Your new book, free people, free markets. I have to say one of the most interesting things about this book, to me, is its breadth, aha youve got such that youve got such a long time period that youre talking about. The wall street journal was started in, remind me, what year again . Guest 1889. Host right. A few years after the financial times, where i work. Same era yours started in london, and ours started in new york. Host exactly. And youre the home team. [laughter] i want to come back, because i think the parallels between that era and this era are interesting and something i think a lot about as a business journalist. First off, i want to just note a point of connection we both have, were both from indiana guest exactly. Host in my case, rural indiana, and you are from guest whiteland, indiana, which i wrote about in a book that came out last year called when the new deal came to town. Host okay. Guest and i wrote a book about how the new deal affected people in this little farm village, which it was back this those days. Host fascinating. Guest anyway, were not talking about that book, were talking about this book. Host well, you know, its relevant, because i think where people come from often influences their world view guest oh, absolutely. Host im curious, how would you say growing up in rural indiana has influenced your opinion . Guest yeah. Well, i think growing up as i did in a small town actually, a village, we only had 406 people you have a lot of contact with other human beings. Host yeah. Guest you know them. You actually know their secrets, which is one of the drawbacks of a small town. [laughter] host yes. You can also cash checks at the grocery store. Guest i think it helps you a great deal as a journalist, because it makes you see things in terms of real people rather than statistics or and i thought it was a great way to, you know, you go down to the local barbershop and you argue politics. Thats how i learned to argue. [laughter] host in the barbershop. Guest yeah. So i thought it was a great host yeah. Guest way to become a, you know, start out to become a journalist. Host yeah. Its interesting because, you know, from my perspective the midwest is an interesting place. On the one hand, you learn the value of community, certainly. On the other hand, you learn the value of independence and selfsufficiency. And thats something thats very much, i think, in play today in the political debate. And i notice, you know, from reading the whole hundredplus years of coverage that you look at that the journal has always taken that position around individuality. Although its changed over time. I mean, i was fascinated going back to the 19th century to learn that the journal had actually defended the right of coal miners to strike. Guest right. Host back then. Tell me a little bit about how conservativism itself has changed or how we think of conservativism based on this hundredyearplus period that youre looking at. Guest well, i think conservativism is actually something of a misnomer because, yes, journal editors over the years have been what you would call conservative. But as book, the title of the book indicates, basically they were advocates, defenders really, defenders of free markets and free people. And the incidence you were telling about with our founder, charles dow one of our founders, there were three of them, but he was the intellectual of the bunch charles dow was a very strongly believed in free markets and free people. Thats why he wrote an editorial which im sure was very unpopular at the time. There were 100,000 coal miners out of work. They were on strike. Host yep. Guest and he wrote an editorial defending the coal miners. Which probably wasnt terribly popular on wall street. [laughter] they were losing money on mining stocks and all that sort of thing. Host yeah, yeah. Guest but he was defending their rights, that workers have just as much right to organize as investors do to organize business corporations. So that was one of the points i make in the book is that that kind of philosophy, just a kind of fundamental philosophy has carried on pretty much through the history of the wall street journal. Thats pretty much where the editors are today, defending markets as the journal today defends trade, trade agreements, and defending people as weve had to do many, over many years of defending people against the various tyrannies of the world. Some of whom, some of which still exist like cuba, for example, and now venezuela. So thats kind of the thing that interested me, was that continuity despite an enormous change in the world. Host yeah. Guest particularly in technological terms. The journal has sort of remained constant over those years. And by the way, some of the leading people over those years were from indiana [laughter] host really . Oh, thats interesting. Guest barney kilgore, casey hillgate came out of depau, and he took over from clarence bare row in 1928. And he hired another boy wonder from depau named barney kilgore, and he was the creative guy who set the wall street journal on the course that turned it into the huge publication it is today. Host so, all right, so youve raised a lot of interesting topics. Foreign coverage, which you were very much a part of. Were going to come back to that. Labor relations, you know, the nature of defending individual and corporate rights. But let me ask you kind of a more personal question since you also are bringing up some of these past editors and stars that came out of the journal. Who were personally your favorite editors to work for, and you give us any sort of details about, you know, the inner workings of the journal and how its changed over time. Guest well, i just mentioned barney kilgore, and he was a remarkable man. He seemed just very natural, and he had a slight tic. Tick. He kind of went like this sometimes. So he had this little defect that made him seem human. And he was, he acted very human. He was very nice to people. But he was brilliant. He was Bureau Manager at the wall street journal when he was 23 years old. He sort of dissected the new deal, various aspects, and then he became ceo in the late 40s. And, as i say, designed the modern wall street journal. Host how actually, you know, youve seen several eras