Control the Fed, Control the Economy
Most economic debates ignore one basic truth: people respond to incentives.
In this episode, Dr. Arthur Laffer breaks down why higher taxes often lead to less growth, less revenue, and worse outcomes for everyone—despite good intentions.
We dig into the Laffer Curve, Trump’s trade policy, sound money, and more. Is there a method to the economic madness? World-famous economist Dr. Laffer gives his thought
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Follow Dr. Laffer on X: @realArtLaffer
Transcript
Monetary Metals:
Welcome back to the Gold Exchange podcast. My name is Ben Nadelstein. I am joined by world famous economist and author Dr. Arthur Laffer. He’s one of the key thinkers behind Trumponomics. He’s the namesake of the famous Laffer Curve.
And in 2019, he was the recipient of the presidential Medal of Freedom for his contributions in the field of economics. If I continue to discuss all his past accomplishments and positions, it will take up the rest of our time on the podcast. So instead, I’ll simply say, Dr. Laffer, it is an honor to have you on the show.
Dr. Arthur Laffer:
Good. I would love it if you gave all the ones. I mean, goodness, I love hearing it. No, go ahead. It’s a pleasure to be with you.
Monetary Metals:
Dr. Laffer, for people who maybe don’t know you because they’ve been living under a rock, let’s jump in with a crash course on what supply-side economics is. What is it?
What does it mean? What are the tenets of supply-side economics? And of course, what is the famous Laffer Curve?
Dr. Arthur Laffer:
Supply side, basically people respond to incentives. They like doing things they find fun and attractive. They dislike doing things they find repulsive and disgusting. And the government can, through policies, affect those activities.
If you tax something, you make it less attractive, and people will do less of it. If you subsidize something, you’ll make it more attractive, and people will do more of it. That’s where you get the supply side statement that if you tax people who work and you pay people who don’t work, don’t be surprised if you find a lot of people not working.
Another one that’s very simple here is if you have two locations, A and B. If you raise taxes in B and you lower them in A, producers and manufacturers are going to move from. You got it. You follow me and it gets more and more complicated, more and more sophisticated, but it’s all just incentives.
We then look at We look at the five areas of macroeconomics: taxation, government spending, monetary policy, regulatory policy, and trade policy. If you’re in countries like Pakistan or Turkey or some of these, you would also look at privatization as well.
And there’s another one that fits very closely into it, but is not quite integrated fully is something like peace through strength. There’s a military set of policies there. And when you look at people, you see how the differences are. Almost all of my work, all my books, everything, I’ve been looking at just how those incentives are achieved in the marketplace and what the policies are and how to get optimal policies.
Monetary Metals:
Dr. Laffer, you’re famous for something called the Laffer Curve. You didn’t necessarily invent it, but you are definitely the one to popularize the idea in recent years.
When I try to explain the Laffer Curve to my mom or to my grandma, I usually use famous shark tank investor Mark Cuban’s framing, which is, would you rather have 100% of a grape or 10% of a watermelon? People really get that. But Dr. Laffer, let’s have you explain. How are you?
Dr. Arthur Laffer:
I’ve never heard that before. Mark Cuban is not my favorite guy, but I’d never heard that before. That’s great. I’ll consider it stolen.
Monetary Metals:
Please steal it, and we’ll have to thank Mark Cuban for the idea. Maybe you guys can have a podcast together.
So Dr. Laffer, for others than Mark Cuban, please explain what is the Laffer Curve and why does it matter?
Dr. Arthur Laffer:
Well, the Laffer Curve is very simple. It is at 100 % tax rates. If every time you went to the office, instead of getting a check, you got a bill. While your rates are very high, there’s no production, no one would even get out of bed, there be no revenues.
Likewise, if you have a zero % tax rate, everyone’s working, everyone’s making lots of money, but because your rate is so low, zero, they collect no money. So that starts off with those two points. And then as you start They’re lowering the rate from 100 to 99 to 98 to…
Sooner or later, some people start working, they’ll start collecting money. If you raise the rate from zero % to one % to two %, you’ll see… And what you do is you mop out this hyperbole there that is, quote, It’s a pedagogy device. This is not an empirical device.
And it’s meant to explain a point, not to measure it. And what you find is there are two tax rates that relate to the same amount of revenue, the two run a high one, a prohibitive range one and a low one. And just in common sense terms, if you raise a tax rate, it’s true.
You collect more revenue per dollar of tax base. That’s true. But it’s also true that if you raise a tax rate, you’re going to shrink the tax base. These two effects always work in the opposite direction. And when you get up in the upper range, when tax rates are high, when you have a long period of time, when you have a very small tax base, you get up in those areas.
It’s quite It’s often true that if you raise tax rates, you get less revenues. And it really is true. Property taxes are a classic example of it. In the top 1% of income earners, every single time the US has raised the highest marginal income tax rate in the top 1% of income earners, the economy is underperformed. Tax revenues from the rich have gone down, and the poor have been hammered.
Every time we’ve lowered tax rates from the rich, and this is just we have every tax return. Every time we’ve lowered tax rates, the economy is outperformed. Tax revenues from the rich have gone up, and the poor have had a chance to prosper. Those are very, very true. And that’s my book with Brian Domitrovic and Jeanne Sinquefield, which is Taxes Have Consequences.
And we have every single tax return in the US from 1913 to the present. This isn’t what’s my opinion, what’s your opinion? I could give a damn what your opinion is.
This is about facts, not how you feel. And We have all those data, and yet it is still amazing to me how many economists, professionals, don’t know straight up from sick them. They don’t know. They really don’t. It’s just terrifying.
Monetary Metals:
Talk to us a little bit about President Trump. Obviously, there was major tax cuts from President Trump. Do you expect further tax cuts from the Trump administration?
What do you see going forward from President Trump in terms of tax policy?
Dr. Arthur Laffer:
He’s really good at answering questions, and he’s not shy. So I’m not going to, in any way, shape, or form, speak for President Trump. I’ve known him for a long time, never really well until 2016. Then I got to know him really well, but I’d known him for 20 years before that.
He’s very well aware of supply-side economic policies. When I look at what he did in his first term, Operation Warp Speed, that was incredible. Instead of having to wait 13, 14 years for a vaccine, we got it in 10 months. I mean, Right to Try. Who would vote against Right to Try? Well, a lot of people did. Then you look at his tax cuts and jobs, which was a very good tax bill. I mean, just the opposite of the other people.
