Interview with Presidential Candidate Gary Johnson – Part I

July 18, 2011 - 3:12 PM EDT

Gary Johnson is the former Governor of New Mexico. He served in that role from 1995 to 2003, making him the first Governor of New Mexico to serve two full four-year terms after the term limit was increased from one to two in 1991. He is now running for President of the United States as a Republican. His political views are essentially libertarian, stressing small government. As Governor of New Mexico, he vetoed a record 750 bills.

Much of the poker community learned about Governor Johnson when the Two Plus Two Poker Forums and the Poker Players Alliance began publicly supporting him in late June. Governor Johnson’s campaign started a thread on Two Plus Two and added a poker section to their website, and Governor Johnson attended Two Plus Two’s annual party in Las Vegas, and has publicly expressed his support for the right to play online poker. Two Plus Two has provided Governor Johnson with free advertising, stickied his thread in their extremely popular News, Views, and Gossip forum, publicly suggested donating to the Johnson campaign, and (after this interview took place) publicly requested that other websites support Governor Johnson as well. The Poker Players Alliance has featured Governor Johnson’s candidacy prominently on their website and PPA representatives have actively supported the Johnson campaign.

I met up with Governor Johnson this past Thursday in a busy Starbucks in midtown Manhattan to talk with him about his campaign, how his campaign relates to poker in particular, and his political views in general. In this first half of the interview, Governor Johnson discusses his views on poker, the extent to which his stance on poker is a priority for him, his relationship with Two Plus Two Publishing, his general views on the role of the government, and his stance on drug policy. In the second half of the interview, Governor Johnson discusses a wide range of foreign policy issues, his chances of winning the presidency, the differences between himself and Congressman Ron Paul, and more.



Noah Stephens-Davidowitz: As you know, a lot of our readership are, naturally, online poker players. Many of them are now former online poker players. So, what message do you have for these people who are suffering right now?

Governor Gary Johnson: Well Noah, first of all, I just see this issue as indicative of dozens of other issues–and drugs, if you will, being a bigger issue than poker, affecting more people.

I use as an example–My passions are skiing and mountain biking, and right now, I am being denied access to public lands because I’m a mountain biker. And yet, they allow horses on those same public-land pathways that [Governor Johnson pauses]–There’s excrement, and–a much, much smaller issue, but there is the whole range of the federal government coming into our lives and affecting our passions.

And in this case–What, ten million poker players? Who knows how many of those ten million are passionate about poker? I would have to assume that a lot of them are, and this is the government then stepping in the way and saying, “No. You can’t do that.” That’s ridiculous. It’s ridiculous from A through Z.

There’s a government lottery. So now you have to go into a casino to play? Whereas I come to find out that you can play for pennies in the evening–This is coming back to internet poker–so is it really an issue of dollars and cents? It’s government protecting you and I from ourselves.

NSD: Poker players are of course excited to have a presidential candidate who has taken interest in our issue. But, I’m curious to what extent you care about poker? To what extent is poker part of a larger issue to you? How much of a priority is our freedom to play poker to you?

GJ: Well it would be an absolute priority, and then back to indicative to the whole. But, in the context of poker, whatever I can do administratively to right this, whatever laws that I need to write to right this, I will do. I will absolutely commit to doing that.

NSD: But certainly you understand that a big part of governing, even if you’re the President of the United States, is making compromises with other people. And, even the President of the United States doesn’t get everything that he wants. So, you have a lot of other fairly strong beliefs about taxes, medicare, and even mountain biking, for example. So, to what extent, would you be willing to compromise other beliefs to fight for poker?

GJ: So, how much did I compromise being Governor of New Mexico? You could argue that I really didn’t compromise at all, that it was about doing what was right. And when people ask me, “What’s your proudest accomplishment as Governor of New Mexico,” it was that i took it on, A through Z, whatever it was. There was no [Governor Johnson pauses] prioritizing, if you will. It all had to do with doing what was right all the way across the board. So in that context, that’s not going to change.

Can I bring this about? Can I make this happen? Well, the thing that I can promise is that, administratively, I will do everything I can to right this. Don’t discount how effective that can be.

And then, from a legislative standpoint, I just think that this is indicative: You’ve probably looked at my resume; I vetoed 750 bills while i was Governor of New Mexico, thousands of line items as Governor of New Mexico.1 Only two were overridden.

