July 1-, 2013; States Need Gold Reserves: Senator Kent Lambert

The McAlvany Weekly Commentary
with David McAlvany and Kevin Orrick

Kevin: Our guest today is [Colorado State] Senator Kent Lambert. David, it is interesting, we have talked about the financial moving to the economic, to the political, to the geostrategic. We have some interesting people who listen to the commentary. We have some interesting people who we have communication with, but rarely ever do we get to talk to somebody who is an expert from the financial, to the economic, to the political and the geostrategic, and we have that in Senator Kent Lambert.

David: Locally, in Budget Committee, Appropriations, and of course his experience with those things goes back to when he was working in the Air Force, to spending time in the Pentagon. He is a very interesting guy, because frankly, starting with a degree at the Air Force Academy in Military History, then moving on to International Relations, a Masters at the University of Southern California, Strategic and Tactical sciences, and another Masters Degree from the Air Force Institute of Technology.

That led into a career that was primarily spent flying planes, B52s, teaching and training others how to fly those planes, and then a number of stints, both in Europe and the Middle East, again, working for the Pentagon in Air Defense as an attaché in Jordan and in Sweden, working with the Deputy Defense Intelligence Office there in Europe, it just goes on and on, quite broad experience, and frankly, I’m glad he’s on our side, and he is also in the state legislature representing the people of Colorado.

Kevin: Something that has always interested me about Senator Lambert is that during the modeling and simulations at the Pentagon, he was working for the Reagan administration, and later, Clinton’s nuclear posturing, the ICBMs. There were policies that were changed because of Kent Lambert’s modeling and simulations. We had ICBMs still, partially, because of the team that he was on in the Pentagon.

Something I also like, Dave, is that when he brings his expertise to the political realm, and we’ve talked about his stint in Amman, Jordan and his understanding of the Muslim Brotherhood, that’s the strategic, but now he comes back and he realizes the value of state government, and to have a sound government, whether it is a national government, all national governments have gold reserves. He has actually been a proponent of putting states on gold reserves, as well.

David: If it’s good for a foreign central bank, why wouldn’t it be good for an independent state where you have to look at your finances, the resources that you have, the reserves that you have, and making sure that they are allocated in a healthy way, and in this instance, actually, a constitutionally mandated way? Very intriguing.

Kevin: David, we are on the road at a conference here in Denver, and fortunately, we have been able to bring Senator Lambert in.

David: Each week we look at market issues, and we look at international issues. We look at a whole host of things, and it is important to consider domestic politics, as well as international politics, and it is not every day that we get to sit down and visit with someone who has experience in both arenas, a Master’s degree in International Relations from University of Southern California, a long history, as we have just discussed, in the military, in public service, and now in the Colorado State Legislature. Kent Lambert has a perspective, given his background, given the CV, that is both international in nature, but also very practical and pragmatic when it comes to domestic policies, both on a national and state level.

A lot of ground to cover, because Kent, what we want to do is maybe start with some of the things that you have put in play here in the State of Colorado which are unique and then we will branch off of that to the national level, and then after that look at some of your notes, things that you are observing today in European spheres, as well as the Middle East, and Egypt in particular, because you have some very practical experience there.

You introduced a piece of legislation here in Colorado that related to gold, a unique piece of legislation, but there seems to be a growing trend of legislators who are thinking about the role of gold in the economy, the role that it played, the standard-bearer, if you will, in the monetary system. What was that about, and have you worked cooperatively with other state legislators? Tell us a little bit about that and what you are trying to accomplish and what you hope to see.

Kent Lambert: Sure, thank you, David. We have a practicality here in Colorado. I am a Republican and we have a Democratic majority, so realistically, we always have to look at the numbers and know some of this legislation is not going to pass. But I think it is more than symbolic. I think we can set a precedent of at least public education, or even education of our legislators, and frankly, I had some positive feedback from some of our Democrat legislators about the problems that we are facing.

It is always a question, what is the right level to approach some of these problems? Are we going to allow the federal government to make all of our monetary decisions? Or, under a federalistic system, can the states actually step up and either challenge the federal government over constitutionality of some of these principles, or start some new programs? I think in bringing that forward, the discussion was the most important part of it. I was able to, for instance, bring forward the facts that over the last ten years we have been on a basically exponential decay rate of the U.S. dollar. What are we doing about this? What happens if we do have a super- or hyper-inflationary problem in the future because of those international or national policies that are put into effect? And as a state, what is our responsibility to survive, or to endure through that period, looking at some of those alternatives?