If you look at his health care price transparency, really understanding the incentive structures there. That’s great. If you look at his deregulation of energy, I mean, it’s amazing. So when I look at him, he understands this stuff. I spend time with him. And what I don’t try to do is get him to tell me what he’s going to do.
All I try to do with the President is give him the information I think I have and that might be useful for him in making good decisions. He has a whole range of issues he’s got to consider other than economics. I’m not into social issues. I’m not in any of these other than, just not.
But I am in economics, and I really know my economics backwards and forwards, and I know the data and all that. To the extent I can, I try to help him on that. I was with him a week and a half ago, two weeks ago. I see him about maybe every two months, month and a half, two months, spend an hour and a half, just the two of us.
We just talk. We talk trash a little bit, fun trash. Well, we’ve had a lot of friends in common. I’m a little older than he is, about six, seven years older than he is. And we talk about substance, and we talk about what he wants to do and stuff. And I’ve always asked him, I always make sure, please don’t tell me what you want to do, because I don’t want to have that burden of knowing what you want to or who you’re going to pick for this job or that job.
We’ll talk about all those things, but I just don’t… That’s where I am with Trump. And so what do I expect from Trump? I expect that this second term, the big, beautiful bill was great. I was really pleased. I think he did a great job on that. I think the price, health care, price, transparency, he really wants to do something on pharmaceutical pricing that we shouldn’t be the highest.
When we develop the drugs, we shouldn’t be the biggest payers for the drugs. I mean, And I think a lot of other stuff in health care that’s really important. And I think he’s just going to continue on on the types of policies he does. And I wouldn’t be surprised if you see him lowering tax rates further into the future. I mean, I talk about it a lot with him.
And as you know, we have a lot of pay for sitting out there, like all the contributions from 501(C)(3)s that are tax exempt, all the earnings there. I mean, we have probably, if you talk about a 10-year framework, which is what the tax bills are always put in terms of, we have probably $4 trillion worth of pay for us, which means he could reduce the income tax quite dramatically from where we are now, 37%, even to something like 15%.
He could break, get rid of the corporate tax if he wanted. He has a lot of room to move in there on those. He’d have to get a pass through Congress. But I expect he would try to push that stuff pretty… I mean, that’s what he’s been doing. And He really understands this stuff.
When I talk to you about the Laffer Curb, I’ll tell you about one I was talking to him about two weeks ago, and he was talking about a tax dividend from the tariffs. And he was talking about about 2,000 bucks. He said 2,000 bucks per person, that’s about $600 billion that would go. And he was talking about it as a dividend.
That’s a little different than that. I would not recommend you do a dividend. Which would you prefer doing? Giving money to people who don’t work or reducing tax rates on people who do work? So my suggestion was don’t write them a check, which would cause them to quit their job. What you do is you lower tax rates. Payroll tax rates was my suggestion. There was 2.5% on the employer, 2.5% on the employee.
So it costs employers less to hire workers. And so workers receive more for being hired. What do you think would happen in total employment and output? I also went through with him. This is just an example of what I do is if you do a dividend, a tariff dividend, your first place got to collect the money. Once you collect the money, then you have to write checks and send it back to those people.
Well, collecting money is a very expensive process. I did a paper with John Childs long ago where it’s about 20, 25 cents for So every dollar they collect. It costs the economy and the government about 25 cents to collect that dollar. So therefore, you have 75 cents left over. To send that 75 cents back out costs a lot of money. People there, you got fraud and all that. So you may end up, let’s say, with 60 cents.
Now, if you take that same dollar you’re talking about here and you cut the tax rate by a dollar, all right? Then you get more output, more employment, more production, and more tax revenue. So the impact of a dividend, let’s say, of $2,000.
The dividend, if you do $2,000 to send back, it costs you maybe $500 to do that one. So the benefits are only $1,500, and they also caused people not to work, versus cutting tax rates for $2,000, which would really be a lot more than that because you’re going to get all the fee… Well, you can see the types of stuff I talk about with him. He understands all that stuff completely. Bang, no problems.
And that’s the type of stuff I talk about with him. And I don’t know what he does with all of this stuff. Every now and then, I find out later what he does. I don’t know if your viewers know, he tweeted me out a couple of days ago. That was from… I wasn’t expecting that. All of a sudden, someone will go, Did you see what?
That was very nice of him. But that’s what I do with him. And it’s just common sense. I do that with anyone who comes in who’s in that type of position. I was Gary Brown’s economist when he ran for President. That was Gary Hart’s economist when he was there. I worked with the Kennedy’s with Clinton.
I was a big supporter of Bill Clinton, obviously, for good reason on that. I don’t give a damn if you’re left wing, right wing, liberal, conservative, Democrat or Republican, you like tax cuts, I’m on your team. I mean, I’m not into the social issues, so what the hell else do I choose a team for except pro-growth agenda?
Monetary Metals:
Dr. Laffer, now I do want to ask you about one of Trump’s agendas, which was tariffs. Obviously, supply-side economics usually is for free trade, and yet a lot of people have smeared President Trump as a mercantilist.
Dr. Laffer, you speak with President Trump. You say he knows the issues. On a scale from free trader to mercantilist, where do you put President Trump?
Dr. Arthur Laffer:
Well, I’m not going to allow you to do that. I’m going to allow you to let me explain the situation there. Pure Trade Theory is my dissertation, my trade. I taught pure trade at the University of Chicago. It It doesn’t get any better than that. All right? My book, International Trade policy, not a big seller. My mom bought three copies, but it’s really right. And that’s my specialty.
And when you look at trade, you have two really big benefits from trade. You have what we call the Ricardian gains from trade, comparative advantage. We then have one other one, which is the Sydney Alexander gains from trade, which is the transfer of resources from one country to another, from savers to investors.
Let me go through those there. I mean, comparative advantage in the gains from trade is that we produce some things more efficiently than foreigners do, and foreigners produce some things more efficiently than we do. We and they would be foolish in the extreme. If we didn’t sell them those things, we’re more efficient at producing. In exchange for those things, they’re more efficient. We should probably not be growing bananas in Minnesota in the dead of winter.
No, I think that That’s the day. This stuff, comparative advantage, Ricardian, the gains from trade is big, big, big deal. And I cannot overstate it. I mean, it’s a huge, huge deal. It is the real reason for the Smoot–Hawley Tariff, which my colleague Bob Mundell said, it was the Smoot–Hawley Tariff that caused the Great Depression, and it was the Great Depression that caused World War II.
