. i like russian literature. so, one problem with the book, or at least for me, is i've had the sense of people thinking that i want to see the soviet union collapse. i don't like the soviet government. i don't like the soviet government's emphasis on military strength as its claim to superpower status. i think it's misplaced. >> so, what do you think? since then, what's happened to the soviet union? >> well, i still like russia. and i like russian literature, and i like the russian people. i think what they have found out was you cannot remain a viable country and suppress individual pursuit of prosperity, or creativity, or

whatever it is people want to use, their god-given talent, life, liberty, happiness. you cannot subjugate that to what some greater government decides is important. and in the soviet union, they decided military strength was most important. second to that was infrastructure. they wanted to be independent. and they wanted to be internally powerful and part of the control mechanism. and a very poor third were the people themselves. and i think it bred a sort of hopelessness that i still think is the biggest problem, of over-reaching government. >> have you been back? >> yes, a few times. and now, at the national endowment for democracy, i specialize in pro-democracy projects in russia.

>> what is the national endowment for democracy? >> it's called ned. and the national endowment for democracy, ned, was started under president reagan, but has a completely bipartisan, pro- democracy initiative. it is funded by congress through the state department, but it's independent of the state department with an independent board. >> who runs it? >> the board, and our staff. and what we do is take grant money -- approximately $110 million a year -- and we have this year over 1,000 projects. but we never tell people in another country what they should be doing to have democratic institutions. that is, we think the best formula for people is democracy. and that means free, independent media, fair elections, honest

elections, rule of law, right to assemble. the national endowment is comprised really -- well, there's four core groups, and we give grants to them. but they represent the republican party, the democratic party, chamber of commerce representing private entrepreneurship, and a labor solidarity center representing unions. >> who nominated you for the board? >> i was asked by vin weber, who was the chairman. >> who's chairman now? >> well, it has just switched to richard gephardt, because it's so exquisitely, politically balanced, they always make sure that there's the same number of republicans and democrats. there's lots of congressmen and ambassadors who are on the board. when the white house changes, they do change from chairman to vice chairman to reflect the

party in power. >> do they pay you? >> no. >> do they pay the chairman? >> i don't think so. no. no. >> how big is the staff? >> the staff is i think about 120 or so. and they operate on a pretty thin budget. basically, they receive the grants. people in other countries apply for grants -- countries all over the world, virtually every country where there is some need to improve the democratic process. and they've been very active in the middle east. but they come to us. they can get on our web site and apply for a grant. and then, our staff make sure that they're legitimate and that they have the wherewithal to comply with the requirements. we're very transparent. but we do a lot of good in funding people who are willing to take the risk, and in some countries it's significant risk, to fight for democracy.

so, anyone who's ever been cynical about democracy should talk to our grantees, who thank us, and who are willing to be harassed, put in jail, sometimes worse, because they demand what we have. and particularly, those institutions, once again, a free, independent media, the right to vote in an honest election, the right to assemble -- they want to have protests, in most countries they're not allowed. >> give us one example of what you would consider a success. and how long have you been on the board? >> i've been on four years. i would say one of the great successes was ukraine, the orange revolution. and in fact, russia very much resented the work of ned. ned helped support the groups that became part of that movement, the orange revolution, who said, "this will not stand. we know it was a fraudulent election." and they just refused to leave

the streets until there was a run-off. and that is when viktor yushchenko was elected. he's the man who, if you remember, the toxins. his whole face was destroyed. he was not the favorite of moscow. but he rose to lead ukraine, to head ukraine toward nato, toward the european union. now, things have been rough in ukraine. the economy has really spiraled downward. it's a very difficult situation around the border with russia. but even though they've experienced real political difficulties and economic difficulties, i still think that they have said "it's better to be independent, and we will decide our own destiny." and probably, even leaders who we might now say were too pro- russian at one time, they likewise say, "no, we may decide to move ahead with european union integration."