So, I vetoed stuff like outlawing online gaming. Now, I didn’t veto that specifically, but I would have. I would have because that would have been somebody’s passion, and as long as they’re not doing any harm to anyone else–other than arguably themselves–I think that fits in dozens of categories where the government gets involved and alters our lives for the worse.

NSD: Are you familiar with the current legislative efforts with regards to online poker?

GJ: Which is?

NSD: Well there are many of them. I guess the most relevant one is Representative Barton’s bill, HR2366. To give you a summary, the basic idea is to make enforcements of other gambling legislation more strict as sort of a compromise to allow people to play online poker. And, it would create a federal government regulatory body to regulate smaller state regulatory bodies that would license online poker sites. So, I was wondering if you would support that because it’s creating more government, but it’s creating more government to allow people to play online poker.2

GJ: Well so, the pragmatist that I am, yeah, I would be in support of that, but that’s not the right kind of–and I would see that all the time too, and I would always sign off on the pragmatic legislation that advances the issue. So in that regard, yeah, I compromise all the time

NSD: Would you prefer online poker to be completely unregulated?

GJ: Yes, yes. And by unregulated, just the whole notion of being–correct me if i’m wrong–So, does government really need to get involved in online poker given that my Visa card indemnifies me from any purchases whatsoever? Why would that be unchanged if it were a poker site? I doubt it would be, so why would the government be needed at all?3

NSD: I guess the people who are pro-government regulation are worried about cheating, poker sites not running fair games, and money laundering. Historically, the government has regulated almost all legal gambling in this country because of issues such as these.

GJ: Right. And when it comes to fraud by the operators of the sites, of course fraud is always illegal regardless of what industry you’re in. So, this is the kind of stuff that I just vetoed, and I would have a veto message to go along with it. Look, it sounds great that the government wants to protect me when it comes to gambling online, but the reality is, this isn’t going to make it any more safe; it’s just going to add burden to the industry itself. And, I can’t tell you how many veto messages that I would have written in response to regulating gaming online.

NSD: The section of your campaign website about poker contains the following quote: “The federal government should not be involved in restricting lawful commerce that doesn’t harm anyone.” I found this quote to be a bit confusing because the US Department of Justice has maintained that online poker is not lawful commerce, which is why it’s restricting it in the first place. And since poker is a competitive game played with money against other people, there’s almost always someone who is, in some sense, harmed when poker is played. I think that even the strongest supporters of poker would admit people are harmed by poker all the time. So, I was wondering if you could clarify your statement.

GJ: Well, by “harmed,” you’re saying doing monetary harm?

NSD: Yes. I think it’s fair to say that not many people who play poker and lose money enjoy the process.

GJ: Well, no I would–Gosh, I mean, yeah, you lose money, but there’s an extent to which you stop playing if you continue to lose money. At some point, you stop, and so, are you “harmed” in such an environment? I don’t know if i would use “harmed” as the term.

NSD: Perhaps I can rephrase. I think that poker is a form of commerce in which people compete to one-up each other and take money from each other and therefore to sort of “harm” the other person. I think that’s a reasonable description.

GJ: Ok, so this is me. I mean, this is just the way my brain functions. On that basis, then, I would veto that kind of legislation because then do you not then give me some legislation regarding high school athletes running the mile competitively because of the psychological harm that they’re going to do to one athlete against another because they got beat? There doesn’t seem to be an end.

I think this is [relevant]: As governor, I would ask people, “How many of you have all seen professional bull riding?” Have you professional bull riding up close and personal?

NSD: Yes, I have.

GJ: On TV or in person?

NSD: In person. I went to the Calgary Stampede.

GJ: Okay, alright. So what you saw was something just–”Oh my god. This is really, really dangerous.” It’s really dangerous.

So, I ask, “How many have seen it?” Well, usually, I don’t know, maybe fifteen percent of hands go up. For those that haven’t seen it, go see it because the government is gonna outlaw this at some point because it’s gonna definitely do harm to those involved. It’s very, very dangerous.

NSD: Just to clarify, you don’t think the government should outlaw bull riding.

GJ: I don’t think that the government should. As much as you might declare it harm, these are willing participants. Nobody is being held against his will.

Two Plus Two

NSD: You and the Two Plus Two Poker Forums have formed quite a strong relationship. Could you describe how this relationship started and what it means to your campaign?

GJ: Well, it could mean a lot. For me to be successful in this campaign, I have to raise a significant amount of money, and this may be an opportunity to do that.4 So, I don’t wanna mince any goals here that we have in mind. You know, put one bet down on me, and you’re not just betting on poker, but you’re betting on the whole notion of liberty and freedom and fiscal responsibility.

