George: I wanted to interview you but I guess I'm not going to be able to do this in public. 

One of those things about Bitcoin that I'm writing about a lot is Bitcoin is an innovation in information theory, it's a new security model but it's also a new accounting model. It's triple entry bookkeeping. I'd like to have a better understanding of just what that means as an advance, in accounting theory. You don't just have to [asset 00:01:19] in the liability. You also have to have to process of verification and integration of the transaction with all previous transactions. That's a triple entry is the idea. I don't know whether it's a confusing concept or whether it actually has a contribution to make to accounting.

Ron: Go ahead, Matt. Sorry.

Matt: Sorry, we were getting started right now guys.

Ed: Okay.

Ron: Okay.

Ronald Reagan: Like a chrysalis, we're emerging from the economy of the Industrial Revolution, an economy confined to and limited by the Earth's physical resources, into the economy in mind in which there are no bounds on human imagination and the freedom to create is the most precious natural resource.

Ron: Welcome to The Soul of Enterprise: Business in the Knowledge Economy sponsored by Sage, supporting small and medium sized businesses by creating greater freedom for them to succeed. I'm Ron Baker along with my good friend, VeraSage Institute colleague and co-host, Ed Kless. Ed, today, we are so honored. We have my all-time mentor on the line for the entire show, George Gilder. George, thank you so much for appearing on The Soul of Enterprise.

George: Oh, The Soul of Enterprise is just what I'm about. I'm delighted to be here.

Ron: This show is basically inspired by your work. I have to tell you, back in 1981, my father, who's a barber. In fact, he was born 2 years before you so you're roughly the same age, he read your Playboy interview in 1981. He took me out to lunch and said, "You need to read this guy's book. This guy wrote this incredible book. Everybody's raving about it. Reagan passed it around in his Cabinet. He said, you know, apparently he read 200 books that are cited in his bibliography."

I pooh-poohed it, George. I said, "Ah, come on, Dad! There's a lot of crackpot economists, a lot of people right." For some reason that I can't explain. I think it ties into your book Men and Marriage and the Faith of Fathers, my dad persisted. He went out and he bought me the book. He threw it at me. He said, "Read this." I did and I did it in one sitting. It turned my world upside down. That's how I learned about you. I owe it all to my dad.

George: Thank you so much, Ron. Thanks guys for taking this knowledge and power concept another step forward now in knowledge and power which is an outgrowth of Wealth and Poverty, the book that Reagan read and made me Reagan's most quoted living author.

It took me another 25 years or more from 1980 to … Gosh! To 2013 to really figure out that economics is best expressed as information theory and capitalist economy is not chiefly an incentive system but an information system.

This is a hard thing to swallow because all economics is based on incentives. Incentives are obviously important but the fundamental concept at the center of economics is called Homo economicus, human being is chiefly a function of the forces around them, a function of outside conditions and forces. Information theory says the human being is not a mere function. He's a creator in the image of his creator. That is, he's created in the image of his creator. The key property of creation is surprise. If it's truly new, the measure that's novelty is it's surprise or it's unexpectedness. That is the crucial principle of capitalism, that it's an information system, bringing new creations into the world.

Ron: George, you've been saying that, I know it's some Princeton professor, you quote Albert Hirschman who said creativity should always take us by surprise." You've added to that: "Otherwise, planning would work and socialism would work." I don't want to live in a world that's planned.

Let me ask you. A lot of economists, a lot of supply side economists or libertarian or right leaning, people like Steven Landsburg. Steven Landsburg has a great line: "People respond to incentives. The rest is a commentary."

What I love about Knowledge and Power, your latest book, is you say, "Incentives are like greed. They're ubiquitous." You can't blame and airplane crash on gravity and you can't blame anything on greed because you can't blame change on a constant. You've flushed out this theory of the creativity and creative destruction of capitalism or entrepreneurship with information theory. Can you explain information theory, Claude Shannon and his concept of that?

George: After writing Wealth and Poverty, I went to Silicon Valley and wrote a newsletter on the semiconductor industry, the microchip industry. Underlying all this semiconductor industry and computer systems that evolved from semiconductors and internet connections which were further expression of network computers is Claude Shannon's information theory.

