[
  {
    "i": 0,
    "speaker": "Speaker 1",
    "text": "We're here at the University of Freiburg in Freiburg, West Germany with Professor F.A. Hayek, the author of many famous books and undoubtedly one of the world's greatest living economists."
  },
  {
    "i": 1,
    "speaker": "Speaker 1",
    "text": "In fact, many of us in the free market movement or hard money movement would say that Professor Hayek is definitely the world's greatest living economist."
  },
  {
    "i": 2,
    "speaker": "Speaker 1",
    "text": "It's a particular pleasure for me to be here doing the interview personally because Professor Hayek had a great influence on my early understanding of the free market system and how it works and my reading of his work since then have heavily influenced me."
  },
  {
    "i": 3,
    "speaker": "Speaker 1",
    "text": "My understanding of free market economics, etc. So it's a pleasure to be here and I'd like to ask you, Professor, my first question."
  },
  {
    "i": 4,
    "speaker": "Speaker 1",
    "text": "I wonder if, since our audience is mainly interested or at least very greatly interested in the theory of money and how it affects their investments, etc., I wonder if we could talk for a minute about how money evolved without the... ...with the help of governments into ... ...and in present times it seems very much the hindrance of money from government interference."
  },
  {
    "i": 5,
    "speaker": "Speaker 1",
    "text": "Karl Menger talked about the evolution of money as a sort of a natural phenomenon. How did money come about and what's happened today to mess up things so much?"
  },
  {
    "i": 6,
    "speaker": "F. A. Hayek",
    "text": "You see, the great trouble is money's wasn't allowed to develop further. After two or three hundred years of coins, all governments put their hands on it and stopped any further developments. We were not allowed to experiment on it."
  },
  {
    "i": 7,
    "speaker": "F. A. Hayek",
    "text": "Money hasn't been improved. Money has rather become worse in the course of time. Because unlike the you refer to Menger, and it's quite true that Menger, and before him, Jung and Mandel, made law, language, money, the three paradigms of spontaneously grown institutions."
  },
  {
    "i": 8,
    "speaker": "F. A. Hayek",
    "text": "Now fortunately, law and language have been allowed to develop. Money has originated in original form, but as soon as it was there in its most primitive form, it was frozen. Government said it must not develop any further."
  },
  {
    "i": 9,
    "speaker": "F. A. Hayek",
    "text": "And what we have had since in development were matters of government inventions, mostly wrong, mostly abuses of money. And I have come to the position of asking, has monetary policy ever done any good? I don't think it has."
  },
  {
    "i": 10,
    "speaker": "F. A. Hayek",
    "text": "I think it has done only harm. And that's why I am now pleading for what I've called denationalization of money. Not in this book. I hope I will live long enough after this of this book to write another book on money, which is very urgent."
  },
  {
    "i": 11,
    "speaker": "F. A. Hayek",
    "text": "But at the moment, my moral issues seem to be more important, even than the monetary policy."
  },
  {
    "i": 12,
    "speaker": "Speaker 1",
    "text": "And more fundamental, yes. I would agree. But to stick to the money subject just for a minute, I'll never forget it was at our conference, the National Committee for Monetary Reform Conference in Lausanne, Switzerland, at the beautiful Borromée Hotel, where you first introduced this theory of competition in currencies."
  },
  {
    "i": 13,
    "speaker": "Speaker 1",
    "text": "And an excellent speech that was very well received and since has been printed into a pamphlet form and then a miniature, then a small book. Earlier, when we were chatting, I showed you that in the recent edition of Fortune magazine. Even Fortune magazine has picked up on discussing this controversial theory"
  },
  {
    "i": 14,
    "speaker": "Speaker 1",
    "text": "of competition of currencies. Let me ask you, how do you think that it would work? Would the major banks, such as Chase Manhattan, issue currencies? Or would there be gold coins issued? Or how would it?"
  },
  {
    "i": 15,
    "speaker": "F. A. Hayek",
    "text": "No, I still believe that my original plan is right. But I'm afraid I've come to the conclusion that politically, it's completely utopian. Governments will never allow."