I mean, this is the whole package. If this were just about poker, this isn’t going anywhere. If this was just about drugs, this isn’t going anywhere. I would hope if this is about fiscal conservancy, maybe that is what makes it go places. I have a record of really watching the pennies, watching the dollars spent. I was a Jeffersonian Republican as Governor of New Mexico. I really watched the penny. I spent the money like it was my own because it was.

NSD: So, this is a small issue, but the Two Plus Two Forums lost one of its moderators because of the company’s support for you. I suppose he doesn’t agree with your politics and doesn’t agree with Two Plus Two supporting politician in general.5 I believe Mason Malmuth and Mat Sklansky [two of the men behind 2+2] spoke to you about this, and you offered to speak to him. He declined, but why did you do that, and if he’d said yes, what would you have said? [While I asked this question, Governor Johnson indicated to me his knowledge of the situation.] 

GJ: Well, just what were his objections? And maybe those stand up.

I mean, obviously this is his passion too, or he wouldn’t be a moderator online. Why would he not want to advance his passion?

NSD: Well, I would think that he, like you, thinks that the other issues are more important than online poker. So, I would think that he mostly disagreed with the idea of a public forum where he volunteered his time supporting someone with political beliefs that differed from his own, regardless of the online poker issue.

GJ: And what are the political beliefs that I believe in that he disagrees with?

NSD: Well, I don’t want to put words in his mouth.

GJ: No, no, but do. I mean, this isn’t going in your article.

NSD: Well, it might. I guess it’s safe to assume that he probably believes in government intervention to a much larger extent than you do.6

GJ: Well see, that flabbergasts me because it’s government intervention that wiped out his poker.

NSD: But, government intervention… [Governor Johnson interrupts me.]

GJ: In good ways? In good ways as opposed to bad ways? I mean, I hear this all the time.

NSD: And what’s your response?

GJ: It’s great that you can distinguish between good and bad. Obviously, if you were in office you’d pass just the good and not the bad, and I would suggest there’s unintended consequences on all of this stuff, and the best government is the least government.7

The Role of Government

NSD: So, this leads to one of my next questions. I’m sure that we can talk for hours about what you think government shouldn’t do, but what do you think government should do?

GJ: Protect you and I against individuals that would do us harm, whether that’s from a property standpoint or whether that’s physical harm.

NSD: So, for example, contract law?

GJ: Yes, exactly.

NSD: And obviously you think murder should be outlawed and stealing? [Governor Johnson answers affirmatively as I'm asking the question.] But what other things do you think the government should do besides the fundamental things that almost everyone agrees on?

GJ: Well, property–in the context of property. I think you talked about physical harm and contract law. What outside of that–What kind of harm exists besides those two items?

NSD: Well, as Governor of New Mexico, you changed your stance a bit on education? [During the interview, I described briefly what I thought had been his policy on education in some detail, but I had the facts wrong. We chose to leave this out of the interview to avoid spreading false information.]

GJ: Well, here’s the story on education in New Mexico. First of all, I increased education as a percentage of the budget every year I was in office. That was something that I promised to do.

NSD: Did you increase the total amount spent on education as well as the percentage of the budget that it represented?

GJ: Yes, in overall dollars and as percentage, which I think is even more important–percentage spent. But, my third year in office, the legislature proposed to increase educational spending by $450 million. Well, man, that was Alice in Wonderland. There wasn’t $450 million. So, the increase in spending was, I believe, $225 million, which is what I proposed.

When I proposed that, the educational community went ballistic over the fact that I wanted to “cut” educational spending by $225 million, when the reality was, that’s what was getting added to it. Do you see? They come up with a $450 million proposal for increase. My proposal for increase was 225, and they label that as a cut.8

NSD: So, is it fair to say you do think the government should be involved in education?

GJ: I was more outspoken than any governor in the country regarding school choice, believing that, to improve education in this country, we need to bring competition to public education.

NSD: Do you mean private competition?

GJ: Yeah. Well, vouchers. So, in this case, vouchers would accommodate that.9

When it comes to federal government, the best thing the federal government can do to improve education in this country would be to get abolished, and let me explain: The federal government gives each state about eleven cents out of every dollar that every state spends, but that’s fourteen cents that goes to Washington and comes back eleven cents, or whatever it is, and eleven cents comes with sixteen cents of strings attached.10 This is reality. So, if the federal government were not involved in education at all, it would mean more money to the states. It would mean money that never went to the federal government in the first place coming back at you, and it wouldn’t be coming back at you with strings attached.