Things don’t get much worse than that. I was in the White House in 1970 to 1972 when Nixon did the 10% import surcharge, the Job Development Credit that excluded foreign made capital from the investment tax credit, and the ’70s really sucked. They were bad, I think in large part because of what Nixon did.
Then if you look at the other side of the Ricardian gains from trade, it’s equally as powerful. The Kennedy Round Tariff Negotiation of the 1960s was a major item in the go go ’60s. They’re really huge prosperity. He got tariffs globally dramatically. If you look at NAFTA under Reagan, which was passed by Bill Clinton. Thank God for Bill Clinton. I voted for him twice, just for the record. I did it. I thought he was really good.
It caused the Reagan boom. It was part of what caused the Reagan boom. So no matter how you slice it or dice it, protectionism kills an economy, reducing protection as pressures, booms the economy. Okay, we’re all there. That’s Ricardian. The Alexander gains from Trade are equally as interesting and equally as powerful. There are some countries that save a lot more than they invest.
And there are some countries that invest a lot more than they save. What really happens is the trade deficit is for those countries that have more investment than they have savings, and the trade surplus is for those countries that have more savings than investment. You take a machine in a ho-kido, imagine this.
A machine in a ho-kido is crapping out. It’s losing money like. You take that machine down to Tokyo Harbor, you load it onto a ship, you send that ship to San Francisco, you offload it in San Francisco, you take it to Denver, Colorado, and that machine is the most productive, wonderful. It’s It’s a beautiful allocation of resources. By putting that machine on a ship in Tokyo Harbor, that’s a Japanese export. By offloading it in the United States, that’s a US import.
Now, Japan has one less machine than it otherwise would have had. So it now has a trade surplus because it sell one machine, and it has one less machine, it has a capital deficit. The US now has a trade deficit, and it owns one more machine. It has a machine In surplus, a capital surplus. You follow me? That is, in short, the Alexander gains from trading. Just to give you a flavor as how important these are. From 1640 until about 1870. Now, that’s 230 years. That’s a couple of weeks, okay?
The US ran trade deficits every single year with seven exceptions. There were seven years we did not run a deficit. Can you imagine what those years were? 1776 and 1777. For some reason, the British weren’t willing to sell us goods. I don’t know what’s wrong with those guys. 1811, 1812, two years there.
And then we had the Canal bond collapse in 1842, 1843, 1844, where the British and the Dutch lost all their money. They bought all the bonds. And Rothschild, out of England, said, America will never get another penny. That lasted for three years in money. But those were the only seven years that we didn’t run deficits.
We built our country on foreign savings, US investment. We brought in their capital. We combined it with our labor, our natural resources, and we became the pre-human and economic force on planet Earth because of our trade deficits, our capital capital surpluses and the accumulation of capital here. It doesn’t get much bigger than that. It really doesn’t.
So now looking at these. Now, I’ve hopefully convinced you how good trade is for the economy and how good it is, both Ricardian and There are differences today than there used to be. For example, in the olden times, it took years to develop a consensus to put a trade bill in front of Congress. It then had to pass the House, had to pass the Senate, went to reconciliation. They got a common bill. They then passed both House and Senate.
And once you got it passed, it’s impossible to remove it. It took a while for the President to sign it. The Smoot–Hawley Tariff was passed in the House and the Senate in the fourth quarter of 1929. It wasn’t signed into law until June 30th, 1930, by Herbert Hoover. In ’29, the stock market crashed. It dropped 35 % in that one quarter.
It went from a high to down to 83. It fell by 83%. I mean, unemployment rates went from 2% to 25, 27. This stuff is big stuff. Today, it’s not true. We have a New York House executive order, so we don’t need to pass through Congress and wait 400 years and undo He can put a tariff on you today, remove it tomorrow, put it on someone else, hop it down, get ticked off because your provincial governor, Ford, up in Canada, said some tariff on 10% across, then take it off a weekly.
It’s a very different thing on flexibility. You with me? Not only that, there’s something called reciprocity, which is very different, that is not considered in international economics, but I’ll consider it with you.
After World War II, we took all the combatants, the US did, both hostiles and friendlies, and we allowed them to put tariffs on US products to be able to build up their domestic industries. And they did. They used those, and we did not reciprocate. We did not go after them. But after a while, they all of a sudden became developed countries, really prosperous on their own right.
But did they lower those tariffs? No, they did not. So today, of all the big countries, and I’m not talking about the Isle of Man or Jersey, Jersey, and Sark, or some of these others, and Hong Kong. But of the big countries, we are by far the freest trade-break country, really are. And these other countries are really protections. It’s been built into their political soul. So now you have something where you have a very skewed reciprocity. All right, you with me? We today have flexibility, and today we have a skewed reciprocity.
Japan has much more tariffs on US goods, non-territ barriers, quotas, et cetera, than we do on Japanese goods. They don’t have a clue how much the damage they’re doing to their own economy by tariffing their imports. They don’t. No brains, no headache. That’s it.
The last thing I want to mention that’s different today, that’s understood today, and it’s very important for Trump, is the idea of the idea of leverage. It’s true that trade wars, no, there are no winners in trade wars. There are none. But the losers all don’t lose the same amount. Imagine that the US and Puerto Rico are the only two countries in the world.
So the whole world economy is the US and Puerto Rico. Us is 99% of the world, Puerto Rico is 1% of the world. Let’s imagine we have this perfect free trade where all the resources are going in the Alexander Gaines from trade, all the resources are being done by the Rick Harding Gaines rate. Puerto Rico’s exports are our imports, our exports are Puerto Rican. They run a trade balance surplus.
Our trade balance deficit is exactly the same as their surplus. I got it all perfect. Now imagine the US puts a terror. It’s going to hurt the US. But when you look at US producers, 99% of their customers are Americans, only 1% are Puerto Ricans. Now look at Puerto Rico. 99% of their customers are Americans, only 1% of Puerto Rico. Puerto Rico gets hammered, the US doesn’t.
So there’s a big leverage factor here. If I’m trying to get you to do something, I got a little leverage over Now, for most presidents who are brain dead, they don’t understand anything of what I’ve told you. But Donald Trump does. He’s a negotiator. So he uses trade because they’re flexible. He’s got the reciprocity issue.