Claude Shannon defined information as unexpected bits, calculating information as unexpected bits. He could measure the bandwidth, the capacity of any communication link. Being able to measure it, he could then interconnect it with other information links and be sure that the network would function, that it was the basic insights of the internet came from information theory and the basic insights of computer science also came from information theory of … Shannon was the first to really formulate the bit and the byte and define them.

This really underlies our technologies and our technologies really do drive our economy. It makes sense that the information theory that underlies our technologies also can be used to explain our economy. I discovered it really does.

Ron: It's an ingenious way of looking at the role of the entrepreneur because I guess economics has never really had a good theory of the entrepreneur. Yeah, they chopped it up to randomness or spontaneous order or whatever. You're really flushing it out here and giving it a theory. It’s not about responding to incentives or price arbitrage. It's really an act of creativity.

George: Yeah. What I really came to do was to simplify these concepts. Basically, wealth is knowledge. You really can tell that because as Thomas Sowell said in 1971, "The Neanderthal in his cave had all the material resources we have today. The difference between our age and the Stone Age is entirely attributable to the accumulation of knowledge." This, I think, is a crucial way to look at wealth. Wealth is knowledge.

If wealth is knowledge, what is growth? I think this was the most important insight. If wealth is knowledge, growth is learning. I'd long been fascinated by learning curves. Several of my books contain long explanation of learning curves. Boston Consulting Group and Frank Haggerty and Texas Instruments and Bain & Company all pioneered the science of learning curves and extended them to almost all, really all activities in a capitalist economy.

With every doubling of total units and value produced, you get a drop in cost of 20 to 30%. Learning curves have been demonstrated for all across the economy from the production of eggs to insurance policies to microchips to bandwidth to … Everything in economy can be described by a learning curve and so it becomes reasonable to take a step forward and say, "If wealth is knowledge, growth is learning."

Ron: Learning. I love that. It's learning through falsifiable experiments which is what each new business launch is. I know you're a big fan of Carl Popper and if something's not falsifiable, it's not scientific. Each business is a falsifiable experiment, isn't it?

George: That's correct. That's just right. Learning is governed by Popperian falsifiability. There are lots of argument about Popper and just how complete an explanation of scientific progress popper expounded but it works beautifully in an economy. Businesses succeed because in generating real growth because they perform entrepreneurial tasks of new business ideas. These tests can only yield knowledge and wealth if they can fail, if they're falsifiable, if they can go bankrupt.

That's why governments constantly try to guarantee things in order to produce growth but guarantees are absolutely inimical to a learning process. If it's guaranteed, it doesn't yield learning. It's low entropy in Shannon's model. Entropy being Shannon's way of defining surprise or unexpected bits or creativity.

Ron: Right. Really, the economy is more about ideas than it is about incentives.

George: Yes. That's right. It's more about ideas than it is about incentives. The idea has to be embodied in real experiments which have to be fully tested and which can be falsified and which are enacted in a market process that renders the knowledge institutional and cumulative and thus allows capitalist wealth. That's why when you have all of these government guarantees, all of these economies so now it doesn't guarantee everything, that whole system suffers the biggest risk which is systemic risk. The whole system collapses.

That's the great danger we face today that our economy is so interwoven and interweft with government regulations and guarantees and specifications and rules that are really incomprehensible to any individual in it and thus becomes just noise in the system in information theory terms. The channel is full of noise, you can't communicate over it. Capricious government regulation is just noise in the channel.

Ron: George, that's a brilliant insight. Wealth is knowledge, growth is learning and also somewhere else you wrote that knowledge is about the past and entrepreneurship is about the future. I just absolutely love that.

Unfortunately, George, the clock is up against it. We've got to run to a break. We're going to go to this break, folks. When we come back. I'm going to get Ed in here. He's going to take over and ask Mr Gilder some questions. We're really excited to have him on the show.

Now, we want to hear from our sponsor, Leading Results.

Matt: Very good job, guys. All clear.

Ron: Sorry about that, George. I hate cutting you off.

George: I'm all right.

Ron: We have soft breaks every 15 minutes or so. We try to stick on schedule but this is just fascinating.

Ed: We got to pay the bills and Voice America is very entrepreneurial.

George: Okay. I'm going to fix that in the next couple of years.

Ed: Yeah.

George: I wanted you to be able to collect your money from micropayments.

Ed: Yeah!