I think one of the precedents that I wanted to set was the fact that in some of our state investments, in some of our reserves, we should be thinking about physical assets as well, in particular, gold or silver bullion or something, like other central banks do. Why? There is nothing illegal about a state actually putting some of our reserves in a tangible asset. I think if we had done that at the time of my legislation, we actually would have made a profit. Even with the gold market coming down the last couple of months, it still would have been at least a break even, if not an increase in value for the state holdings. And it was a trivial amount for a state government, we were going to start with a million dollars to show that it could be done, but even that was robustly defeated by the Democrat majority because they don’t want to challenge the fiat currency system of the U.S. government.

David: Colorado is not the only state that has done this, half a dozen, and hopefully there are dozens in future years that consider similar pieces of legislation, and ultimately, we hope that there is traction gained between all of the states, again, as you say, not just the symbolism of the gold standard as it was, but who is responsible for our money, and who is responsible for the healthy operation of the economy.

You start with the household as the primary unit in the economy and from there, extend it to a community, a state, and then ultimately arrive at the nation, but its seems that most of the decisions are being taken in a very top-down manner, and to ask the question of who is responsible, I think, is a pretty good one.

Kent: Of course, a lot of these questions have been addressed and answered during our original constitutional convention. Roger Sherman, obviously, had a solution in drafting Article I, Section 10, that said the states will use gold and silver in payment of debts. He had something very, very specific in mind. What happened since 1913? Have we completely lost the entire concept of the U.S. constitution on monetary value? Apparently we have. But it is still on the books, the principle is still out there.

If we had followed some standardization of our currency over the last 100 years now, maybe we wouldn’t be in the tremendous debt problems we have right now. Maybe we wouldn’t be manipulating currency as we are now. I think some of these things need to have public education, we need to get it to the table, we need to have, as you say, interstate dialogue and conversation with some of our other legislators in other states, and at the federal government, and see what kind of solution our existing government structure can come up with.

David: Moving to the national level, do you have any thoughts on trends – new, different, disturbing, encouraging, trends in national politics? Dive in where you will.

Kent: I do, and maybe not even with the federal system, but just as a nation, I think there were some trends happening, and I think you have mentioned some of them in your podcasts in the past. One structure I find very useful to think through some of the dynamics of our economy is what you often mention – I think you start the show with it every week – going from the monetary, to the fiscal policy, to the political realm, and then over to the geostrategic effects of that.

But I have felt that there are two maybe new nodes that we ought to bring to the discussion, and I came to this conclusion partially from reading about some of the social issues that we are having, as well as some of the demographic issues. I play around. I am certainly no Greek scholar, but I came across two Greek words that I thought were very important. One is Oikos, which is actually a Greek yogurt. It is now a company. The Oikos company is a style of yogurt. But in Greek the word means household. It is probably the closest word to family, and the family institution of the United States, I think, is under very, very, direct attack, both socially and fiscally.

Several times, I think it was mentioned on the show, that the bill payers for programs like ObamaCare or growth of big government, is coming out of the family wallet. And we measure some of these terms. President Obama mentioned several times, “ObamaCare is going to save $2500 per family, per year, across the United States.” It’s not happening. If anything, it’s going to go the other direction, that health care costs are going to go up. But the real question is, who is making the decisions? The institution of the family has typically, I think, been the decision-making unit. When we talk about home economics, that is really a redundant term, because economics, the basis of that word, comes from that Greek work, Oikos, which means the household.

So when you say home household, that’s pretty redundant, but that is the basic element of our economic system. Those household decisions that are made on a day-to-day basis like what car I will buy. Well, I guess now that the federal government has bought some of the car companies, they can make that decision. And when they put in the CAFE standards, when you mentioned that 90-95% of the home loans are underwritten by the U.S. government rather than the private market, that means you have a central government taking over a lot of those lower-level decisions that ought to be made by families. Health care – just think of the big bills that a family has to pay. Now we are saying, well, you aren’t going to pay that anymore. You aren’t going to be able to decide what your health care is. We are going to have a one-size-fits-all central government plan, like every socialist government has done in the past. We’re going to control all that for you and give you what you need. Well, that takes away that decision responsibility from the family.