>> here's more from our 20-year- old interview. >> now, if i was going to advise the soviet government from a financial point of view, what they could do to take part in the international financial system, monetary system, i would urge them to put their money where their mouth is, so to speak, and come up with a gold-backed ruble. i think that the soviet union's only claim to credibility with western financial types is to provide collateral behind a currency. in fact, i think it would be a rather brilliant coup on their part to come out with a currency that they agree to redeem in gold, because they have mythical holdings. not mythical in the sense that they don't exist, but bankers' eyes just get round when they think of soviet gold reserves.

so, there is this implicit assumption on our part that they do have something valuable. and clearly, i think they're the world's second largest producer. they do have gold. >> what's happened to their gold and their ruble in the last 20 years? >> well, they should have done that. i have to say, i wish i had fought harder. i went over with a hoover team, a stanford team, in 1991, advising boris yeltsin. i was given the portfolio to recommend whether or not russia could break free of the soviet union. it was that august that everything fell apart. and in fact, by december of 1991, the soviet union was no more. i think that the soviet union, or what the residual governments then decided to go with the big bang theory, and there was a harvard approach. and the net result was, instead of solidifying the money first,

they tried to do everything. and they ended up giving people a really bad taste for capitalism. the russian people, who were very hopeful under yeltsin, ended up thinking that this is a way for people who have access to the politically elite, the cronies of those in power, they'll get big rewards and the rest will suffer. so, throughout the 1990s, russia was really grasping with disaster. and it was only really when putin came to power that russia started making money, because of oil. and people started saying, "you know, this is better. it's better to have a strong, tough leader. we're willing to give up some of those freedoms we thought were important. but it turned out we were worse off under so-called capitalism." and i think even now, if your

currency has integrity, you can build on it. it's a foundation. and russia ended up having a disaster in 1999, where the ruble lost a third of its value in a matter of a few weeks. there was a complete default. and it put russia on the lifeline to the imf, which they also resented. and again, it just fueled kind of this permanent distrust of the west, which i think is why someone like putin stays in power. >> you've mentioned the imf a couple of times. what is it? >> the international monetary fund has a wonderful legacy. it was set up during world war ii. actually, the first draft laying it out was written by a guy named harry dexter white in the treasury department a week after pearl harbor was bombed. and the idea was to say, you know, in the 30's, because of

the depression, we had a breakdown of any kind of international system. we had beggar-thy-neighbor, competitive depreciations of currencies, where everyone tried to make their currency cheap, so they would get an advantage when they sold it in another country. we had protectionism. and in order to get the allies in europe to feel like there was something worth fighting for, the u.s. decided, let's give people hope that, if we get through this vicious war, there'll be something good to come to. we won't just go back to the 30's, where it was every man for himself and a depression. we'll show leadership. and so, the imf came out of that. the international monetary fund had one main job, and it was to have a stable international monetary system, fixed exchange rates among currencies. they would have to be fixed relative to the dollar, and the dollar would be convertible into gold at a fixed rate of $35

per ounce of gold. >> any country in the world back up its currency with gold today? >> no. and this is why i now have real resentment of the international monetary fund. because when the u.s. went off that system under president nixon in august of 1971, instead of fighting to maintain a stable monetary system, or figure out how to get back to one -- which is what i think the imf should have sought to do -- it waited a few years, kind of fumbled along. and then it accepted that. and now its attitude is, any country can have any kind of exchange arrangement they want -- floating, fixed. they can have a currency board. they can piggyback and peg to another country's currency. the only thing they can't do is peg their money to gold.