Ron: Right, right. George, you said you were in Jackson Hole or are you still going there?

George: Yeah. I spoke in Jackson Hole and a sort of counter offense run by the American Principles Project and Steve Lonegan. It was really exciting. Alan Greenspan was supposed to be the main speaker but because he didn't show, I became the main speaker. I would have done better, I think, with all the attention Alan would have attracted but Paul Krugman frightened him away.

Paul Krugman just wrote an article in the New York Times and attacked Greenspan for going to this conference of cranks in Jackson Hole. Greenspan dropped out.

Ron: Wow! Okay. If we have time, we want to ask you about your gold paper that you...

Ed: Coming back, Ron.

Ron: Yeah.

Matt: Stand by, guys.

Ron: Okay.

Voice over: You are tuned into The Soul of Enterprise with Ron Baker and Ed Kless. To find out more about our show, visit us on the web at You can also chat with us on Twitter using #asktsoe. Now, back to The Soul of Enterprise.

Ed: We are back with George Gilder. George, Ed Kless here. My pleasure to meet you. My relationship to you is through Ron. I guess I owe it to Ron's dad as well. I wanted to just pick up on, we were talking a little bit about Knowledge and Power. I just got 1 question on that. That is if all wealth is the accumulation of knowledge, how accurately can that then be measured?

George: It can be measured if you have a measuring stick. One of the real problems in recurrent economy is the measuring stick is now floating. It's now part of what it measures, that is money is the measuring stick of economic activity. Money through the centuries, much of the time has expressed a particular weight of gold and thus has had a tie to the actual, physical constants of the universe.

My new book which is available for free at the in a PDF, you can download it, shows that the reason gold has been such a valuable measuring stick is that it's not that gold is shiny or gold is valuable or gold is a good conductor of electricity or gold is jewelry but rather that as money, gold is as not part of what it measures. Gold, through history, has cancelled out economic progress in itself. Its cancelled it out just pretty much by happenstance.

It so happens that as technology for mining gold and transporting it and finding it and collecting it has improved, the gold itself has become more difficult to extract than deeper loads and more thinner deposits. New technology has been cancelled out by the greater cost of finding the gold. What's left is a measure of time. Gold is measured by the time it takes to extract it. Time is actually the 1 unmanipulable, unhoardable, unstealable, unfalsifiable, it's the 1 element in the universe that is a perfect measuring stick. In fact, when people do try to create a measuring units metric and root them in physical constant as the [system for national 00:22:35] in Paris where they measure the meter and the second and the lumen and the amp here and the mole and the kilogram.

All these different units of measurement, they all finally are rooted in time because they all have to refer to some frequency or some temperature or some other metric that is rooted in the passage of time, a frequency of so many cycles per second, the temperature is so many oscillations per second. They're all based ultimately in the speed of light. Money is also based on time. That's why gold has been the measuring stick over the centuries that succeeded.

When Satoshi Nakamoto, the pseudonymous inventor of Bitcoin, tried to create a new currency, his chief goal was to mimics gold in its roots in the passage of time. If you got wealth is knowledge, growth is learning, money is ultimately time. If you manipulate money, you manipulate interest rates, manipulate the measuring stick, you end up really trying to manipulate time. Time always wins.

Ed: I teach a project management class for Sage. One of the things that I say in class is that time is a constraint, not a resource and what …

George: That's an important insight.

Ed: Yeah, it's critical. This is coming around to our audience, George. One of the things that Ron and I teach is a course about getting off of the billable hour for professional firms because we believe that it's a challenge because it's really based on Marx's labor theory of value and that people shouldn't charge for their time.

What I find so interesting about this and what is creating some real cognitive dissonance for me and I think for Ron as well is we have railed against this idea of charging for time because we said that time is not money. You're making a very subtle difference. It's almost not an equals. You're saying time is not money but money is time because otherwise, if access to gold represents time and effort of extraction, wouldn't that make Marx's labor theory of value correct, in a sense?

George: You see, if it's labor, then labor comes all sorts of different qualities and entails different forms of capital and tools and technologies and different levels of sophistication and knowledge. The crucial point is that the measuring stick can't be part of what it measured. If you have money based on the measuring stick of human labor and creativity, you've got money is part of what it measures. It can no longer be a guide or an anchor of value. It's just a part of the process of learning and growth that characterizes the economy.

