What's happening right now... falling home prices, people losing their jobs, credit no longer flowing - none of this is the problem. This is all the consequence of the problem. The problem is all the reckless borrowing and spending that took place in the years that preceded the collapse.

And why did all that take place? That all took place because of the Federal Reserve, because of the monetary policies it pursued that led to all this irresponsible borrowing both on Wall Street to finance speculation and on Main Street to finance consumption...

All of these problems are a consequence of inflation. The government has been too easy and created too much money. For a while the cheap money went into stocks then it went into real estate and distorted the economy. It distorted our decision making process, our consumption and savings decisions and the economy is way out of balance.

But right now as the market is trying to correct the imbalances brought about by all the inflation government created, they are creating more inflation... Basically, there is a fire and the only way the government knows to put it out is with gasoline.

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