George Gilder: Here’s How to Achieve a Real Economic Recovery



George Gilder, author of The Scandal of Money: Why Wall Street Recovers but the Economy Never Does, recently joined Dawn Bennett on her radio show “Financial Myth Busting” to discuss the continuing economic challenges facing the U.S. and how to overcome them. The key, according to Gilder, is getting our money right.

Here’s a taste from the interview:

BENNETT: Why does Wall Street recover from recessions, or these types of recessions and Main Street never does?

GILDER: Because of the financialisation of the economy, the futile effort to replace production with finance and savings with credit, and it doesn’t work. We’ve created this closed loop economy where the Fed creates money and, by their own data, 62% of it goes to the banks which in turn use it to purchase government securities and finance the government. And two thirds of the rest goes to the top five hundred corporations which use it not to invest these days but rather to buy back their own shares and then cosmetically improve the stock market. It’s a closed loop economy between Washington and Wall Street that leaves out Main Street.

BENNETT: Your book centers around something we’ve talked a lot about on the show, which is even as the government has literally spent trillions in fiscal stimulus and printed trillions of monetary stimulus, the result is merely creating this illusion of a recovery. Why is this recovery not like a genuine recovery?

GILDER: Because it’s based on zero interest rates which zero out the future. Zero interest rates essentially mean that money is free, and whenever you have a free good, it has to be distributed by a queue and only the people on the front of the line get any. And as a result, this is the first recovery on record where small businesses have actually reduced employment. In other words all the gains in employment have come from the biggest companies and there has been no entrepreneurial revival, and as a matter of fact we even discovered that young people now have the lowest levels of entrepreneurial interest in the records of the Pew poll. And many of them are attracted by the socialism of Bernie Sanders. So it’s just after decades of suppressing manufacturing, overtaxing corporations, spreading myriad regulations across the economy, we’ve now reached a point of stagnation and we try to paper it over with interest rate reductions and money printing and money shuffling, and it no longer works.


BENNETT: George, so many Americans today are so tired of struggling economically, and in your book The Scandal of Money you offer up a solution that goes beyond supply-side economics. Would you dive a little bit deeper into that resolution?

GILDER: It’s amazing how powerful is real money. Berner Erhard [sic] after WWII went back on the gold standard, and the day after he announced it, the stores began to magically fill up with goods, people were willing to trade and people willing to invest and commit to the future. The problem with fiat money that’s changing day by day is that it closes down the horizons of investment. Today we speak about investment by the flash boys in milliseconds. That has nothing to do with a capitalist process of savings and long-term savings directed to the creation of capital goods that produce a yield in the future and actually enrich our future. And so I think solving the money problem will once again unleash entrepreneurs on the frontiers of the American economy.

You can listen to the full interview here or read the transcript here.

Paul Dupont is the managing editor for

Paul Dupont

Paul Dupont is editor of

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