so, it's not just a betrayal of the original idea, it's almost perverse. they can't peg to gold. meantime, the imf sits on virtually all of the gold that was contributed from the beginning, from countries who had to pay in gold or dollars to become a member of what was supposed to be a stable, international, monetary system. >> vin weber you mentioned earlier. my recollection is that jack kemp was a big gold supporter, and he had an outfit called empower america, and that vin weber was involved in empower america, and you were involved with empower america. >> i was on that board -- very proud of that. kemp was a visionary. there was recently an event in washington to launch the jack kemp foundation. it's very invigorating to see the people who were part of that movement, the supply side. now we can proudly say, supply-

side was something that brought economic growth. it was based on the wisdom of recognizing that the free market works, because it reflects the collective effort of individuals who use their talent and their intelligence to pursue their dream. and what you don't want to do is inhibit that. all entrepreneurs really want are good solid rules, a solid foundation and honest money, which is something jack kemp was willing to go to bat for. sound money, that to me is where you start. >> not your personal detractors, but people that would detract from or criticize what you're saying, would say today that we are in the mess we're in today, because of supply-side economics, because of this thing that went on during the reagan years that

said, spend, spend, spend, enjoy. you've heard it. >> the economic growth during the 1980s completely turned us around from the stagflation, the stagnant growth and the inflation, the worst of all worlds, that we had under president carter. and in the 1970s, it looked like our country was permanently in malaise, or even going into decline, as if we had just become in a business model, kind of the cash cow, that our best days were behind us. what we learned under the reagan administration was that the potential for economic growth is still there. i know it sounds hackneyed, but the american dream is still alive, and i think a universal one. people want to be successful. they want to be prosperous. it doesn't mean just material wealth. they just want to have the chance to pursue what matters to

them, and to define what matters to them. and the two big parts of the reagan revolution were, in monetary policy, to stabilize it, to get rid of inflation. and under paul volcker, that's what we did. it took a real squeezing out. it was very painful. but with high interest rates, we attracted a lot of foreign capital. he was following robert mundell's ideas. mundell, laffer -- these are the heroes of the supply-side revolution. so, on monetary, it was to have a stable, honest dollar. and in the fiscal realm, the idea was lower taxes. lower taxes and give people a chance to be entrepreneurs before they get to an "atlas shrugged" point in their life where they say it's not worth it to be creative and take risks, and go out there and be an entrepreneur. i really think, when you lower

taxes, you're finally recognizing the heroism of entrepreneurs. >> it's 20 years later. and remember back then it was all about the soviet union. here's another excerpt on what you were thinking then. >> could you sense from visiting there for this short time, that the people there are happy? unhappy? how would you compare them with the general mood of americans? >> you know, that's a question that i think reflects human nature. i'm not sure that a highly consumerist society means greater personal happiness for an individual. the people i met, happy enough. i think they had that russian characteristic of being resigned. i think they're much more passive than americans. we're so demanding. if something's not up to snuff, we call the manager.

in the soviet union, they shrug it off. and if they get lucky, they're able to buy this or that, it's good fortune. but you wouldn't begin to see irritation like you would in the united states. >> have you seen any change in the russian people since the wall came down? >> they had a taste of freedom. there's still a certain resignation. and they probably accept what's imposed on them much more readily than americans. but i am so glad americans don't have that trait. we do get mad, thank goodness. we get mad, and we fight back. and we have a political system that allows us to say we don't like the way we're going, and we're americans and this is a government of the people, by the people, for the people. and we say, "we're the people," and we really start asserting it.

and there's still a difference. the russians don't quite believe it, but one thing i do think is universal is the entrepreneurial spirit. and it's not just about making money. i agree with what i said then. if you're resigned, in any society, it's not just because you can't necessarily be the wealthiest person. it's that you can't fulfill your own dreams. and in russia, in the soviet union, it was that soul-killing aspect of living in a society where what you were going to do and where you were going to live was pretty set. it was central planning all the way. and the liveliness of a dynamic society like the u.s., i think comes from a sense of, well, we don't know exactly what's going to happen, because i might just decide to go out and be this or that. i'm going to take the risk.