Also, I think when we look at that, I’m a conservative, and sometimes we come across politicians all across the country who say, “I’m a fiscal conservative. I believe in fiscal principles, but I don’t believe in all that social conservatism.” Well, if they don’t believe that the family should have a more predominant role in making those decisions, then what is the fiscal aspect of a bad social policy? We’ve made some very serious flaws in the direction of those trends we’ve had nationally, in the state governments, and so forth, by trying to separate out a family from a fiscal policy or a social policy from a fiscal policy, because it always has fiscal impact.

I guess that leads into the second node that we may need to look at, and that is the Greek word, demos, which basically means the power of the city. You get words like demography, or demographics, or democracy. How do people socially relate to one another, and what does the population, itself, look like? 40 years ago we made some decisions, for instance, getting back to the social versus fiscal conservatives, we made some decisions about abortion in this country, and we have had about 55 million abortions of people who would be adults today. And look at the demographics. The two realities we have is that we have a lot of baby boomers who came out of the late ’40s, early ’50s, who are now of the age when they are retiring, they are no longer the fiscal engine driving our economy, and now are coming into receiving benefits from the rest of the population, but we have 55 million less population to support them.

David: Right, going back to that issue of separating out social issues from fiscal issues, if you wanted to set aside the social, which is difficult to do, as you say, but look at the issue we have today, 81% of our mandatory programs, Social Security, Medicare, Medicaid, a few others. That is 81% of our tax revenue that is going to these programs, and they are driven demographically. We have a ballooning of the population that is the recipient of these programs, and on the other side, the mismatch is that you don’t have enough workers to accommodate the balloon in payments going out.

Kent: Right. And considering even the basic assumptions of classical economics, one of the factors of a strong economy, according to Adam Smith, as I recall, was a growing population. If you have more workers, you have more resources to fuel that engine of economic enterprise. What has been happening to our population, to our demography, is that we have a bimodal thing where you have a whole lot of people who are retirement age, who are now spending their income that they have saved up, or the Social Security that they expect, which never was saved. It is actually transfer payments from the next generation.

But how can the next generation make any money? Some people call that the boomerang generation, an interesting term. When the kids are growing up, the parents throw them out of the house, and they come back to live in their parents house because they can’t make it anymore.

And now we are going to put an individual mandate on them to pay maybe $2500-3000 a year in additional insurance that they can’t afford right now. And all of a sudden I think they are waking up and saying, “We can’t afford this. Better that I just quit my job, go on public assistance, and increase the case load for food stamps, for Medicaid, and all the other benefits, and this is what we are seeing at the state level.

Supposedly our economy is in recovery, and yet, the number of people on the SNAP program, or food stamps, continues to grow. It is not reversing. Why is that? If our economy is getting better, shouldn’t we have fewer people in poverty, on public assistance?

David: This is like the opacity in China where the economy is growing, and yet, energy usage is down, electricity usage is down, and the basic indicators of real growth are actually in decay and decline. Meanwhile, the official statistics are advertising that all is fine, move along, don’t ask any questions.

Kent: Yes, nothing to see here. Well, we are seeing it now. I just saw a report this morning that 47% of Americans now have a full time job. That is less than half of Americans that have a full time job. That is unprecedented. What is happening is that people, probably because of the influence of ObamaCare, at least, the expectation of that, are getting part-time jobs. We a lot of what we call the 29-ers out there who only get 29 hours of work per week because if you get any more than that, you are going to go over that 30-hour threshold and now you are getting into an unaffordable situation for their small businesses.

David: Factored into the most recent unemployment numbers, there were 132,000 statistical creations, this is the birth/death model, not actual jobs created, but 132,000 jobs penciled in if you will, on the basis of that modeling, and then 322,000 jobs that came in on the part-time side. That helped us get to, on a net basis, an addition of 190 and change.

Kent: And what a terrible expectation. “Dad, I got through high school, Dad, I got through college, and all I can get is a part-time job somewhere in a franchise hamburger place or something like that, because those other companies simply won’t hire me. It’s not worth it to them to hire me for a full time job.” That’s shocking in America. And it may not all be due to government regulations, but that seems to be a major factor going on here.

David: This is a big jump, but when we look at conflict, we think of war, we think of many different kinds of conflict, but it involves space. You bring a unique perspective to this, because not only have you had involvement with the government dealing with outer space programs, but you have also had the boots-on-the-ground experience in the Middle East, in Europe, and here in the United States.