of journalism come and go, and were many what many people would call an incredible period of disruption right now. Do you think journalism is better or worse today than when you started . Guest well, its certainly far more diversified. I mean, you have all these blogs. Anybody can be a journalist today. And maybe gather a following. And there are all kinds of blogs. I have no idea how many there are [laughter] host a lot. Guest as you know, they compete with and the wall street journal is about half of our circulation of wall street journals circulation is electronic now. Probably same way with the ft. Host yeah. Twothirds, actually. Guest so its extremely diversified. And the professional journalists, people who are hired reporters on the staff of well known publications kind of resent that competition. But on the other hand, probably i kind of think it might be good for them because sometimes these amateurs come up with pretty good stuff. [laughter] host well, okay, so im glad youre remaining true to your tenets of free markets and supporting the blog. To go to your point about the journal retaining this view of free markets above all else, you know, i can see when youre writing in the book many great examples of that. I can also see some times, particularly in the modern era, you know, under murdoch where, to me, it seems like theres a more partisan environment. And i think thats something that a lot of american readers worry about today, that the media has become too partisan. Whats been your experience with these debates at the journal . Guest well, the journal ive been on the opinion side. I started out as a reporter this chicago and then went to detroit, cleveland, atlanta, whatever. Foreign correspondent. And then i joined the editorial page in 1970. So ive been in the opinion business host long time. Guest we are partisan. We make no bones about it. Host yeah. Guest we are partisan. Host but partisanship above ideas sometimes is what people criticize both on the left and the right. The times will come in for this criticism as well. Guest yeah, i can see your point. And i think that has become a problem. I think that some people are just kind of wearing their hearts on their sleeves and just winging it because theyre just so antitrump, for example. [laughter] host yeah. Guest the main issue here. Host yeah, yeah. Guest and i think it has done some damage to the quality of journalism, particularly when people are just full of anger. And i, you know, im not sure thats justified. I think journalists should at least even opinion journalists should try to remain cool and analyze things. And you never can be quite totally objective, but at least you should try to be intellectually honest. Host yeah, yeah. Lets i want to sort of come back to some of your favorite stories and some more personal stories in a moment, but let me kind of link together a big financial topic thats been in the news for the last 810 years which is quantitative easing which has been done by the fed, of course, following the financial crisis, you know . For the viewers who may not know, the fed dumped about 4 trillion of money into the u. S. Market. Guest absolutely. Host this is something that i know a lot of folks at the journal were unhappy about. I wrote a number of articles myself even though im more on the liberal side of the spectrum saying i thought easy money was actually not going to fix what was wrong in the economy. Its interesting, because you in your book mention several other points throughout history in which there was this problem of government papering over, essentially, fundamental problems in the economy with monetary policy. And i wonder if you could maybe kind of take us through some of the historical lessons that you see there and how things might end in the next few years with this. Guest well, of course, one of the classic cases from history was the silver act of the late 18th 19th century. And the journal was against that. And basically, that was an act where the Western Mining interests wanted congress to monetize silver so that silver would have more value, and they would win. And we were on the Gold Standard at that point, so we would be bimetal centered. Host yep. Guest well, the journal already had i think correctly thought that would be inflationary. It would benefit the silver miners and, of course, William Jennings bryan made his great speech about the cross of gold and all that sort of thing. Host populism. Guest yeah, that was populism. And populists have many heroes. There are different kinds of populists, but many eras have wanted easy money. Is so the journal has had to fight that over the years to try to encourage government. Money is theres no such thing as wealth. The Gold Standard was about as near as you get. But the journal supported the federal exchange act. Again, with the idea that this would stabilize money. At that point local banks could issue money against gold. They supposedly had in their vaults. Well, they created a national currency. The journal supported that. But then in the 1920s began to have second thoughts [laughter] host i wonder why . Guest but at any rate, the journal and one of our editors which we might get to said ive probably written 50 editorials about inflation. He wrote editorials over and over again about how your money depreciates if the central bank or the government inflates the currency. And this gets a little, it gets more complicated than many people understand, but basically the point is that the issuance of currency is what causes inflation. Its not producers, its the currency, okay . So host well, no, so its interesting though because critics i mean, frankly, i started writing columns that were critical several years ago of the amount of qe that was being done. But a lot of people, including me, thought that by now wed be starting to see more signs of inflation, and were not. What do you think . Is this time different . Is there something going on that guest i wish i knew. Im exactly as be puzzlinged, im just as puzzled as you are. Host yeah. Guest and the quantitative easing, we were certainly against that. Host yeah. Guest the Government Spending or the Federal Reserve, actually, which is really more of a branch of the government than most people