i'm going to put together a plan. there's a sense of the possibility of being successful, however you define it, that i think is the difference between being a caged animal, where food is thrown to you predictably, or saying, no, i'm going to live in the wild, and i might just have to fend for myself. if you like freedom, that's what you live for. and that's what i think is worth preserving or bringing as a power to bear in any society. >> today, 20 years later, this has been a huge consumer society. you hear a lot of people complaining about service stinks, wherever you go. >> in the u.s., you mean? >> in the u.s. a lot of the institutions that we revered 20 years ago have failed miserably. all the airlines, almost all of them went broke. what happened here, then? >> i'd say, wherever

competition is limited, you're going to see a decline in service and value. it's competition. adam smith, who had a great sense of morality, he wrote about that as much as he did about how capitalism would work, if the invisible hand sort of directed individuals to do things. he said that would ultimately give you the best society. and i think it's really true. maybe it even seems selfish that people trying to enrich themselves cater to the demands of other people. but what else would we want? it's people who are willing to set up a service business or produce something. and they're trying to please their fellow man, yes, because he's going to buy the product, and they'll make a profit. and that's how they'll do better economically. but it's also a society that pays attention to its fellow

man, because that person demands the best value for the lowest price, and it brings to bear all of the forces of free markets. and that's what i believe in. i think that comes closest to reflecting a system that individual humans can thrive within. >> i have not seen you on television. do you not do these shows for a reason? >> well, i was especially pleased to do your show, because i think it's nice to speak in depth. i appreciate that opportunity. i don't think i'm a good sound bite person, because i'm likely to say something that maybe is taken the wrong way. i'm not sure. but i don't -- >> do you avoid them on purpose? >> i don't avoid them, but i don't often accept. i kind of -- the "wall street journal," a blessed newspaper, has been very kind, especially in the last couple of years,

giving me a great forum to get ideas out there. i know we need strong political personalities, so you need people with charisma. but i think i'm much more the kind who is sitting in jeans and t-shirt and pounding away on my keyboard. and i don't even try to sell my ideas, so much as i'll just slide it under the door. and if people like it, i'm happy to come in. i sometimes will come in and meet with senators at the capitol, and tell them my thoughts about the debt situation or the deficit, or where we're going as far as the dollar. i love to do that, but more as a behind-the-scenes teacher, i guess. not the doer, the teacher. >> david walker, who used to run the gao, the government accountability office, and now runs the pete peterson foundation, says that we cannot

grow out of the situation that we're in now. >> it's pretty frightening. >> is that true? and if it is, is it the first time in our history? >> i never want to say we can't, because we've been in terrible situations. coming out of world war ii, we had a lot heavier debt to gross domestic product ratio. we've had tough times before, where we're confronted with the loss of war, financially as well as what it does to the spirit. but i think the country is valiant -- i want to say resilient enough to come out of even this. but this is unprecedented spending, unending deficits, and what i consider an unconscionable accumulation of debt. it's a kind of debt that thomas

jefferson said was the last thing he ever wanted to wish on this country, where the burden, the yoke on the necks of american citizens is set by government, without really their express permission. i guess we gave our implicit permission, because we elect the people we do. but it's a tremendous debt level. and i think at some point, you can kill the goose that laid the golden egg. at some point, i could well imagine the creative, productive people who have brought tremendous profits and salaries, and built factories and made other people wealthy. i can see an "atlas shrugged" scenario where they all say, "i'm going to galt's gulch. i'm dropping out. i'm going on strike, because the country doesn't appreciate the risk i take on and how hard i work. and the government takes me for granted." i can imagine people saying "it

was a great dream, but i don't know if it's worth it for me." and if enough people feel that way, then the country has real problems. >> which politicians have been the most consistent for you in your life that you have any respect for? >> certainly jack kemp. i like jon kyl of arizona, jim demint, south carolina. those people come to mind. i'm very pleased with bob mcdonnell. i have met him. >> the new governor of virginia. >> our new governor of virginia. very pleased that he is talking about free enterprise and the american dream. those would be the people who come to mind. >> which economist, you know, in the paul volcker, alan greenspan group do you respect the most?