So, you have exposure to air space, outer space, (laughter) and then all of the territories of traditional conflict in both Europe and in the Middle East. What I would like to ask is your perspective on Europe. NATO played a significant role – you spent time, boots on the ground, in Europe – perhaps when NATO had more of a role. What are the transitions there, and what do you see in terms of European development or devolvement?

Kent: On a major anniversary of Roswell, and you didn’t talk about the extraterrestrial experience (laughter). But yes, the world is changing. I had a background in Strategic Air Command at a time when that threat was going away. It appears as though the Soviet Union was under great pressure and our vital national interests were going to shift to some area of the world, specifically, the Middle East.

I had a real interesting job interview on the second of August of 1990 with the generals at the Pentagon. They asked, “Why would you want to go to the Middle East?” I told them exactly that. I said, “This is going to be the number-one area of our national interest for several years.”

David: Or for decades.

Kent: For decades, yes. I went back to the hotel and I turned on the television, and unbeknownst to me, Saddam Hussein was in the actual act of invading Kuwait on that day. So I figured I must have bluffed them enough so they thought I knew what I was talking about. I got hired to be the air attaché to Amman, Jordan, and then later got to be in the American embassy in Stockholm, Sweden.

The end of the Cold War paradigm of the Warsaw Pact versus NATO is certainly now a thing of the past, but very exciting times. I was also air attaché to Latvia. The Baltic Sea states, especially, and Poland, and Estonia, Latvia, Lithuania, coming out of decades of dictatorial communist regimes, suddenly had some self-determination, and in conference after conference that I went to, there was a discussion about joining the European Union and having some sort of co-prosperity sphere. We had national leaders stand up and say, “You know, we don’t really care about that. The only thing we care about is joining NATO. We want to be in the political process and NATO because we think that is more important to our national security than just simply some sort of economic currency regime using the euro, and what good is that going to get us?”

Interesting, though, as we are transitioning into this, Europe, itself, and not just Western Europe, but now Eastern Europe, wants to have unification for their own defensive purposes, so they have a place at the table for their own national security, very interested in that. I thought that was a thrilling type of thing.

Of course, now, the whole idea of European integration is almost more along a north/south line within Europe, rather than an East/West line. Where is the risk? Isn’t it in the PIIGS countries? Isn’t it in Italy, Spain, Portugal and Greece? They simply don’t have the earning power that some of the other Eastern European countries, or Germany, has.

So I see that there is almost a concert of Europe type of redraft of the map. How are we going to keep Europe peaceful and unified? What kind of structures are going to be leading into perhaps the next 100 years in Europe, without collapsing the whole economy, based upon different sources of national debt?

David: And does NATO have a role in that?

Kent: NATO is really a political entity, not a military entity, but it does deal with national security purposes. I don’t know if that organization … it’s probably not the right one to intervene in the European Union debacles that they have been having, but you also see some countries are saying, “Look, we still need our national sovereignty. We still need, perhaps, our national currency back, just to protect the well-being of our citizens. Of course, looking at the violent history of Europe in the 20th century, that has got to be a foremost concern in Europe – the internal frictions between Turkey and Greece, or between France and Germany. Who knows, 5-10 years from now, where those dividing lines are going to be between the north and the south of Europe?

David: You also saw some pretty significant changes in the Middle East when you were in Jordan, the shift toward parliamentary elections, actually, the presence of the Muslim Brotherhood in Jordan at the time, their initial popularity. Quite interestingly, they didn’t stay popular, almost an echo of what we have with Mohamed Morsi and the Egyptian Muslim Brotherhood. Maybe you could speak to what you saw then, and some of the parallels that you see now.

Kent: I think there are some parallels. I was there at the time of the early 1990s when King Hussein was still the monarch there, but the royal family wanted to make a peaceful transition to democracy, and they still do. I think you have, in Jordan, one of the most highly educated populations in the Arab world. They work very hard, they have a lot of professional degrees, a lot of advanced degrees. They are doctors, they are engineers, they are hard-working people, and they wanted to have a greater role in democracy, like the people of Egypt.

King Hussein organized and allowed free parliamentary elections and the first go-around, the Muslim Brotherhood was the majority party. After a couple of years of that, they felt maybe this wasn’t quite as hot as they thought it was going to be, because they made a lot of promises and almost prophetic predictions about how much better this was going to be, and Islam is going to take care of you, and suddenly found out that, especially with the Muslim Brotherhood, you have a very extreme element that may be more concerned about tyranny than they are about democracy. I won’t go into all the details of that, but let it be said that the Muslim Brotherhood lost the initial favor that they had with the population.