He’s got the flexibility. He uses it to negotiate better deals. Now, if you look at the five deals he did in his first term, if you look at USMCA, that’s an improvement in trade. It really was. If you look at the Japanese deal, we got them to lower some non-tariff barriers. It was in Brazil. South Korea deal was also freer trade. If you look at Brazil and Colombia, the other two deals are all.
So when you look at him, he did freer trade deals, not less, by negotiating with these people and bringing them in. Now, I can tell you one story about his first term. He was at the G7 meeting in Ottawa. This is well recorded.
And he had to leave the meeting early to meet with Kim Jong Un in Singapore. You remember that I got a button and I’m going to push you on my button, figuring your button, and all that stuff. And he had to leave early. He said, Excuse me for leaving early. I know, but none of us wants a nuclear war. No, do we? No one raised their hands. So nuclear was not very popular in that discussion.
He said, I have to leave early and please forgive me, but the US has got a deal to make with the rest of the six of you. We today are willing to get rid of all of our tariffs, all of our non-tariff barriers, and all of our quotas, if you are. And they looked at him and go, Look down at their shoes. Bye, Donald. See you later. He is a free trader through and through. He uses tariffs, quotas, and all this stuff to negotiate. That’s all he has in the Ukraine-Russian conflict.
That’s all he had in the Gaza-Israeli situation. That’s all he had in the Africa. He uses and he loves negotiating. To be honest with you, I’m a wuss. My fallback is my pushback. I don’t know what I’m doing. I wet my pants, I cry, I roll in fetal position, I go in.
But Donald Trump doesn’t do that. He has in his hands and his toolkit all of these terrorist quotas, et cetera, which are beautiful tools. How do you deal with smog in St. Louis. If you’re dealing with Albanians fighting people in Sarajevo, they don’t give a damn. But they do give a damn about terrorists.
So he has a perfect set of tools, and he has a perfect set of countries and issues that he wants to achieve things. And my view is that I think Donald Trump is a free trader all the way, and he uses all of these tools to negotiate better trade and freer trade and bring us back more prosperously. And also he uses them to stop world war just the same way Reagan did. It’s peace through strength. If you join the good guys, we’ll cut your terrorists, we’ll stop sanctioning you, and we’ll make money together. But if you decide to be a bad guy and bomb people and kill people.
We’re going to put sanctions on you, and we’re going to build up a big defense. Look what’s happening in Venezuela. Perfect thing. We’ll blow up your goddamn boats. We’ll embargo your tankers. I mean, this is what Reagan did. This is what Trump did. It’s peace through strength, and he knows how to use it just the way Reagan did. I don’t know if you remember our Iran stuff. I don’t know if you remember that this is Reagan, what we did there, what we did with all of these.
Trump blasted the living hell out of the nuclear reactors. He’s done this stuff with Venezuela. Reagan did it with the island there in the Caribbean there when the Cuban troops came in. Reagan did with the F-111s when he bombed Gaddafi’s home. The same thing is this is a man who knows how to negotiate, knows what he wants, and is able to use it.
So I am a huge fan of his the way he handles this. Let me just tell you, I would be the biggest opponent of this with Joe Biden because that guy doesn’t know straight up from sick. Look at I’m three years older than Joe Biden, and that man should not be present. He shouldn’t. I shouldn’t be either, by the way. I go a lot. But Biden did it all the time.
Donald Trump with more tools, with more ability more flexibility, makes America better, stronger, and more prosperous. I want the right for people to use those tariffs, remove the day he’s out of office. That’s when I want the Supreme Court to come in with their decision. This is unconsitutional usually, but let him do it right up until that moment.
You follow me?
Monetary Metals:
So, Dr. Laffer, if I’m hearing you correctly, you’re saying that Donald Trump is basically using the flexibility of the on and off tariffs as a tool to lower these trade barriers, and hopefully at the end of four years, we will have freer trade than when we started.
Is that right?
Dr. Arthur Laffer:
Yeah, but do remember, and let me talk about the President himself as a person. And he did that one, the economy here is a plus, plus, plus, plus, plus You look at Donald Trump and you hear how he speaks, and you and I understand this, but I want to make sure you understand that you’ve got to take Donald Trump seriously, but not literally. He has a style of bluster of flip.
That doesn’t mean he’s not a serious person. That means that’s the way he speaks. If you go to the oval office, and I’ve been going to the oval office now for 55 years, it’s the most beautiful oval office I’ve ever seen, much better than Nixon’s or any of them.
He’s really done it beautifully. He’s got the Declaration of Independence in the curtain there. He’s got the big Reagan and he’s got gold filigree all across there. You’ve got the big wall of presence, the Wall of Fame there, which is there. It’s very much of the French Rococo, Gaudy style, but it’s beautiful. But that’s Donald Trump. I’m not that. I’m an old primitive American. I like Queen Anne, William. I’m not the style, but it’s beautiful.
He knows how to take for who he is. That’s Donald Trump. But don’t make the mistake of not taking him seriously and thinking that he doesn’t know what the hell he’s doing. He does, and he really does. And he just expresses himself. He He expressed it himself the way I would when I was in high school.
Guys are stupid. Trump is probably as good a president the US has ever had. And I’m just talking economics now. I’m not into social issues. I’ve said 10 many times, but I’m not. But I think he’s about as good a president as we’ve ever had in the US, and I’m really pleased to be involved with him. I do not work for government ever. I never will. I did once in the Nixon white house.
I was George Schultz’s right-hand person, and I found out what I don’t do well and what I don’t like. I really didn’t like it there, and I could take it through all the reasons. I made a bow, I would never take a penny from government ever again. So when I walk into Trump’s office, I don’t have an agenda, I don’t have an issue, I don’t an ax to grind.
I really don’t. I just there, if he doesn’t like it, then fine, go. You like it, you can use it. It’s yours. All I’m here is trying to help him make a better job, not to get some result this way or that way or the other.
I like it much better that way because I go home at night, he can’t fire me, he can’t hire me, he can’t double my pay, he can’t have my pay. I do the same thing with Reagan. I never worked with Reagan. I was never a job in there. Now, I was closer than all the people who were with Reagan. I was. But I didn’t go in there. I look at these other people, and it’s Republican and Democrat.
I’m not trying to say it’s not just one side. But these people, Janet Yellen, Christina Romer, Jared Bernstein, Larry Summer, all of these guys, they will rebut arguments they know to be true in order to curry favors with their political benefactors. I won’t. If I’m not invited ever again to the oval office, I got my farm up Kentucky. I got my six kids. I got my 14 grandkids, four great grandkids.