The crucial thing is money has to be a measuring stick. That means the measurement has to be rooted outside of what it measures. That means time. It's not labor time, it's time itself. That, as you say, is not a resource. It's a constraint. It's what forces trade-offs. It's what allows you to allocate resources and to define priorities. I always say that socialists assume infinite time. If you have infinite time, everything's possible so nothing can be measured or calculated. It's recognizing that money is time and it constrains your decisions is crucial to understanding the real nature of money and economics.

I hope that wasn't completely confusing. It is a subtle difference, though. It's not labor. If it's labor then you can have the computers involved and wars, laws advance. Money just becomes a plaything as the financiers. Pretty soon, the whole economy is dominated by finance. That is the peril we currently face, the horizons of investment strength until finally, you have markets dominated by flash boys as they call them, Michael Lewis, doing transactions in microsecond.

Ed: Yup, great. Thank you. It was not confusing. It actually provided a lot of clarity for myself. Thank you.

We've got about 2 minutes for a break here. You brought up Bitcoin. I have 2 quick questions about Bitcoin. I'll get them out and see where we can go. Do you think that Bitcoin might grow faster in some of the emerging world countries as it is in Argentina and then actually loop itself back to here in the more developed world?

George: No. I think that's one of the things that is happening.

Another thing that's happening is the Bitcoin blockchain is emerging as a new layer of internet software, the internet under the OSI Model as it's called has 7 layers and some of them are being collapsed and merged but essentially there are 7 layers which spring from Shannon's theory.

I believe that we need an eighth layer. That's a transactions and trust layer. I think that the Bitcoin blockchain can be layer 8 on the internet. Gradually, they come an increasingly important force in the world economy. I think this is positive because it represents a return to a new form of goal rooted in time.

Ed: Yup. Last quick question on Bitcoin, then we'll take the break. You have studied Bitcoin well, much more than I have. I have asked this question to a lot of people and never really get, I think, a satisfactory answer is what happens when we get to 21,000,000 Bitcoin?

George: We have a learning curve? People have been taught to believe that inflation is the natural condition of capitalist economics. This is really giving up if you think costs are always going up. You are essentially saying that learning has stopped and we're in a long period of secular stagnation as Larry Summers once said. The fact is that the natural condition of capitalism is for prices to go down and everything gets cheaper all the time.

The granularity of the Bitcoin is 100,000,000 units. There's not a big danger that it's going to represent some kind of constriction on economic growth. I think the fact that time is the 1 thing that remains scarce when everything else grows abundant. You have to have the time manifested in the monetary system where the monetary system can't regulate transactions and commerce.

Ed: Excellent. Thank you so much.

We're up against our second break so thanks all of you for joining us but we'd like to remind you that you can email us at but right now, we want to hear from our sponsor Azamba.

Matt: All right. Good job, guys. All clear. Back in about a minute and 40.

Ed: Great stuff, George. Thank you so much. That was awesome.

Ron: That was.

George: Oh, good. Thank you. You think that was an answer to the question?

Ron: It was.

Ed: I think so. Yes, it was. By far the best I've received.

Ron: George, are you familiar with Dierdre McCloskey's trilogy The Bourgeois Dignity, the bourgeois virtues books?

George: I've read various essays by her. What should I read? I don't want to read some vast work at this point. I'm in the middle of finishing a book.

Ron: No, yeah. Actually, just listen to our show.

George: Is she really good or is …

Ron: Yes.

George: Seems to be pretty good.

Ron: She's excellent. Like you, she's a fantastic writer. She wanders but I love her wanderings because they're all very erudite.

George: Which one should I start with?

Ron: She's basically saying the reason for the great enrichment, the Industrial Revolution wasn't … She doesn't have a materialist explanation. It was because of language. It was because we gave the entrepreneur and the innovators dignity.

It's a fascinating thesis. We actually had her on the show. I would just have you listen to that so I'll send you the link because she does a great job explaining it, I think on our show. I would just love your take on it.

George: The entrepreneur's dignity?

Ron: Yeah.

George: How does that relate to language?

Ron: That we changed our language with respect to them because I guess we changed our attitude and we started not calling them parasites and all that. We started giving them dignity.