>> the greatest economist, the one for whom i have the most respect, is robert mundell. >> where is he? is he alive? is he -- >> he is a professor at columbia. he won the nobel prize in 1999. he is the father of supply-side economics. he also has a magnificent castle in siena, italy, with his wife, valerie, and their young son. and every year -- and i believe he's done this since 1971, since the dollar went off of gold -- he has a fantastic gathering of economists from all over the world, talking about how can we ever get back to a stable, international monetary system. and he has people like paul volcker in attendance. i've met many central bankers and leaders of government there. and so, he's very much involved still in the future of the international monetary system. he's been consistent intellectually.

and he's very interested in china these days. he sees china as coming on board, just as he supplied the intellectual groundwork for the creation of the euro, the european money. and he now sees we could have some kind of a linkage between the euro, the dollar and whatever china comes up with, some kind of a yuan that's convertible and a stable currency. >> explain something. this is a simple thing. i mean, it's not a simple explanation, i'm sure. but when the euro was created and -- was that 10 years ago? >> yes. >> there was a parity. one dollar for one euro. >> yes. >> and then it even dipped below, where it was in the 80's on the euro side, and now it's $1.50 the other way around. >> now, that tells you something, because the whole idea of floating rates was supposed to be a more stable system.

and the whole idea of fighting protectionism is to eliminate tariffs. but because you have this huge area of the european union, and this huge area of the united states, having variations of more than 50% in that relatively limited time span, that tells you that the swing in currencies swamps the impact of a tariff of five percent, maybe 10%. when you have a swing of a currency of 50%, you have just made your competitors' products 50% more expensive, which is completely unfair, if you really believe in a global marketplace and a level playing field, or you've given yourself an advantage which is certainly on the scale of the great depression, when we called it beggar-thy-neighbor, these competitive devaluations. the u.s. now having a weak dollar to me

is saying to the rest of the world, "we don't care. we may be cheating, because a weak dollar makes our products cheaper in your markets, but we're doing it." that's very unseemly for our country, such a wealthy country, to do that. >> one of the things amateurs like me don't know is who's making the money. and i assume somebody in this country with this weak dollar is benefiting greatly. >> well, the problem is, because there's no system, money doesn't mean what it's supposed to mean. it's supposed to be a unit of account, a measure, an honest measure. it's supposed to be a store of value. instead, it's become a game. the people who make money are speculators who bet on where the dollar is going to go relative to the euro or other currencies. and you have banks betting. now, banks have to be able to exchange money, because they handle international trade. but the amount of money you would have to convert into another currency to carry out

international trade is like less than five percent of the currency market. the foreign exchange market is huge, and it's absolutely just a gamble of betting which way it's going to go. so, banks get big profits from that. speculators get big profits. but what bothers me is that we've turned money into a lottery instead of money being a tool, and i think the most important tool for capitalism, which requires free markets. how do you interpret demand and supply for anything, if you have this sliding measure of what its price is? it would be like having a ruler, and today an inch is this big, and tomorrow it might be like that. you can never have this reliable way to measure value. so how can free markets work when you don't have a unit of account that means the same, and through time, to everyone?

you don't have that basic foundation upon which price signals can then do their job and free markets can work. >> and you're married to a banker? >> i am. well, a former banker, a wonderful, very brilliant finance and monetary intellect, who was a very successful banker, but who, lucky for me, got out of banking back in the early 1980s, and so, is kind of a fellow farmer. we both like to hang around the place, and go out and visit the cows. and this morning he was up in a tree stand watching deer. didn't shoot any, but i'm sure we'll end up having venison tonight. so, it's a different life. it's not a washington life. >> you did spend time in mexico, though. >> yes. i taught at a grade school. it was a business school, a graduate school of business called duxx.