I’m doing just fine. I’m 85. I’d like to sit back and burp a little bit and maybe have an old-fashioned late at night instead of working the way I do. But I don’t have an ax to grind.
When I talk with the President, I try to tell him as truthfully the things I believe I have. I mean, I do make mistakes. Don’t get me wrong. I do, but not because I’m biased to do it. And these other people are. They butter up and kiss butts all the time because they want to impress the President. I don’t.
Monetary Metals:
Dr. Laffer, I want to ask you about maybe one of your mistakes, which is Nixon and the closing of the gold window. Obviously, you’re not for the closing of the Gold window.
Maybe that was our friend Milton Friedmann. But talk us through what happened in 1971, the closing of the gold window, and then in your opinion, why that matters today.
Dr. Arthur Laffer:
Okay, let me start with the first part you said, I disagree, and put it into the other-I was George Schultz’s right-hand person. I was the senior economist, PhD economist in the White House. I was 29. George Schultz was my mentor. He’d hired me at the University of Chicago.
He hired me four times. He never did learn. He never did. I went, Yes, you’re completely right. I disagreed with almost everything Nixon did. I really liked Nixon as a person. I did. He was really entertained, fun, brighter than hell and all that. But what he did, I told my mom one time, I said, Mom, you won’t believe it, but I just wrote a speech for President Nixon. Mom, it was amazing. He took the whole thing. He took the whole thing.
Oh, well, he made two changes. Only two changes in the whole speech, Mom. Wherever it is, he put is not, and wherever I put is not, he put is. But it’s my speech, Mom. Nixon was the antithesis of what I believe in, although I liked him very much. I love George Schultz. I thought it was great. My view back then was, if you’re willing to listen to me, I won’t quit.
I don’t mind being overrun. You guys were elected. I wasn’t. I’m there. If I can have an input in your process, I’d love to do that. But if you don’t want me as an input, let me go home.
And So I stayed there with George Schultz. I put my inputs in. Of course, Paul Volcker and I were the only two who wanted to keep on the gold standard. Milton Friedmann had won that debate. We got off gold. This was in the Camp David meeting there, and I didn’t want to. I’m a gold bug, as you probably know, not in the sense of holding gold. I don’t hold gold. But I do believe we should have a gold standard or a price rule standard. I really do. And Volcker does, too. We got outvoted.
All the others were Milton Friedmann acolytes, and they did their stuff. In 1972, I think it was where George gave a famous speech. He said that the US is raising the price of gold to $42 an ounce, a price at which we will neither buy nor sell gold. Now, what the hell is he talking about on that? And then you started, I wrote a piece in the Wall Street Journal.
You may want to go back and look at it and show some of your people there, The Bitter Fruits of Devaluation. I did that to do valuations help trade. This is my specialty area. I got resoundingly booed. Remember, I was 30 years old, so pretty young. I had just gotten tenure at Chicago, so I got the fastest tenure there ever. But this was my downfall. I mean, everyone was on my tush. All the everything was.
And of course, I didn’t know how to handle myself. I was a professor. I didn’t talk to people. I chewed gone. I had those B things, the antennae out of my head. I wrote this thing, and if you go back and look at it, Milton Freeman wrote a better critique of it. So did Godfred Hobbler, Paul Samuels, and they all said it was stupid. There’s no way you’re going to have hyperinflation in the US.
And I said, if you devalue your currency, all right, our prices have to rise relative to their prices by the full amount of the devaluation. Trade will not be impacted at all, and we’re in for a real inflation book. And if you go back, Bob Bartley, the Wall Street Journal, wrote in the parentheses, Dr. Laffer told us this would happen in a meeting on our board, and you can see how I do it.
That’s how I did. So I wasn’t surprised. George Schultz, who did not like that piece, he didn’t. He said it was a bad piece. He thought it was shoddy economics, and he thought I should withdraw it and not publish it. I had a different take on it, and I did publish.
Now, it didn’t change our relationship at all. Three years later, four years later, I asked him, I said, remember when you thought I did a crappy piece of bad, shoddy academic work on that paper? And you saw what happened. Were you surprised?
And he said, Arthur, I’ll tell you, I was the least surprised person of anyone in Washington, which is the nicest thing in the world to say. And it happened. When you have a standard there, if you devalue relative to gold or other currencies, your prices are going to rise relative to the other country’s prices by the full amount of devaluation of the devalue of the currency. That’s it.
And all the research that back then on that shows that to be the case. And it’s the case today, too. But now it’s different in the sense that we don’t have a fixed rule Now we see what’s happening in the private market, where with crappy government currencies, government fiat money on back paper currencies, you’re seeing a resurgence of gold.
You’re seeing resurgence of crypto Cryptocurrencies. I’m on probably four crypto boards. I love cryptocurrencies. I think it’s the private market’s attempt to take away the government monopoly on money and bring us back to a sound. And I especially love stablecoins.
I think they’re really cool. Bitcoin and gold, they serve a different function. Gold can serve the transactions, medium function, but it’s not that good at it. But stablecoins are great. Great. I don’t know if you agree with me on that or not, but they’re really wonderful.
Monetary Metals:
Dr. Laffer, I actually want to ask you specifically about stablecoins. The biggest stablecoin is Tether. They are a US dollar stablecoin. They also have a gold stablecoin as well. But Dr. Laffer, in your opinion, because now there are these stablecoins which are available worldwide, has this cemented or reinforced the dollar’s World Reserve currency status?
Because now anyone in Namibia or Chechnya or Ghana or Switzerland, they can say, Why do I need the Lira? Why do I need my local currency? I’ll just go on my phone, I’ll buy a US dollar stablecoin, and it’ll be as patriotic as Dr. Laffer. Do you think that the world reserve currency is now cemented because of stablecoins for the dollar?
Dr. Arthur Laffer:
I wish you hadn’t used the word cemented. It’s improved, but it’s not cemented. I just talked to Paolo probably three weeks ago at length. Stablecoin, his Tether, is an extraordinarily ingenious tool, especially in places where they don’t have money.
Let’s say the Maasai tribe, they’re trading cows and blah, blah, blah, blah, blah. And if you have dollar bills, you slip and fall in the mud hole and your dollar bills are ruined. It’s perfectly there for phones to do it. It’s an amazing, amazing thing. And it is revolutionized. It’s revolutionized. Turkey, African countries, all of these places don’t. It’s got a problem with the big countries, us, the US, London, Japan, all these, where most of the money is transferred.