  },
  {
    "i": 16,
    "speaker": "F. A. Hayek",
    "text": "And even bankers do not understand the idea, because bankers have all grown up in a system in which they are so completely dependent on central banks, government institutions, as lenders of last resort. And after many experiments, there's hardly a banker who will understand even this."
  },
  {
    "i": 17,
    "speaker": "F. A. Hayek",
    "text": "But I am arguing. So I may now be revealing half a secret. I am devising a roundabout way. After all, in a modern world, hand-to-hand money, coins, and paper is no longer the most important."
  },
  {
    "i": 18,
    "speaker": "F. A. Hayek",
    "text": "Credit and credit cards are substitutes. But the governments can still. They can stop people from issuing money. They can hardly stop them from opening accounts in something, unless they introduce a complete system of exchange control. Mm-hm."
  },
  {
    "i": 19,
    "speaker": "F. A. Hayek",
    "text": "Except, as I said before, I do not expect that any bank will understand it. But there are other people who are suitable for it. Sure. My hope is now that one of the big dealers in the all market will prepare to open accounts, which would be, I think, a very good deal."
  },
  {
    "i": 20,
    "speaker": "F. A. Hayek",
    "text": "Mm-hm. I think that's the only way. I think that's the only way."
  },
  {
    "i": 21,
    "speaker": "Speaker 1",
    "text": "Mm-hm."
  },
  {
    "i": 22,
    "speaker": "F. A. Hayek",
    "text": "Mm-hm. Mm-hm. Which he will redeem in so much of current money as are necessary to buy this list of all the terms. Only in the form of accounts. Which he pays out in whatever currencies are needed, or in any currency enough to buy this list of all the terms."
  },
  {
    "i": 23,
    "speaker": "F. A. Hayek",
    "text": "Wow, fascinating. Which will make his unit, call it the standard, the standard unit, not ever being used in circulation. People will very soon begin to keep their accounts in standard. It's the only thing which is trustworthy. It's also a thing where many people can compete."
  },
  {
    "i": 24,
    "speaker": "F. A. Hayek",
    "text": "Most of them will probably choose the same list. If one of the big men has started this, others will imitate it. So I think we can forget about existing money and existing banks, and we can't really open a system of accounts which will displace money."
  },
  {
    "i": 25,
    "speaker": "Speaker 1",
    "text": "That's a fascinating concept. Maybe the unit one day will be known as the Hayek. Continuing on just for a minute on the money issue, it occurs to me that the fundamental flaw in Friedman's theory of monetary control is becoming more and more evident today."
  },
  {
    "i": 26,
    "speaker": "Speaker 1",
    "text": "We have electronic transfer of money. We have credit card transactions. We have complicated computerized analysis of the money supply. Yet. In spite of and because of these things, the federal authorities are even admitting that they don't even know what the money supply is."
  },
  {
    "i": 27,
    "speaker": "Speaker 1",
    "text": "They can't put their finger on it. So how in the world could you have a theory based on a tight definition of increasing the money supply at a particular rate which varies from time to time, if you don't know what the fundamental money supply is?"
  },
  {
    "i": 28,
    "speaker": "F. A. Hayek",
    "text": "You know, about 40 years ago, I once wrote a sentence something like this. One of the worst things which could happen would be if mankind ever forgot the quantity of money, except it should never taken it less of it. And that's why I still believe it is true that the price level is determined by the quantity of money."
  },
  {
    "i": 29,
    "speaker": "F. A. Hayek",
    "text": "But we never know what the quantity of money in this sense is. I think the rule ought to be that whatever issues the money supply must adapt the quantity so that the price level will remain stable."
  },
  {
    "i": 30,
    "speaker": "F. A. Hayek",
    "text": "But to believe that there is a measurable magnitude which you can keep constant with beneficial effects, I regard as completely wrong. I agree with you."
  },
  {
    "i": 31,
    "speaker": "F. A. Hayek",
    "text": "I don't like criticizing Milton Friedman, not only because he's an old friend, because outside monetary theory we are in complete agreement. Our general view on what is desirable and what is not is almost identical until we get on to money."
  },
  {
    "i": 32,
    "speaker": "F. A. Hayek",
    "text": "But if I told him what I mentioned before, that I very much doubt whether monetary policy has ever done anything good, he personally is convinced that a good monetary policy is a foundation for everything."