it was started by a great man named alfonso romo, one of the billionaires of mexico, but more important, a man whose grandfather was a president of mexico, the first democratically elected president of mexico in the '20s. he was assassinated. but this man cares very much about the legacy of democracy and entrepreneurial capitalism. and this graduate school of business he set up in monterrey, mexico, had all u.s. and european faculty, who he would fly in -- you would take up residence at the school -- so that mexico's cream of the crop mba students didn't leave. he wanted them to stay there and work for mexico. >> did the school make it? >> it did for a few years. i guess i taught there six years. but i think ultimately, it was absorbed into maybe the university of monterrey -- another institution of higher learning. it was very expensive.

he was pretty much footing the bill for the students. but many of them went on to fantastic careers. i know some ended up doing graduate work beyond that at harvard, because i wrote recommendation letters for them. and they all have that spirit of free enterprise and the sense they can make a difference in the world. >> by the way, you mentioned the "wall street journal." you've written how many pieces in the last couple of years? >> well, i just happen to know. in the last two years, 15. and i think almost always the lead op-ed, which i appreciate very much. >> and who first said to you, "yes"? >> well, through the years prior to that, maybe once or twice a year, it would be the person in charge of the editorial page. >> is that paul gigot? or is it -- >> he is higher than that. he has a higher title.

the man is robert pollock. and his partner is howard dickman. they run the page now. and i started getting just a little e-mail, "do you have anything to say on this?" and i think the first few times -- now, this is because my issue -- i had written a book called "money meltdown" back in 1994. and so, we went through the mexican meltdown after that in 1995, asian in 1998, russia in 1999. but whenever the u.s. dollar has been going through its throes of agony, i would get a little inquiry, but especially a couple of years ago -- a little e-mail, "what do you have to say about this? any thoughts?" which is a dream come true when you get a query. and i would say, "look. you won't want it, because i'm kind of a curmudgeon on this. and i wish we had a neutral reserve asset like gold, something universally recognized, something that's

had constant purchasing power over centuries. i mean, this is crazy. you don't want to put this as a lead op-ed on the nation's premier business newspaper." and he would write back, "yep, sounds great. write it up." and so, i've had a chance. i don't just -- some people call me a gold bug, but it's not really that. what i'm saying is, money is a tool. it's not something that's descended from heaven. and yet, we live under legal tender laws of mandated money. you have to use the dollar. and i think that implies a moral contract on the part of government. if they're going to be the producers of the dollar, they'd better make it a good product. to be a good product, it has to fulfill those functions of medium of exchange, unit of account and a store of value. and it has to do it honestly and with reliability and with integrity. >> do they pay you to do that?

>> oh, the journal? >> yes. >> i think it's gone over the years from $150 to, the one they ran a week or so ago, i got $600 for. so, you could not make a living on an editorial. >> and they ask you for how many words? >> usually 1,200. >> i want to go back in history again, because you had this -- i don't know what you'd call it -- this relationship with russia back then. and with the wall coming down and 20 years of russia after. >> oh, yes. let's listen to what you had to say. >> i've always liked the literature -- tolstoy and dostoyevsky and pushkin and gogol. and what i'm trying to do now is, i'm trying to memorize "a day in the life of ivan denisovich," by solzhenitsyn. so, i have tapes of solzhenitsyn reciting his work. and then i have a russian version -- >> in russian or english? >> in russian.

and then i have the work in russian, and i have it in english. and i have about four english- russian dictionaries. and every morning for an hour i start reciting what i've memorized so far and adding on to it, and working my way through the book. >> why? >> it's a great pleasure. i think the way you get a feel for a language, unfortunately, is through this exercise of memorization. so, i need to hear it and read it and think about it, so it has meaning to me personally, to really embrace it. >> how long was "a day in the life of ivan denisovich"? how many pages? >> a hundred and nine maybe. >> did you memorize it? >> [speaking russian]

some of it. >> yes, i have no idea whether you were right or wrong. but why were you doing that? and have you gone back to this? do you still read russian? >> yes. i'm very interested in dmitry medvedev. i have -- >> the new president. >> he's the president. >> i think he is different from putin. i would love to see him be his own man. he's very much against corruption. he appreciates the ideal of