The reason is that Stablecoin, what they do is they issue a dollar, and then they immediately offset. They collect their dollar, then buy a short term bond or note, whatever, a T note, T bill, longer, whatever it is. They do do a little bit of other stuff that I wish they wouldn’t do. I don’t like them doing gold and Bitcoin in there, but they do a little bit just, I don’t know, salt and pepper and Louisiana Hot Sauce or something.
But they should just be a dollar, and they do that. And so they have a profit yield, a gross yield on that of the interest rate. Well, in our world of New York and financial markets, London, et cetera, you can’t have those type of margins without having competitors just beat the living hell out of you.
So I would love to see them to have a stablecoin where they return the value to, now they say the genius act would be, that’s just crap. The thing that’s going to happen is you’re going to get competition amongst stablecoins to where the margins are brought way, way, way, way down, maybe a 10th of a BIP or a half a BIP or a BIP there where you have a stablecoin, where the returns are.
Then it really doesn’t matter what your numeral rare is. It really doesn’t, because the interest rate spread, the interest rate in the US is really comprised of two things. One, it’s the real rate of return on capital, but it’s It’s also the expected rate of inflation. And so when you have a dollar, what you want to have happen there is you want to have that stable in terms of goods and services.
And to do that, you need to return to the holders of the stablecoin coin, the yield, the inflationary yield. That, I think you’re going to see now. You don’t write it out in a dividend check.
What you do is you allow the stablecoin to appreciate relative to the numeraire you’re stabilizing the coin to. Do you follow me? Let’s say we have 3% inflation, so the stablecoin should be appreciating relative to the dollar by 3% per annum. You can do that really easily, and you can do it continuously every billionth of a second. Now, I’m on the board of Soulmate, which does Solana, as you know, but it’s cool.
All of these ones have different functions, different uses. They all have blockchain, which I think is absolutely brilliant. Blockchain I’m trying to get rid of all the transactions, problems in banks, et cetera, credit cards. I mean, it’s just unbelievably cool. And being 85, I’m considered the grandpa of crypto. But I love it, and I’m on four boards with it. And I think it’s the greatest thing ever. And I want to live forever to see how it evolves. But that’s what I think is going to happen.
Gold, when it was just Bitcoin and gold, I like Bitcoin, but Bitcoin, I didn’t know how it could transfer itself to be a transaction’s medium. Now with Tether and all these other stablecoins, I understand it. Gold has both, but gold has the one problem of being a commodity.
Now, you can do almost be infinite personally small. You can do 0. 000, one molecule of gold, one atom of gold, you can do. But it is a little awkward in that it’s a physical thing. So I always go back, and I don’t know if you’d like me to do this with you, but I think it might be good for your podcast. Let me go back to the history of the US dollar, and let me take you back.
And I’m going to use my point of demarcation, 1913, which is the same year that I do my demarcation on the income tax because the income tax in the US was the 16th Amendment was passed in the early 1913. They then passed the income tax, the progressive income tax, and And the income tax in the US in 1913 was only for November and December. That’s the demarcation.
Same thing with the Fed. The Fed was instituted in 1913. Prior to that, the monetary system was private, and it really was private. Now, government had three functions, a little bit more than three, but I’ll just talk about the three real ones. Number one, it defined what a dollar was. A dollar is one-twentieth of an ounce of gold, $20. 67, to be exact. All right?
A dollar is an ounce of silver. All right, that’s a dollar. They defined it. They also did minting of coins. We had the US mint, which if you brought in bullion, silver or gold, they got it to the right purity. They then minted coins for you, and they charged you a commission. That was true, by the way, in private sector.
There were a lot of private mints all over the country. It was a competitive industry, and how much they charged, determined where the people brought it. So that’s not a big deal, having the government involved in that, it doesn’t do any problem. The one that they did, which I thought was really good, is they would go to banks that had released their balance sheets and their income statements and audited them to make sure that the financial statements they released were true and accurate.
Now, as you know, back then, paper currency were banknotes. Banks issued liabilities. They had a format, a piece of paper form. It looks like a dollar bill, only each one had its own bank name on it. And some of those that sold a slight discount to others, there was a slight thing there, and that was all cool.
It did that. And the banks and the Fed audited the balance sheet. That was the world. And if you look at that, was the world from 1776 until 1913. That’s what’s that, 137 years. Then we had the Fed come in first time to nationalize money. Then they did it with state banks versus federal banks, and they made you have reserves and treasuries, so they were extricating.
Yeah, all that stuff. Then you had the confiscation of gold in 1933. That was Roosevelt. He did it in March of ’33, the Bank Holiday Act. Then he devalued the dollar, the biggest wealth tax in US history. The only country that made it criminally illegal to hold gold, US, that’s us. I did my dissertation on the interest equalization tax and the voluntary foreign credit restraint program. I was in the White House when we went off gold in the Smithsonian.
I’ve been there We’ve done that in all. Now, look at the period from 1776 to 1913, 137 years. Over that whole period, the average rate of inflation was?
Monetary Metals:
Zero.
Dr. Arthur Laffer:
Good work. Zero. Now, it doesn’t mean there weren’t some changes, but they could have well been changes in the relative price of gold. They didn’t have to be inflation. All right, there was no inflation over that period. How many great depressions were there during that period? Zero.
We had panics, but panics lasted two weeks. Then it went right back, changed the ownership of assets. We never long bonds. Now, I use my favorite economist of Wharton, Jeremy Siegel, whose partner is Jeremy Schwartz.
They have the best data on interest rates ever. I trust those two guys to the hilt on doing it. If you look at the long bond yields, 1776, they’re in a five and a half % range, and they drifted down. By 1910, they were in the four and a half % range. Any bops and No. The long bond just never moved. Boring, just what you want in a long term capital. There were no 21 and a half % short term interest rate down. None of that. Now, from 1913 to the present, the private, the inflation, the dollar, the price level has gone up 35 fold. Huge. We’ve had big depressions and collapses and high unemployment and all that.
Nothing. They didn’t protect us from crap. And interest rates. When we came into office on January 20th, 1981, the prime interest rate in this wonderful country of yours, you’re too young to know, but it was 21. 5%. Mortgage rates were 16, 17, 18, 100%.