  },
  {
    "i": 33,
    "speaker": "Speaker 1",
    "text": "Well, it certainly leads to my next question, and that is in light of the total mismanagement of money by governments, government control over money in the central banks, in light of this, the third world debt crisis, the huge buildup of loans, at last count there was something on the order of $600 billion loaned to the third world countries."
  },
  {
    "i": 34,
    "speaker": "Speaker 1",
    "text": "In light of this terrible situation, still being controlled by at least the central banks claim to be controlling it. In light of all that, what do you think is the outcome for the third world debt crisis as it's being called?"
  },
  {
    "i": 35,
    "speaker": "F. A. Hayek",
    "text": "What do you see as the outcome? I don't know. If you are very lucky, I doubt whether you should be as lucky, you may get through it without either an assumption of inflation or new controls being clapped on."
  },
  {
    "i": 36,
    "speaker": "F. A. Hayek",
    "text": "I don't quite see how it can be done, but I still hope it may be done. But the only good thing I hope to see is that people are becoming somewhat aware that the present monetary system is not really satisfactory. Then we'll have to consider very fundamental reform."
  },
  {
    "i": 37,
    "speaker": "F. A. Hayek",
    "text": "I don't think anybody is yet going far enough. I much sympathize with the people who would like to return to the gold standard. I wish it were possible. I'm personally convinced it cannot be done for two reasons."
  },
  {
    "i": 38,
    "speaker": "F. A. Hayek",
    "text": "First, the gold standard presupposes certain dogmatic beliefs which cannot be actually justified. And our present generation is not prepared to re-adopt beliefs, which were old traditions. And have been discredited."
  },
  {
    "i": 39,
    "speaker": "F. A. Hayek",
    "text": "But even more so, I believe that any return, any attempt to return to gold would lead to such fluctuations in the value of gold that for that reason it would break down. So although I much sympathize with the gold standard people, I don't believe that is a possible way."
  },
  {
    "i": 40,
    "speaker": "F. A. Hayek",
    "text": "I think in the long run, only my much more radical proposal, how we get over the transition period, I don't know. It's certainly a difficult question."
  },
  {
    "i": 41,
    "speaker": "Speaker 1",
    "text": "It seems to me that your solution There is some type of solution that gets money back to a stable valuation so people can trust that money is absolutely fundamental to the survival of a free Western civilization."
  },
  {
    "i": 42,
    "speaker": "Speaker 1",
    "text": "And what's discouraging is that, as you say, the likelihood of adopting your very, very radical proposal is, probably, only very, very slight, at least at this time. And then on the other side, the idea of returning to any sort of gold standard, I agree with you, doesn't seem to be politically feasible."
  },
  {
    "i": 43,
    "speaker": "Speaker 1",
    "text": "And if we continue in the present situation with these massive budget deficits and continuation of inflation, it seems to me that the only outlook seems to be for a continuation of the status quo, ups and downs, but basically, long-term, long-term currency depreciation, which..."
  },
  {
    "i": 44,
    "speaker": "F. A. Hayek",
    "text": "If I may interrupt you a moment. I hesitate to speak about it because it involves another frightfully important problem which I have been much interested in, which I haven't studied. It's the whole question of the supposed necessary help to the underdeveloped countries."
  },
  {
    "i": 45,
    "speaker": "F. A. Hayek",
    "text": "Now, I believe some such help ought to be brought, but I have argued 40 years ago that it ought to be taken not in the form of government-to-government, but in the form of private investment, governments only coming in in the form of guaranteeing free repayment of capital and the returns of such investments."
  },
  {
    "i": 46,
    "speaker": "F. A. Hayek",
    "text": "That I argue, surely enough, not with regards to the underdeveloped countries, but with regards to the post-war help of the United States to Europe. I think the same principle applies to the underdeveloped countries. I don't think governments ought to give a penny to other governments."
  },
  {
    "i": 47,
    "speaker": "F. A. Hayek",
    "text": "They can help private enterprise by guaranteeing against political risks, which essentially involves the problem of free transfer of capital and capital. There, you could exercise a very considerable pressure because we have to..."