Yup. It drives people like Matt really nuts because they have all this materialist explanations for the great Industrial Revolution but she falsifies almost all of them. She's an economics historian.

George: I love that. That's a terrific writer, doing a great job these day, Matt is. You've had him on the show?

Ron: No. We haven't had him but he debated Dierdre. Okay. We're back.

Matt: Yeah. We're coming back.

Ron: Okay.

Female voiceover: find out more about our show, visit us on the web at You can also chat with us on Twitter using #asktsoe. Now, back to The Soul of Enterprise.

Ron: Welcome back, everybody. We're so honored to have George Gilder with us. George, there are so many things I want to talk to you about. Your book Knowledge and Power. Your book The Israel Test which I just think is brilliant.

I did get a question from one of our devoted listeners who wanted to ask you about inequality. This is a hot topic right now but you point out in your book The Israel Test that the Jewish population, I think these are worldwide figures, represents some three-tenths of 1% of the world's population but yet they're 25% of the notable accomplishments. You'd say, "Whatever the inequality of income is, it's dwarfed by the inequality of contribution." Do you really think inequality is moral?

George: Yes. I think that there's a great misunderstanding that afflicts all these analyses of inequality. The assumption is that the wealth that entrepreneurs command is comparable to wages or even salaries. Wealth is a liquid and it's management is extremely demanding. It is not available in general for capricious or indulgent use.

The fact that Bill Gates Is supposedly worth $85 billion or whatever it is, it's irrelevant to his lifestyle almost. He spends a smaller proportion of the yield of that fortune than almost anyone else in the world, probably than anybody else in the world. He leads an abstemious life and he manages this fortune. If he stops managing it or abandons it or tries to sell it out, it'll decline in value possibly faster than he can sell it. You can't compare the wealth of entrepreneurs to the wealth of the worker. They're different phenomena.

Now, I believe there is an inequality problem and the problem is that shrinking the investment horizons and government guarantees for al these financial speculations and that the emergence of the biggest industry in the world economy by far, by far the biggest industry by volume is currency trading. It's the largest industry in the world economy and it's the most useless. It does not yield a measuring stick or a currency values that are valid or less volatile and variable than economics activity that it measures.

Wall Street likes volatility. Wall Street in its current organization with all its government ties feeds on volatility. What's the downside protected by government? Entrepreneurs want dependable currency values with the upside guaranteed by the rule of law. The real inequality, I think, is between those parts of the economy that are really guaranteed by government and thus are not really contributing to economic growth and progress and entrepreneurial activities that create all our wealth but they depend on what I call a low entropy channel, a predictable channel of law and tradition and morality and aspiration is the low entropy channel for creative contributions of capitalism and when you're manipulating the currency, it can't be a magic wand that creates growth. Money isn't a magic wand, it's a measuring stick.

Ron: Right. As you point out in Knowledge and Power, when Gates did run Microsoft, it was a mast he was tied to and that seems to be the genius of capitalism is it gives the capital to the people who can invest it the best and make it grow, develop that learning through falsifiable experiments.

George: Exactly. That's the secret of capitalism is it awards to the people who proved that they're capable of creating wealth the right reinvest it. If they start consuming it, then they withdraw from that process and they no longer are really creating wealth but as long as they are engaged in the entrepreneurial process, they get the right to re-invest the money that they make and through this learning process of enterprise.

Ed: George, Ed here again. I want to thank you for that. It was a great explanation. I'm going to take you back. I have a favorite sentence of yours that I'm going to share it with me and get your take on it. It goes back to Wealth and Poverty. It's this sentence. "Say's Law is not only refuted, it was implicitly reversed with cause and effect hopelessly confused in the proposition that demand created its own supply. Take and you will be given unto." Do you think that's still true today with this inequality debate and are you optimistic or pessimistic about the future, I guess even short and long term?

George: The key thing to understand, this is an economy of mind and economy of mind can change as fast as minds can change. In Knowledge and Power, I give all kinds of examples of countries that have turned around overnight and transformed themselves from hopelessly stagnant and sporadic socialist sloths into amazing, creative ascendancy. When they do it, it happens overnight. The US did it in 1946.

A lot of people don't really understand what happened and how amazing it was that in 1946, we elected a Republican Congress that all the economics thought there troglodytes and fools. This Republican Congress defied the view of Paul Samuelson and the other economists that, "Unless we continued government spending at this same level that we had during the war, we would return to a great depression of this location and demoralization unprecedented in economics," Samuelsson said.