So what the hell is this? We need to get rid of the government monopoly and money and go back to private money. And that’s what Paul Volcker and I were talking about. And so when you rightfully point of finger, you were in the Nixon Whitehouse, that That does not mean I supported it.
In fact, I was opposed to it, but I was a kid. Not only was I a kid, I really do believe that if they listen to you and if you’re articulate, you can make a difference. I didn’t resign in protest. That’s not what I do. I try to help people who are hugely opposed to me to change their minds or to soften their positions. I’m not a virtue signaler. I’m just not.
And so when I look at this stuff, should I have been there in the Nixon Wild? Should I have resigned in protest? Hell, no.
I’m sitting there to try to make a better country. And so if I can get Vincent Nixon to do a little less damage, I’ve done a good job. So There you go. There you have it. That’s my story, and I’m sticking to it.
Monetary Metals:
Dr. Laffer, as we come towards the end of the interview, I’d like to do a rapid A fire round with you. This is a lightning round. You can answer these questions as short as you possibly can, and we’ll do as many as we can.
Dr. Arthur Laffer:
Remember, I’m 85, so I drool. I’m a little slow. I’m things, so don’t push me too far. I can’t remember what I had for breakfast.
Monetary Metals:
Absolutely.
Dr. Arthur Laffer:
All right. Don’t embarrass me with something really quick.
Monetary Metals:
Dr. Laffer, which tax would you eliminate first? The income tax, the capital gains tax, or property taxes?
Dr. Arthur Laffer:
I’m not going to be short on this. Property tax is the one I did in Prop 13 in California I’m getting to get it. But the one I did for Jerry Brown. I was his economist when he ran for president. We got rid of all federal taxes except for sin taxes, and we replaced all federal taxes with two flat rate taxes, one on business net sales value added, and one on personal on adjusted income with no deductions, no exemptions, no exclusions, no emissions, nothing. Both in there with no progressivity in the codes, nothing there. That’s what I do.
Monetary Metals:
Dr. Laffer, next rapid fire question for you. Which country, in your view, has tax rates that are too low?
Dr. Arthur Laffer:
Are you kidding? Which 18-year-old has too much sex? None. There aren’t.
Monetary Metals:
All right, Dr. Laffer, next question for you. What would you say to states that are losing citizens, like California or New York, to places like Tennessee or Florida?
Dr. Arthur Laffer:
Well, I moved because of that. That’s the whole reason I moved to Tennessee was that, and I did, and I made great choice. Earning income with lower taxes is a lot more fun, just for the record. Just thought I’d mention that to you. Yeah, that’s what they do. And if you go to my series on Rich States, Poor States, I’ve been doing that since Prop 13, since 1978, I’ve kept the whole index. It’s the Alec Laffer Index. And so you can look that up in the Alec American Legislative Exchange Council’s website there. Steve Moore does one on the Committee for Prosperity website. I eat the stuff I kill.
Monetary Metals:
All right, Dr. Laffer, next one for you. Who do you think will see a bigger economic boom? Nayib Bukele in El Salvador or Javier Milei in Argentina?
Dr. Arthur Laffer:
I’ve spent a week with each one of them, and I love them both. Bukele is really impressive. His brother is phenomenal. Khalid, his sister, is great. I spend time there. I’ve got all these pictures. He’s really a cool, cool guy, and his family is cool, and he’s enormously popular. I’ve also spent a week with Javier Mele. I adore the guy. I’ve got all these pictures where Ava Peron gave her seating the Casa Rosada. I know that’s the Pink Pal. That’s where he operates there.
I think with a recent reprieve by the debt that our Scott Pesant was so wonderful doing, his new election, I think both of these gentlemen are going to be enormously successful. And I hopefully am going down to see the old-timey ones that I did in Chile with Pinochet and Sergio Dacosta and Ralph Lutz. Cast was just elected new President of Chile, throwing out the commie, just like we did with Eduardo Frey and Allende, and coming in with a good…
And I’m really excited about all three of those countries. Argentina, I think is going to be spectacular. Sturtzenegger and Caputo are just amazing, if you know who they are, they’re just wonderful, just like the old men of the team.
I got the best ever. And if you look at the Bukele team, it’s the whole family plus. And now you’re going to see us rejoined. So it’s going to be the three amigos. And now all we have to do is get that necessary Cacimento de Silva out of there, out of Lulu, out of Brazil, and put Paulo Guedis and all the people back in their Bolsonaro. And then we’re going to have everything.
It’s going to be the most wonderful continent in the world, from the crappiest to the most wonderful. Then Venezuela will not only interdict their ships, we’ll also attack them from the back with all these other wonderful countries and provide them with good alternative free market pro-growth economic presidential candidates. How’s that?
Monetary Metals:
Laffer, that sounds great to me. Okay, next question for you. Who, in your opinion, was the best Fed chair and who was the worst Fed chair?
Dr. Arthur Laffer:
Well, we had great Fed chairs as long as we stayed on gold. The damage done was minor. We had too much in reserves of gold, so we were allowing ourselves to have inflation, and by lowering the quantity of reserves over a long, long period. It culminated in 1961, 1962 with the trip by Kennedy to meet Charles de Gaulle, where he threatened to cash in his dollars for gold, and that was boom. William McChesney Martin did a great job. If you look at it after that, you got Arthur Burns, who did not do a very good job. He gave Gmail and Miller, he was not.
Then Paul Volcker came in in ’79, did a great job of really going back to a price rule. I really like Paul Volcker. He, by the way, did not like me. He just didn’t. I thought the world of him. I loved Bill Clinton, too, by the way. I voted for him. He called me the worst thing that ever happened in the world. But I don’t give a damn what he thinks of me. I thought he was great. And then Alan Greenspan, I thought, did a great job.
And then you got the twerps. You got Ben Bernanke, Benny Bernanke, who doesn’t understand straight up from sick. And you got Janet Yellen. And then you got the… You got Powell. I mean, this guy asked his staff, What should I do? Paul Volcker told his staff what he was going to do. And I think the next Fed chairman, and I think it’s going to be Kevin, That’s a joke. There are two Kevin. Thank you. I think it’s going to be Kevin, and I think we’re going to go back to a very good Fed chairman, and hopefully reestablish solidity and soundness in our currency.
Monetary Metals:
Dr. Laffer, last rapid fire question for you before we grade President Trump. Do you support auditing the Fort Knox Gold?
Dr. Arthur Laffer:
I think it would be fun. Do you think it’s there?