realize. Host yeah. And i want to ask you about that. Guest spending these e nor mouth sums enormous sums to buy up government securities. In other words, basically giving the, in a sense giving the Government Free money because the Federal Reserve returns its earnings on bonds, as you well know, government bonds, to the treasury. So it takes out its own expenses and returns everything. So the government is actually at these low Interest Rates, and with the fed buying enormous amounts of federal paper, the government was getting money free, and they took advantage of it. They doubled the National Debt in seven years. So we were against that. Host well, its interesting guest and let me get back to your question which, i dont know how we managed to well, i know how we did it. I know how the fed did it. The fed actually, basically just borrowed back the, i mean, just just created reserves in the banks and held them by giving the banks interest on the reserves. You know all about that. So thats how they managed to avoid inflation. But there was still an enormous distortion, and thats what i have written about as well as you have. Host and were waiting to see what the impact of thats going to be. It could surface in five years, i mean, actually, its interesting because if you take it in the international context, theres still a lot of money being pumped into system by europe, by japan guest absolutely. Host so were not really through that cycle yet. Its interesting because, you know, not only has the government taken advantage of easy money, but corporations have actually guest oh, absolutely. Host and, in fact, we have, i believe, a record Corporate Bond bubble right now. Whats the journals feeling been about that . Whats your feeling about that . Is that something that keeps you up at night . Guest my feeling is pretty much consistent with the journals even though i havent been there for a while, but i still write for them. And and we worry about this. Debt has consequences. Its not just corporate debt, but the Consumer Debt is now getting very high. Host yep. Guest and it went down, after the crash it went down, hit the low in 2010 as everybody pulled in their horns, and then its been kind of growing ever since. And now were getting up to the point where auto loans outstanding are very high, Credit Card Debt is very high host right. Student loans. Guest student loans, that might be a writeoff because host yeah, right. [laughter] guest god, thats a trillion. Host yeah. Guest so, you know, debt has consequences. Host yeah. Guest borrowing from the future host yeah. Guest and someday you have to pay for it. Host you think rand paul doesnt get his due . [laughter] guest well, you know, i agree with him on some things, and other things i dont agree with. [laughter] host well, its interesting to me because, again, im sort of coming back to our mutual indiana roots here. Guest right. Host im definitely a liberal, but one thing that has always puzzled me, actually, is why more folks on both sides of the aisle but particularly democrats dont think more about the consequences of debt bubbles for ordinary people. Because, of course, everybody or borrows in this society. We have a debtor society. Guest yeah. Host Consumer Credit has grown certainly dramatically over the last 40 years. Corporate credit has grown. Theres any number of reasons for that. One of the reasons, i think, is that the tax code subsidizes certain kinds of unprofitable and unproductive, i should say, debt. What has been the thinking . I mean, surely at the journal and particularly on the opinion pages you must have done some pretty deep thinking over last several decades about why have we become such a debtor nation . What would it mean to go back to being a country that incentivizes and encourages savings versus debt . I know thats a big question, but maybe you could kind of throw guest thats a very big question, a really interesting question. Ive thought about that a lot myself. I think probably at one point we were too conservative. It was probably harder than it needed to be to get a loan from a bank. And, of course, one thing that changed all that was deposit insurance policy which came out of the new deal. Host right. Guest and i kind of like that. Theres a big argument about that among monetary economists, monetary economists, some of them think, well, that caused the banks to be more risky. Host yeah. Guest because host moral hazard problems, yeah. Guest i tend to think that, no, probably it actually seemed to stabilize the Banking System along with some to other things. And i think maybe the banks needed to take more risks. And so i think that risktaking has become more thoughtfree, and people are more willing to do it. Thats good in some sense because it kind of keeps the machinery of the economy going. It finances production. And but, as i say, debt does have consequences. Host yeah. Guest and this slow growth that we have, have had now for quite a long time, it may be permanent just simply because we have such a large debt overhang. Host thats interesting. Guest because so much money has to go back into servicing the debt host yeah. Guest that theres not as much available for growth. Host yeah, yeah. Guest so thats just one of my crack brain theories. [laughter] interest well, i think certainly some people would agree with that. Just since were on the topic of debt, im curious, you know, you have a chapter in your book that deals somewhat with the post08 environment and some of the Obama Administration decisions that were taken. If you could time warp back to 2008, what do you think we should have done differently . Guest well, i think the, i think the t. A. R. P. Bill which was the bailout of the banks, that worked out okay. And the journal actually supported that. But there was a lot of internal discussion about that host tell me about that. What were the pro and con sides there . Guest well, some people on the Editorial Board didnt like that idea, but paul gigots the boss [laughter] and he made the final decision. Host and the critics would have been using the moral hazard argument . Guest well, the critics would have been saying, you know, let them take their lumps host yeah. Guest and lets give them a little lessson in sound banking. Ho