Instead, that Republican Congress laid off 150,000 bureaucrats and probably 1,000,000 government workers not including the military and cut government spending by 61% over 2 or 3 years and cut taxes in half, essentially by authorizing a joint return for families. The result was the beginning of what we now look back on as a golden age but it's worth remembering that it started with a 61% drop in government spending.

Ed: I hope that the current Republican and future Republican Congresses take note of that and take your advice to heart.

We're up against our last break so thanks to George Gilder. We will have 1 more segment with him after our last word from my employer, Sage.

Matt: All right. Nicely done. All clear.

Ed: Great stuff.

Ron: Yeah. Great stuff. George, what's your take on behavioral economics?

George: It's trivial. They're finding little ways that human beings tend to invest dysfunctionally. They're trying to model human behavior. They're trying to create a Homo economicus that incorporates various psychological biases and propensities and thus improve Homo economicus. It's Homo economicus isn't even rational now. Before, he was rational function of his environment. Now, he's an irrational function of his environment. In the end, it's a rationale for socialism, for having the experts rule.

Ron: Right. Right, yeah. No. I'm reading the book by Peter Foster, Why We Bite the Invisible Hand. He's really attacking behavioral economics, too. Same thing.

George: Is that right?

Ron: Yeah. It's very interesting.

George: What's his name?

Ron: Peter Foster.

George: Oh. Is it a good book?

Ron: It's a great book. It really is.

George: Somebody really should attack this behavior. It's not that it's wrong. It's just boring. If you ascribe too much significance to the irrationality of the human being in economics, you end up exalting the expert and socialism.

Matt: Guys, I hate to interrupt you.

Ed: Okay.

Ron: Okay. We're coming back, George. Sorry.

Female voiceover: …to find out more about our show, visit us on the web at You can also chat with us on Twitter using #asktsoe. Now, back to The Soul of Enterprise.

Ron: Welcome back, everybody. We're here with George Gilder and George, your most recent book, you've mentioned it. We will post show notes, folks, with links to where you can find George. We'll put up all of his books including his new 1 you can download in PDF which is called The 21st Century Case for Gold: A New Information Theory. George, this little monograph of yours just blew my mind. One of the things you say is you recount the trip to China with Milton Freeman. In this paper, you say Milton Friedman was wrong about monetary theory. How was Milton Friedman wrong in your opinion?

George: I have a T-shirt that I got from some economic conference. It was Milton Friedman on the front of it and MV=PT. Sums up Milton Friedman's monetarism. MV means the money supply, all the purchasing media in the economy, the money supply times velocity. That's the turnover is the money equals essentially prices times strength actions or G the output. GDP, essentially. Milton Friedman assumed that the money supply ruled. This was his big theme of monetarism. If you control the money supply, you really could control nominal GDP and have a big influence on real GDP. That's the monetarist faith.

If that's true then it is really important obviously to have control over the money supply. It's good to have an expert at the Federal Reserve Board regulate money and it's crucial not to have the people control money because it's so important but it depends on V being a constant. Essentially, V, velocity, the turnover of the money has to be reasonably constant. Friedman got a Nobel Prize in part for explaining why it was a constant. It an effective psychological propensities embodied in lifetime savings targets. You save when you're young and you spend when you're old.

In other words, velocity isn't part of the economy. It's expression of this psychological propensity. It's assumed that turnover was around 1.7 times a year of velocity. This was a role of economic science. There were times when relatively velocity did seem to be relatively stable and it's stable when the measuring stick is stable but as soon as we adopted Friedman's floating rates, velocity became volatile.

Velocity is now wildly more volatile than the actual economic activity that these measuring sticks are supposed to measure. Monetarism doesn't work anymore and velocity, when you think about it, is the way we control the economy how we decide whether we like this money and whether we're going to spend it a lot because it's dropping in value or whether we're going to save it or whether we're going to make long term investments. Velocity really embodies a whole array of human participation in the economy.