Monetary Metals:
Dr. Laffer, we’ll do it together. All right, Dr. Lapper, let’s rate President Trump on the pillars of Prosperity. First, low rate, broad-based flat tax. Where do you rate President Trump from, F to A?
Dr. Arthur Laffer:
This is waiting versus what?
Monetary Metals:
Just in general on the Pillars.
Dr. Arthur Laffer:
You got to have a standard. I mean, F to A.
Monetary Metals:
If he got the highest- Yeah, and it’s a North Star.
Dr. Arthur Laffer:
Yeah, no, I understand the North Star. Relative to every other president in the United States is the best. Relative to perfection, he’s good, but there’s still a long way to go.
Monetary Metals:
Okay, next one, spending restraints. How’s President Trump doing?
Dr. Arthur Laffer:
Not well on this absolute standard, but a lot better than Biden. And he has all sorts of political constraints, and he’s not done a great job on that one. It’s just very hard, but he hasn’t, but he’s sure is hell better than anyone’s around. He’s not a Bill Clinton. Bill Clinton got government spending by two and a half percentage points relative to GDP. Clinton was the best on government spending control. But Clinton then had He had New Gingrich.
He had team players that could do it. Trump doesn’t have that type of alliances. So Trump has done a good job, a great job as he could, but it’s still not… We have a long way to go on spending. And I love, love, loved him bringing in Elon Musk and the team. I think Doge was great, and we should have a lot more of Doge, but that’s the one really bad area.
Monetary Metals:
Okay, next one, sound money. Where does President Trump stand?
Dr. Arthur Laffer:
Trump is coming in now to his own. He hasn’t done anything yet this term because he hasn’t had the ability to get control of the Fed and to control the Fed’s balance sheet. He did a fairly good job as President, the first one. But again, nothing like the ones in the 19th century and early 20th century because they were pegged.
I mean, it’s a problem that he wasn’t able to solve. He did a lot better job than the presidents around him, but he didn’t do as good a job as Reagan and Volcker did. They dropped him way down. And he had the problem there, and Biden blew it the next time. I think Trump is going to do a great job here. But again, from an absolute standard, he’s got a long way to go compared to his compatriots there. He’s done a great job.
Monetary Metals:
Dr. Laffer, next one. This one might be tough. Free Trade, how is President Trump doing?
Dr. Arthur Laffer:
I think he’s spectacular. You got to understand. I do understand Trade, as I went through with you very carefully. Understand it. If you’re smart, and there are ways of using tariffs, quotas, non-tariff barriers to achieve objectives, like How do you get the Japanese to the table?
How do you do it? Well, what do you do? Is you go up there to them and say, I’m going to put 50, 100, 200% tariffs on you. If you don’t, oh my God, don’t do that. We’ll come and negotiate. They don’t want to cut their own tariffs, but you have to threaten them. You have to get into negotiations.
And I think he’s probably as good a president on free trade as anyone I’ve ever seen. I love, love, love Kennedy’s round. I loved it. And I love NAFTA that Reagan did. And Reagan and Clinton, by the way, was under Clinton. It was passed. And I loved it. But I think Trump really understands this stuff and knows how to negotiate and do that better than anyone ever. I think he’s spectacular on trade.
Monetary Metals:
All right, Dr. Laffer, last one of the pillars, which is minimal regulation. How’s President Trump doing?
Dr. Arthur Laffer:
He got energy deregulation passed. He’s proposed medical care price check transparency. He’s done the one for every rule you put in, you got to take away 10. I don’t know. It’s like the bar scene in Star Wars, regulations are because there’s so many different ones and all this stuff. But I think he’s done the best job I know in modern time. Now, back in the olden days, where in 1910, government spending as a share of GDP was 3 %. Regulations were low. So how do you compare him with Thomas Jefferson? I don’t know. But I think he’s done a spectacular job in deregulation. Just spectacular.
Monetary Metals:
Dr. Laffer, what do you want your legacy to be?
Dr. Arthur Laffer:
I want you to like my kids, my grandkids, and stuff like that. And I’m just really happy with my life. I’ve had a great life, a fun life, and it’s your turn to take… Well, not quite yet. I got another 10, 15 years.
Monetary Metals:
Dr. Laffer, you’re living to 137. That’s my prediction.
Dr. Arthur Laffer:
That is my… You’ve heard that, too.
Monetary Metals:
All right, Dr. Laffer, I’m going to give you a minute to brag about your children, your grandchildren, your great-grandchildren, because I hear that’s one of the joys of life.
Dr. Arthur Laffer:
It is. I mean, it doesn’t mean I love all my kids the same, and all my grandkids the same, I do. I don’t like them all the same, okay? They piss me off and stuff like that, and I get some battles, they come. All of that happens. But I really look at my kids, I don’t have a zig or a zag in the group. They’re all good. Some of them are more successful in one area or the other, but they’re all really good. They’ve all got kids of his own except one, and I think he’s going to soon. Then I look at my 14 grandkids. They’re just spectacular. I mean, professionally academic.
Now, my six kids are not. They don’t follow me in the academics, the math and stuff like that that I do. I’m very much like my family going back. My dad was not, but my grandfather was a brain surgeon at Western Reserve Medical, all of this stuff. So it skips the generation. My grandkids are all really scholars, and it’s just amazing. I just couldn’t be proud of them. And I think they’re going to have a lot of great grandkids.
My view of the world is that if you can’t convert the rest of the world, just overrun them. And I’m going to do that. I’m like the Muslims. I’m going to be like the Amish. I’m going to be like the like the Germans and just have tons of kids and just increase my weight. And not one of my kids is an ultra lib or anything like that. I don’t think there are any tattoos. At least they don’t tell me they have them or any. I mean, I’m pretty conservative, as you can tell. I don’t mind if you have tattoos and stuff, but I don’t want it.
Monetary Metals:
Dr. Laffer, it’s great hearing you brag about your kids. Okay, final question. What’s a question I should be asking all future guests of the Gold Exchange podcast?
Dr. Arthur Laffer:
Well, what you should say is, don’t you think of you? What do you think of me?
Monetary Metals:
Dr. Laffer, what do you think of me?
Dr. Arthur Laffer:
I think you’ve done a good job today.
Monetary Metals:
Dr. Laffer, I can’t wait to do even better in our next interview. Thanks so much for joining us.
Dr. Arthur Laffer:
Great. Thank you.