  },
  {
    "i": 48,
    "speaker": "F. A. Hayek",
    "text": "I think the problem is that the government would stop giving such guarantee to any country that has failed before."
  },
  {
    "i": 49,
    "speaker": "Speaker 1",
    "text": "And that seems to be the root of the problem because it looks like most of these third world countries, even the larger countries with a sizable economic base and a huge amount of natural resources like Brazil, will really find it impossible to repay these debts, at least in the short term."
  },
  {
    "i": 50,
    "speaker": "F. A. Hayek",
    "text": "Well, one more thing. Effective help can only be given by the government. And only given if it's according to the sensibility of the political system. This distinction governments cannot make, but private industry can."
  },
  {
    "i": 51,
    "speaker": "Speaker 1",
    "text": "Agreed. Agreed. But since we have this system, I mean, this system that isn't working well now, and it looks like, if you examine the fundamentals, that the long-term outlook tends to be for more and more currency depreciation."
  },
  {
    "i": 52,
    "speaker": "Speaker 1",
    "text": "I know that Ludwig von Mises once said, in a tricky little quote, he said, government is the only agency that can take a useful commodity like paper, slap some ink on it, and make it totally worthless. Yes, indeed."
  },
  {
    "i": 53,
    "speaker": "Speaker 1",
    "text": "It seems like to me, examining the fundamentals, that that's probably the long-term outlook. But that's my personal idea of how the scenario will develop. Nobody knows for sure. But in general, without getting into all the specifics, I know we don't really have time."
  },
  {
    "i": 54,
    "speaker": "Speaker 1",
    "text": "I don't know. But do you see the future as being more and more inflation and currency depreciation? Or do you think that we could have a massive depression because of the government's mismanagement of money?"
  },
  {
    "i": 55,
    "speaker": "F. A. Hayek",
    "text": "Many of the things have, in the last two years, moved very much better than I hoped. That particularly, in England, Mrs. Thatcher would be able to bring inflation down as low as she has done. And the same, to some extent, in America is very encouraging."
  },
  {
    "i": 56,
    "speaker": "F. A. Hayek",
    "text": "If they can bring down inflation to zero and stay there, I think the position of the leading countries can be saved. But I'm not sure that means the position of their banks can be saved. They are no longer mainly dependent on the economy of their own country. And well, I have nightmares."
  },
  {
    "i": 57,
    "speaker": "Speaker 1",
    "text": "Many of our attendees that come to our conferences and have been coming to our conferences for years tend to be ahead of their time, at least they have for the last 10 years, in the sense that they go contrary to current investment thinking."
  },
  {
    "i": 58,
    "speaker": "Speaker 1",
    "text": "And they, years and years ago, were one of the first groups of investors to understand that in periods of long-term currency depreciation, gold is a good investment. And they owned a little gold as a hedge in the same way Europeans have for years."
  },
  {
    "i": 59,
    "speaker": "Speaker 1",
    "text": "Today, all of our attendees are asking themselves the question, reexamining their case for gold. Do you really think, in light of the present trends, that you could say, for the next 10 years, that you're going to be ahead of your time?"
  },
  {
    "i": 60,
    "speaker": "Speaker 1",
    "text": "For the long-term holding, would government paper money be a better long-term holding?"
  },
  {
    "i": 61,
    "speaker": "F. A. Hayek",
    "text": "Certainly not. I mean, that's a whole different issue, the investment issue, from what is desirable as money. I myself, I can't say I invest in large-scale gold, but my asset reserves are gold coins of a certain number."
  },
  {
    "i": 62,
    "speaker": "F. A. Hayek",
    "text": "I mean, everything should go wrong, and it will do something. But that doesn't mean it's good money. Because this is a long-term situation. It doesn't ensure in the least that gold money will be stable in the short term."
  },
  {
    "i": 63,
    "speaker": "F. A. Hayek",
    "text": "I think in the present situation, it will be very unstable money."
  },
  {
    "i": 64,
    "speaker": "Speaker 1",
    "text": "Particularly so because of the chance that the price of gold could go up dramatically, or it could drop dramatically, as it has in the last several months. Have you been reading about it? Does the huge size of the U.S. budget deficit discourage you?"