Some of that same thing is going on in Egypt now. Another thing is, what sparked off the Arab Spring? Was it some sort of Shari’a law desired by the people, or was it that they wanted something to eat? Remember that this came at a time when they had trade relations with Russia, the Russian wheat crop failed, and all of a sudden the government was being asked, “What are we going to eat this week?”

The same thing happened in Jordan when I was there. They had some fairly minor food riots, but people were in the street because they lifted a subsidy that they had for bread. Basically, they were giving away free bread, which is not as expensive as our welfare system, but there was a scarcity of food in some local places, which they solved eventually, but people are concerned about where they are going to get food for their families, and I think Egypt was like that two years ago.

Having the Muslim Brotherhood take over the government didn’t necessarily fix that problem. It was an international trade problem, and going into some sort of Islamic fervor, thinking that is going to fix your food problem, is not necessarily true. I think one of the Fox News observers said that this is one of the few times, if ever, in history, when you had 30 million people going to the streets in order to establish a military coup.

David: I think that has got to be one of the largest grassroots uprisings in recorded history.

Kent: Probably so, and probably successful. You may have seen some of these things in Poland, the people getting together on a grassroots objection to Soviet control – Lech Walesa and the Solidarity Movement. This is like a solidarity movement. The question is, what is going to be next? Are we going to try to double down in Egypt so that now the Muslim Brotherhood has even more control? Or have they had enough of this for now so that they want more of a secular, stable, economically based government which will not lie to the people about the great constitutional reforms that they have promised?

I think it is actually very exciting to see what is going on over there. Obviously, there are factions, the country is kind of in a vacuum, they are maneuvering around for their own local control, but like Jordan, when they cross a certain line and become violent, then it becomes the Chief of State who will step in, in this case the army in Egypt, who will say, “Look, we need a referee to this. We’re not getting anywhere with 30 million people in the street. Let’s solve the problem and move on.”

David: How awkward is this for our oval office? Obviously we weren’t sponsoring the change in Egypt, but once the change was in motion, we certainly didn’t get in its way or offer any resistance. We had Mubarak on the payroll for years and years, and years and years, and dropped him like a hot potato, and all of a sudden warmed up quickly to the Muslim Brotherhood. Is it overstatement say that Mr. Morsi was Obama’s guy and he just got ousted? How does this reflect on Mr. Obama?

Kent: (laughter) You know how you sometimes talk about counter-cyclical risk? We have counter-cyclical foreign policy. This is really strange this last year. I am very, very uncomfortable about selling arms and fighter aircraft to a government that is controlled by the Muslim Brotherhood. These are radical Islamists.

David: But we are doing the same thing in Syria. I don’t think we are selling, we are actually gifting.

Kent: Back in Egypt, we were selling them F16s this last year, as long as Morsi was in power, and now he is being ousted and Senator Leahy apparently just announced that now we should cut military aid because the Muslim Brotherhood is not there. This is really, really strange illogic to federal policy, and yet they are trying to hold back here, for political reasons, to say that the president, obviously, couldn’t have been wrong in this, so we are going to have to stay with the party line and say that Morsi really was the legitimate government and somehow back him. I don’t know, I don’t think the president is really in a position to announce what they are going to do, because they don’t know what they are going to do.

David: Awkward, to say the least.

Kent: Very, very awkward. Very awkward.

David: We have talked about different spaces and different territories. One thing we haven’t talked much about is cyberspace. Cyberspace is an area, certainly, with Mr. Snowden, and some of the released documents, and also we had Julian Assange, Wikileaks issues, a few years back. We have both vulnerabilities from a geostrategic standpoint in Cyberspace.

We also get to do what we are doing right now, which is have a candid conversation about anything we want, and have it published internationally, and there is no limitation or control to that, and there is some sense of incredible freedom, freedom of the press, which frankly, doesn’t hardly exist in the mainstream media anymore, given the filtration system and direct political bias, right or left, but a filtration system that doesn’t allow for candid conversation.

Cyberspace – maybe that’s not something that was in the military’s purview in 1990. There were only a quarter of a million people using the Internet at that point. Now, a third of the world’s population is using the Internet. Where do you see control? We talked a little bit earlier about federalism and state control on certain issues, and of course, at the opposite end of that is more centralized control. Do we have this kind of voice three years from now, five years from now? Or are the “threats” in Cyberspace sufficient to justify, not actually, but just in practical terms, that we will see legislation in this regard, whether through the fairness doctrine, or what have you, to limit our ability to explore ideas and understand the world we have, and have a candid conversation?