Friedman's monetarism was a mistake as Freedman himself acknowledged in 2003 in 1 of his last interviews was with the Financial Times. He just acknowledged that they're targeting the money supply did not work. He said, "If I had to do it over again, I wouldn't stress the money supply the way I did in the past." That's essentially what he said but still, all the fed people have all assumed that if you can control the money supply in 1 of the 16 different categories or whatever of money, you actually can regulate the economy and keep prices stable and expand employment. It's all delusion from my point of view.

Ron: It's demand-side delusion.

George: … Sorry?

Ron: I'm sorry, George. It's demand-side delusion, isn't it? It's like Keynesianism with fiscal policy.

George: That's right.

Ron: You say in the paper that velocity is an expression of our freedom. I just love that. The other thing that you point out, the Steve Forbes quote that floating the currency is like floating the clock. That's a great 1 because like you say, "Money is time and it needs to be constant. That's the beauty at times. It's a constant measuring stick."

George, we've only got a couple of minutes. I want to get Ed in here because he's got a question for you but I'm going to set it up. You delivered what I think is probably the absolute best moral case for free markets capitalism, whatever you want to call it, to the Vatican in a speech you gave called the Soul of Silicon in 1997. My question and I just love that, by the way. I read it twice a year. I just think that is the most profound thing.

George: I'll jump back to it. I haven't read it for a while.

Ron: George, it's just an inspired piece of writing. Was the Pope in attendance when you delivered that speech?

George: There were cardinals in attendance. There were a whole bunch of … But I don't think the pope himself was … The thing I printed and distributed around the Vatican so it was a significant document and the Pope might have read it but he was not there when I addressed some group of cardinals and other high officials in the church.

Ron: I wish the new Pope would read it.

Ed: That's my question, George, is recently Ramesh Ponnuru of the National Review published an article that was entitled Puzzling out Pope Francis in which he posits the Pope is often misquoted and out of context but what are your thoughts on Pope Francis?

George: I think partly, he's reacting to this carnival of currency trading, in speculation that has dominated economics for the last decade of floating currencies or less and I think that he doesn't understand it but he intuitively knows that something's wrong. He's right that something's wrong. Unfortunately, he doesn't have any language for explaining what it is. He gets captured by the left and he makes big blunders like adopting climate change as a moral cause and all these other mistakes that he's making but I think his … I gather he's influenced by Peronism and Peronism in Argentina, isn't that right?

Ed: Yes, yeah.

George: It's a product of that very failed populist assumption. It really assumes that time is infinite and so anything is possible. I think that is a misconception.

Ed: That's outstanding. I think that's very much along the lines of what Ron and I have both thought. Perhaps we also did have Father Robert Sirico on and I know you are friends but at least know him so perhaps when the Pope comes to the United States, Father Sirico will get an audience with him and straighten him out.

George: I hope he does.

Ed: Thank you so much for being on the show, George. This has been absolutely outstanding. Ron. I'll let you take it and close.

Ron: Yeah. George, I just want to say on the back of the book Knowledge and Power, there's a blurb from Rush Limbaugh and it says, "My friends, it would behoove you to study everything you can get your hands on by George Gilder, a true American genius." George, I don't know if you know this but 1 day on his radio show, Rush said, "If I didn't have my brain, I'd want Gilder's."

George: I never heard that.

Ron: I'd have to say, "Ditto." George …

George: The Discovery Institute in Seattle, we're pursuing all these issues.

Ron: Yes, you are. You do great work at the Discovery Institute. I should have mentioned that you're a fellow. George, we will have full show notes. We will post all links and everything that you do and all your books and all of that. We're so honored and privileged that you came on this show. Thank you so much, George Gilder.

George: Thank you.

Ed: What do we got next week, Ron?

Ron: Ed, we got pricing on purpose. We're going to talk about 10 factors of price sensitivity.

Ed: Outstanding. I'll see you in 167 hours, then.

Ron: This has been The Soul of Enterprise: Business in the Knowledge Economy, sponsored by Sage, supporting small and medium-sized businesses by creating greater freedom for them to succeed.

Join us next week on Friday at 4pm Eastern, 1pm Pacific. We will have pricing on purpose. In the mean time, please visit us at We will have full show notes on our interview with George Gilder along with links to where you can find him, his books and articles, other things about him.

Folks, thank you so much for joining us and have great weekend. We'll see you next week.

Matt: All right. Good job, guys. All clear.

Ron: Thanks, Matt.

Matt: No. No worries.