  },
  {
    "i": 65,
    "speaker": "Speaker 1",
    "text": "I just read today's Herald Tribune that the U.S. budget... That's all I need to say for the day. The U.S. budget deficit is going to be over $200 billion for fiscal 83."
  },
  {
    "i": 66,
    "speaker": "Speaker 1",
    "text": "And there was an interesting, I don't know if you saw the little clipping on this, but President Reagan had a commission study the deficit problem, government debt problem, the Grace Commission."
  },
  {
    "i": 67,
    "speaker": "Speaker 1",
    "text": "That's what it's called. And they came up with some pretty shocking predictions that the deficit could grow to three, four, 500 billion dollars. And even toward the end of the century, over a trillion dollars."
  },
  {
    "i": 68,
    "speaker": "Speaker 1",
    "text": "What impact would this have on the U.S. dollar in foreign exchange markets and vis-a-vis other real, not other, but real goods and services? Down. Down dramatically. Yeah. Well, all the more need for your sound..."
  },
  {
    "i": 69,
    "speaker": "Speaker 1",
    "text": "Oh, sure. ...monetary reform. I don't believe that we should ever have a good money again before we take the thing out of the hands of government."
  },
  {
    "i": 70,
    "speaker": "F. A. Hayek",
    "text": "Because if we can't take them violently out of the hands of government, all we can do is, by some sly, roundabout way, introduce something they can't stop."
  },
  {
    "i": 71,
    "speaker": "Speaker 1",
    "text": "What do you think is the major problem or major threat to Western civilization on a very fundamental question? Is it... Do you fear or do you think the main problem or threat to Western free civilization is a third world war, a confrontation between the Soviet Union and the United States, or the economic and political area?"
  },
  {
    "i": 72,
    "speaker": "F. A. Hayek",
    "text": "No. The main danger is pacifism. That the West may become so inferior in power, there's one Russian threat after another, will force it to go in the direction which it doesn't want. I do not believe in the danger of an atomic war."
  },
  {
    "i": 73,
    "speaker": "F. A. Hayek",
    "text": "At least, I don't think it will break out between the major powers. Whether Mr. Gaddafi gets an atomic bomb or somebody... He's a madman. ...that might cause dreadful effects."
  },
  {
    "i": 74,
    "speaker": "F. A. Hayek",
    "text": "But I think both sides are intelligent enough to use it as a threat, but not actually to use it. In the end, I would say atomic war was not a war. It's the end of civilization. Nothing else."
  },
  {
    "i": 75,
    "speaker": "F. A. Hayek",
    "text": "But the danger of Russia becoming so much stronger as by her friends forcing the West not only to make concessions to her, but modify its own system on the Russian side is a very, very serious one. I would regard a maximum, not only expectation, but a maximum of the Russian system."
  },
  {
    "i": 76,
    "speaker": "F. A. Hayek",
    "text": "Not only expectation that I will use my arms, but that's the only way to be able to say when the Russians demand something new. I don't think the Russians will be foolish enough to begin a war against the strong governments."
  },
  {
    "i": 77,
    "speaker": "Speaker 1",
    "text": "So you would favor the rearmament of the United States that Reagan has proposed and the deployment of cruise missiles in Europe, that type of thing?"
  },
  {
    "i": 78,
    "speaker": "F. A. Hayek",
    "text": "Certainly. As far as I can judge the strategic importance. My impression is this is absolutely essential. And I'm greatly alarmed, particularly by the European pacifist movements."
  },
  {
    "i": 79,
    "speaker": "Speaker 1",
    "text": "You have not seen Keynes's 100th birthday article in The Economist about him? Did you not? Well, I taught at his university while he was advising government."
  },
  {
    "i": 80,
    "speaker": "F. A. Hayek",
    "text": "See, my London School of Economics was evacuated to Canada. I went to Cambridge for the whole war period. And Keynes got me rooms in his college. That's a fascinating story."
  },
  {
    "i": 81,
    "speaker": "F. A. Hayek",
    "text": "But he was most of the time advising government, so we met only occasionally on weekends. We are personally very good friends. You have not seen Keynes's 100th birthday article in The Economist about him?"