democracy. whether he can rise to challenge putin when it comes to that -- because i think it would have to come to that -- i'll be very anxious to see. but i read what he has to say virtually every day. the russian presidential web site is excellent. he has video of himself. >> in english? is it in english? >> russian and english. so, that's a good way, if you want to learn russian. you can read it in both languages. you can watch the video with english beneath. you can get transcripts in english and russian. >> well, before you go any farther, let me show you another clip, because things have changed a lot since then, but here's what you were doing back then at your home out an hour from washington. >> we contracted with the gentleman who had set up a satellite system for columbia, to listen in on soviet television. we set up the same operation at

our house. and it involves a big dish and a little computer. and since the soviet satellite is not geostationary -- and i am not -- i don't know anything about these things except what was explained to me. but the soviet satellite keeps moving. so the trick to latch onto it is to get a system that can follow it and track it. so our dish, now, wired to this computer, does a little search about every eight minutes, figures out which is the strongest direction, the strongest signal, and locks onto that and follows that for a little while. in the meantime, it feeds through. and in my office set up in the house, i can watch color soviet television from about 4:30 in the afternoon to about 7:30 in the morning, that comes out of vladivostok. and then i get live soviet radio straight out of moscow all day long. so, it's a pleasure for me to

hear the language. i enjoy that. i don't pretend to understand all of it, but i can get some of it. and every once in a while there's something interesting that comes on the news. >> what happened to that system at your home? >> i presume the people who bought our house dismantled it, because, i mean, this was a great big dish. one time a military helicopter just stayed near it, i'm sure taking pictures, as i understood at one time that there were only three such setups. and one was at nsa, and one was at cia, and we had one. but these days you can -- you don't have to intercept russian broadcasts, which is great. but that's interesting. yes, that was a real indulgence. my husband let me get that. and i really did -- i loved to listen. at a certain time every day they would go live to red square and play the soviet anthem. and that came out of world war

ii, when they would try to reassure people by radio that the country was still there. and it actually is a beautiful anthem. and of course it was thrown out when the soviet union ended. but it was brought back with different words. and i have to say, it still is great music. but that's what you can hear now. i listen to voice of russia with earphones now at my computer, live. >> if you live in northern virginia, you can watch 24 hours a day, seven days a week, "russia today," a full-time television network in english with people that sound almost american. and in some cases they might be, or british, as anchor people. >> yes. >> yes. >> have you seen this? and why are they doing this? >> well, that is -- "russia today" is a state-controlled broadcast. >> it looks a lot like our american television -- >> oh, i think they actually, probably tried to copy fox news, because it's -- it just happens to be state run.

and you will find in many cases similar type stories. at least the old pravda approach under the soviet union was to highlight whatever was the worst thing that happened in the u.s. so, if we had a natural disaster, or something embarrassing politically or socially catastrophic -- someone walks into a school and shoots 10 people -- boy, that would be on the news. and they still tend to highlight that. they ran a huge feature last week on "russia today," explaining why -- and this is so irritating -- 9/11 was faked, and the u.s. knew it and, i mean, just these incendiary accusations. and they do it as investigative journalism. >> well this, "russia today," is part of a package of 10

channels that is supported by the state of virginia. it's on a public television station. >> i love that we can choose to watch those things. i found that the most useful thing to me at the time i was working on the soviet union, when they were very secretive, was to have access to state- controlled modes of information. it doesn't mean you can't learn a lot from that. you can learn a lot. i go first to voice of russia, which is also state controlled, and often look at "russia today," which is sort of, as i say, the zippy version of what the state wants you to hear. and they will even throw in stories that are sort of critical of russia, i think to make it look like they're not preordained from the government. so they do try to do that. but no, i'm happy. i think those stations should be available. you can learn a lot by the way