Kent: This is, definitely, one of my interests. Much to my surprise, the chief information office here of the State of Colorado this last year, nominated me for a national award for the support of IT structures. They had probably 50-60 applicants. I didn’t win, but it was rather interesting that they put my name forward on that, because I am an advocate for reform, for better management of our state computer systems.

Maybe eight years ago, I don’t know in the State of Colorado if you would have found any software system that really worked well, and I think we have made progress in that. But Cyber security, at the state level, is becoming a growing area of risk. South Carolina lost a lot of privacy data because of hackers, because they didn’t have adequate defense. Now I am on a sort of advisory committee to our Chief Information Security Officer in Colorado, and we need to take a new look at how the states play in this whole regime. We know that just in the State of Colorado, there are about 600,000 attacks against our computer systems per day. So the state, trying to protect people’s health records, trying to protect our own tax records, our state cyber-infrastructure, we have a responsibility to protect that data, and the computers, and the software that we use. We must do this or else the public trust is going to be violated.

Unfortunately, as we saw in the Boston massacre, sometimes the information is out there and is not shared with the state and local governments. We obviously knew there were some bad actors that had a propensity to terrorism, and they were not informed of that. We know that there are a lot of bad actors out there from a number of well-known countries that are attacking, not just our corporate infrastructure in the United States, but also our government infrastructure, on a daily basis.

Sometimes it is for criminal motivation, sometimes it is for political, or as you say, geostrategic motivations. But this is the kind of thing that we cannot continue to put up with, so what is the state going to do? Are we going to become more controlling at the state level of our data, or some sort of a balance? I think the NSA concern is that the government is actually using information, maybe violating privacy, but that information doesn’t seem to be transparent, at all, to the state governments.

For instance, if we have known threats from international sources that an organization like the NSA might know about, they don’t share that, that I know of, with the states. Right now we have no legislators in the state of Colorado with security clearances. So even if we had information at the federal level, they won’t share it with us. So even at the federal level, you have this concept of advice and consent. The federal legislature is supposed to control what NSA does, what the CIA and other intelligence communities do. In the state, we don’t even have access to that information, so how can we make informed public policy without getting a little bit deeper in knowing what is going on?

David: And is it possible that the state plays the role as a sort of buffer? If the notion of protecting is legitimate, then controlling is a cascading, logical next step. In order to protect, we must have some measure of control, but ultimately, the concern is abuse of the information. Again, as you say, there are privacy concerns for individual citizens. Could the state offer some sort of a buffer between federal control and abuse of information to how that information can be used?

Kent: I think the state should play, at least, a different role than what we are playing now, because we are seeing that the crimes, the attacks, are occurring at the state level, and as far as I know, we are not working with the federal government to put up a comprehensive attack against this. It is kind of like wildfires. Who is responsible for fighting wildfires in Colorado? Some people say it is the federal government, but they are sure not doing it. They have created a gap here, and a lot of our discussion in the legislature is, maybe this shouldn’t be a federal role at all to manage our forests, maybe we should manage our forests. Maybe we should fight our own fires. And this is a well-established constitutional principle.

David: I’ll tell you what, Ken, if anyone from D.C. had driven through our neck of the woods in the last two years, they would have seen 90% of the trees in the Pagosa Springs area were already dead because of bark beetles, and it was just a tinderbox looking for a match. And that is exactly what we have today. A lightning strike, or whatever the cause might have been – 100,000 acres of pristine national forest was not managed, and nobody in Washington, D.C., who lives there, and doesn’t travel here, would know that there is a brewing issue. But I don’t know anything about forest management, and I could have told you just driving down the highway, “That, there, on the hillside there, all around, that’s a problem waiting to happen.”

Kent: I know there is one person in Washington, D.C., your Congressman, Scott Tipton, who in early 2012 introduced legislation to return some of this authority back to the states. But this is a well-established principle. It’s called the police powers of the state under the 10th Amendment, which says, “Health, life, and safety is the responsibility of the governor of that state.” And yet, our government has said, “Well, you can’t declare an emergency until the Department of Agriculture says that you can declare an emergency.

David: Preposterous.