  },
  {
    "i": 82,
    "speaker": "Speaker 1",
    "text": "I did see that, and I was going to ask you about that. That was reprinted quite a lot and passed around in free market circles in the United States. That was very interesting. Do you think that many of his ideas were sound, but yet they were misused?"
  },
  {
    "i": 83,
    "speaker": "Speaker 1",
    "text": "Because in his later years, and I may be incorrect in this, I'm certainly not a scholar, but in later years I believe he wrote about grave concern that some of his ideas that he had come up with were being misused by governments."
  },
  {
    "i": 84,
    "speaker": "F. A. Hayek",
    "text": "Well, he had the illusion that a little inflation is good and much is not. You know, he was one of the cleverest men I knew. But he was not really a very competent economist at all."
  },
  {
    "i": 85,
    "speaker": "F. A. Hayek",
    "text": "He had strong intuitions, which sometimes were right, and strong conviction that he could get over any theory which he invented to justify his particular recommendations. He was in a way a great man, but I don't think he was a great economist."
  },
  {
    "i": 86,
    "speaker": "F. A. Hayek",
    "text": "I think that maybe he was a great investor."
  },
  {
    "i": 87,
    "speaker": "Speaker 1",
    "text": "I've heard that he was a very excellent investor from time to time. He had major losses. I read in an article the other day that in recent papers that came out about him that in the 1930s he made 60 times his money in the currency."
  },
  {
    "i": 88,
    "speaker": "F. A. Hayek",
    "text": "Well, I have to qualify it slightly, and I can quote him literally. He confessed to me, when he speculated in currency, he went broke. And I turned to commodities, not stock market. I made, I think, half a million pounds then."
  },
  {
    "i": 89,
    "speaker": "F. A. Hayek",
    "text": "That's fascinating."
  },
  {
    "i": 90,
    "speaker": "Speaker 1",
    "text": "That was a tremendous amount of money. And the same amount for his college."
  },
  {
    "i": 91,
    "speaker": "F. A. Hayek",
    "text": "That was a tremendous amount of money."
  },
  {
    "i": 92,
    "speaker": "Speaker 1",
    "text": "He must have made two million pounds in the pre-war pound values. I also read in this article that he was a contrarian in the sense that he would look and see what was the predominant opinion of all the establishment investment advisors and bankers, and then go do the exact opposite."
  },
  {
    "i": 93,
    "speaker": "Speaker 1",
    "text": "I didn't know that story. But it's all right. It sounds very much like it. Professor Hayek, thank you. It's been a pleasure and an honor to be here at the university for this interview."
  },
  {
    "i": 94,
    "speaker": "Speaker 1",
    "text": "I'd like to say to our audience today that Professor Hayek has had his famous book, The Road to Serfdom, translated into 15 languages. And the latest one, believe it or not, and here it is right here, it's been translated into, of all things, Russian."
  },
  {
    "i": 95,
    "speaker": "Speaker 1",
    "text": "And all we need to do is find a way to get several million of these into the Soviet Union, and I think we'd be a lot better off. But I think that is fascinating, and I think it's a real commentary on the importance of Professor Hayek's ideas to the future of Western civilization."
  },
  {
    "i": 96,
    "speaker": "Speaker 1",
    "text": "Without a true understanding of freedom and how important non-intervention is, and without a thorough understanding of Hayek's concept of spontaneous order, as opposed to today's system where mankind seems destined to repeat the mistakes of the past and try to inflict an artificial socialist order on mankind."
  },
  {
    "i": 97,
    "speaker": "Speaker 1",
    "text": "If that type of policies continue, then we are in for some very, very bleak times indeed."
  },
  {
    "i": 98,
    "speaker": "Speaker 1",
    "text": "But as we mentioned today in the interview, there's some very encouraging signs, and I would ask everybody here today to give serious consideration Thank you. to some money each year, some of your profits in your business or your investments each year, to the spread of Professor Hayek's ideas and other free market economists ideas at the various institutes in the United States and abroad."
  },
  {
    "i": 99,
    "speaker": "Speaker 1",
    "text": "Thank you."
  }
]