a government wants to present itself, the differences. you should also be listening to radio ekho moskvy and some of the very few media outlets out of russia that are genuinely free. it's the competitive media that gives you a chance to make -- for you to decide to hear the news, and then you to decide what's really happening. >> you were talking in your book that we talked about 20 years ago, about the military and the money that the soviet union, all their focus was on the military. twenty years later, this country spends $700 billion in the new budget on defense. and you can hear people say that it's all the rest of the world's military combined doesn't add up to $700 billion. why are we now in the position of still being this strong military country? and do you believe we should be? >> well, just to put it in perspective, that's still about four percent of our gross domestic product. and russia, in the soviet union in its final days, was probably devoting over 20 percent, maybe 30 percent of its gross

domestic product to the military. i mean, it was definitely a priority over everything else. in this country, people don't like it to go above about four percent. so, but to your larger question of why does the u.s. have to bear the burden, i don't think americans are warmongers. i think we sort of just shrug our shoulders and say, somebody has to do it. i think we would love it if nato would take on more of the burden. but in the end, we find that the u.s. ends up looking -- or the rest of the world ends up looking to the u.s. to be the force for security. it's too bad. it's an awful burden. and i think it's -- i think the american people are generous with their people and with their treasure to support it, because i think most of the things we do aren't just

necessarily to help ourselves. i think they're to help others countries. >> so, in the very few minutes we have left, what would you tell this president, or anybody else that's responsible for the future, how to get out of this mess? >> out of afghanistan? >> no, out of the financial mess we're in. >> oh. well, first i think you go back to the source of wealth in this country, which is private business. and i think you change your attitude and start saying, we over-tax people, we over-burden with regulatory requirements. we do not support entrepreneurs, and we don't give them sound money, money that doesn't inflate, money that doesn't put them into higher tax brackets than they deserve. >> but what do you say to those that criticize the fact that

the regulators didn't do their job in the last couple of years? >> i think that's totally misplaced -- totally misplaced. i am so tired of the criticism of -- this was even among republicans -- of wall street greed, or predatory lending. i think government had much more to do with the financial crisis, because government interjected itself into the private market. when government distorted the risk of fannie mae, freddie mac securities by sort of winking and saying, these are guaranteed, and then allowed those to be sold and resold, and derivatives, which are just these same kind of financial bets, that multiplied by 30 times over the leverage of that small group of bad risk subprime mortgages, it was the government intervention in all of that. i mean, let's face it. finance and banking are the most heavily regulated industries we have. you can't regulate a distortion

of markets. and to suggest that people were greedy, because they were pursuing profits, legally -- it was legal to make a profit by selling derivatives, selling them 10 times over. it was perfectly legal. but why have an incentive system that makes it more profitable to write up this complex financial instrument that's a bet of whether the european central bank will move on interest rates or the fed, and they both keep their deliberations secret, or whether this currency will rise or fall relative to that currency, instead of having one unit of account and not playing games with money? why would you set up an incentive system that rewards people for betting on so-called investments that have nothing productive associated with them, versus people who make things or furnish real services? they're saddled with having to pay when a system like that,

built on financial air collapses. so, i blame leaders for not giving capitalism a sound monetary foundation. and that would have provided the stable financial atmosphere for carrying out productive capitalism. >> at a time -- how much of your time do you spend on the national endowment for democracy? >> we have four meetings a year. i review our projects. so, i would say i probably spend 20 percent of my time including to that. >> what do you do -- >> we don't have much time to go. but 80 percent of the time -- >> i think about international monetary form, write about it, work on written projects. i'm going to be at the cato institute monetary -- it's their 27th annual monetary conference in a week or so. >> another book? >> i'm not working -- well, i'm working on a book completely different. it's more on a religious theme, and it's fiction. >> judy shelton, on that note,

we thank you for joining us. >> thanks so much, brian. >> for a dvd copy of this program, call 1-877-662-7726. for free transcripts or to give us your comments about this program, visit us at cspan.org. q&a programs are also available as c-span podcasts. >> next week we speak with a syndicated columnist and the author of "the shark doctrine."