Kent: Yes, it’s totally preposterous. This is people’s lives, it’s people’s property. It is hundreds, if not thousands of square miles. We see this in Arizona just recently, where firefighters are dying because of unhealthy forests. So who is responsible for this? I think that is an important point. I’m just using that as a side note to come back to the cyber problem. We have similar problems. State and local law enforcement should be enforcing laws, and yet, if we are under attack, do I have a cyber-cop from the state government who will go out and actually bust some hacker’s door down who is illegally attacking our infrastructure? I don’t see that, and I think the most chilling thing is, we are living in an environment where we know that our Internal Revenue Service has been politicized. They are taking actions that are political, not for public safety, not for anything else, apparently other than political advantage. Now, is this going off into our intelligence community or not? I think that is a valid question. I served during a time when just the initials, NSA and NRO, were probably classified. We had tight security on what these intelligence organizations did, but it was very, very clear, these were only for foreign intelligence collections, they were not to spy on the American people.

Now, I don’t know what is happening. Are we actually using some of our surveillance assets? Because we have done it with the IRS, we have taken political action using government organizations, like the IRS, the Department of Justice, and others, to spy on Americans. The EPA spies on Americans. So with what I believe in this context, that the NSA or other foreign intelligence services would not spy on Americans, I find that very chilling.

David: Well, as we wrap up, I think one of the things that I am hopeful of, and I don’t know if I have good enough reason to be hopeful in this regard, but I am hopeful that there will be a paradigm shift away from centralized control of everything and a return to state responsibility, and grassroots management of government, of the people, by the people, for the people, that paradigm shift would include the kinds of things that you have suggested, going full circle to legislation dealing with sound money, to see that begin to emerge.

You put things in place, and perhaps it’s not the right time, but the right time may be approaching, where enough people say, “This is preposterous. No one is aware of the forest in my area. No one is aware of the social needs in my area. No one is aware of the monetary and economic needs in my area. No one is aware of the security needs in my area,” and it begins to be common sense that those things should be dealt with on a state-by-state basis, and not at the federal level.

I guess, again, I am hopeful. Maybe that is a dream, but having legislation that has already been proposed, worked its way through, can be resurrected and employed in the future. All you need is a different general sentiment and the circumstances may provide that over the next few years.

Kent: I am sort of co-teaching a class at the University of Colorado at Colorado Springs tomorrow evening. It is on the politics of the law, and the instructor is starting his class with Plato’s allegory of the cave. If your readers haven’t heard that, you can find it online very easily.

One of the classic ideas was if you took a set of people and put them in a cave, and had them facing a blank wall for their entire lives, so all they would ever see was the shadows of the light coming into the mouth of that cave, and they would have to extrapolate what it is that is walking outside the cave, but they could never look. They would always have to look at that blank wall. According to Plato, it was the job of the philosopher to go outside the cave, take a look at what really was out there, and them come back and tell the partially blind people what was going on outside their cave.

What about this? What if the philosophers are the ones inside the cave, and they cannot see the reality of what is going on outside? What if the economists are in there looking at a blank wall called Keynesianism and they are not seeing the reality of those Egyptians on the street who don’t have anything to eat?

David: Connecting the dots between our monetary policy here in the U.S., dollarized countries all over the world, and inflation that we continue to export.

Kent: Right. If you are using the wrong model, or if that philosophy of government is not real, and I don’t know many philosophers that agree with each other, so which one is right? Maybe it’s the philosophers who are inside the cave who are only seeing the shadows, and they are not seeing the reality of what is going on.

Mr. Limbaugh talks about low-information voters, and I think that is probably an important thing to remember in Egypt. You have masses of people, and some of them don’t have a lot of education. In the United States we certainly have the opportunity for that, and we should be trusting our people who are creative, with their own money. It gets back to Ronald Reagan’s philosophy. Who will give the most value? A government bureaucrat trying to fight forest fires from Washington, D.C., or somebody who actually lives in Durango who can see the trees burning?

I think this is where, as you said, federalism in our American system is not just a controlled mechanism from downtown Washington, D.C., it is a mixture of local government, state government, and federal government, and we have lost that. We need to go back and take a look at that.

David: Kent, thanks for joining us today. It is a unique opportunity for us to weave politics as it is being done in realtime, with our commentary. I am glad you have listened to the commentary for a few years now, and are joining us on the other side to contribute. Great to have you with us.

Kent: Greatly my pleasure. Thank you very much.