NSD: To be fair, that fourteen cents doesn’t disappear. It’s used by the federal government.

GJ: It comes back at you, but it comes back with strings attached, where you have to spend more money than even the money you get back, I would argue if you just left education to the states that there would be best practices that would emerge. If you never had to send the fourteen cents to Washington in the first place, if you were just able keep it as a state and spend that fourteen, that’s better than getting it having washed through the federal government.

NSD: Okay, so we’ve established that you think that the government should defend property rights, defend people from physical harm, and be involved in education to some extent, though much less than it is now. What else do you think the government should do? [There's a pause.] Should the government maintain a military?

GJ: Yes, yes. Well that’s the notion of protecting us against countries that would do us harm.

NSD: Do you think that the current size of our military is appropriate?

GJ: No, I think it should be reduced by 43%, and I use 43% because that’s the amount of money that we’re borrowing for every dollar that we’re spending–borrowing and printing. We’re not actually borrowing it, we’re printing as much as 70% of that 43%. That’s the latest figures out of Federal Reserve.11

NSD: You believe in cutting the military budget by 43%, but no more than that?

GJ: Well, in the context of reducing spending 43%, I would advocate cutting military spending by 43% to accommodate that.

Drug Policy

NSD: You’re one of the few candidates for national elected office who support marijuana legalization. What are your general policies on other drugs?12

GJ: Well, when it comes to other drugs, what i advocate harm reduction strategies. The things I think we really care about, which is reducing death, disease, crime, corruption. In a nutshell, it’s as looking at the drug problem first as a health issue rather than a criminal justice issue. I think if we legalize marijuana in this country, I think we take giant strides towards this whole notion of harm reduction and the notion that drugs–Hey, first health, not criminal justice.

NSD: How do you think that legalizing marijuana would reduce harm?

GJ: Well, then people would immediately see that–So, I maintain 90% of the drug problem is prohibition related, not use related. That’s not to discount the problems with use and abuse, but that ought to be the focus. So if you legalize marijuana, I just think giant steps in this whole notion of, well, what’s doing harm?

Why does methamphetamine exist? Is it because it’s the best example of prohibition drug that you can think of? It’s cheap and easy to make, and so the consequences of methamphetamine also disproportionately fall on the poor.

I met with judges in Portland, Oregon when I was Governor of New Mexico. First of all, they came to the meeting, they called the meeting, they said, “We’re just here to support everything that you’re saying because we think that everything that you’re saying is right on.” They said, “We’re not suggesting the following, but if cocaine were legal, methamphetamine users would be using cocaine instead of methamphetamine, and there would not be the negative behavioral aspect of methamphetamine because when people use methamphetamine, they do really stupid stuff.”

NSD: So would you legalize cocaine?

GJ: No. But, there’s harm reduction strategy. So, we don’t know how to legalize cocaine, but… [I interrupted Governor Johnson.]

NSD: What do you mean when you say, “We don’t know how to legalize cocaine?”

GJ: Well, nobody’s legalized cocaine, but what the government could do when it comes to cocaine is it could just be honest about cocaine, which is–Look, cocaine is not going to have a negative behavioral aspect to it, but if you use cocaine, you literally put holes in your heart, and so, for people my age that have been using cocaine all their lives, they’re not alive anymore. They’ve died from heart attacks. That’s the reality of using cocaine.13

Think of the impact of a policy where the truth prevailed on these drugs. What impact would that have on health, on harm?

NSD: I’m a bit confused, though, because you’re saying that you would not legalize cocaine, but you also took a very principled stance before. You said that people should be allowed to do what they want as long as they’re not causing others harm.

GJ: So mixing it with the pragmatism that I hope I also got across earlier, the pragmatism of legalizing marijuana and what that will then lead to when it comes to overall drug policy.

NSD: Are you saying that you wouldn’t legalize cocaine because you don’t think you could or because you don’t think it’s right?

GJ: Well, no. First of all, it’s too much for America to bite off.

If–and I’ve said this before–If all drugs were legal, we would be better off. I am not advocating that, though. I’m not. I’m advocating legalizing marijuana, I’m advocating harm-reduction strategies on all these other drugs. Harm reduction is reducing death, disease, crime, corruption. It’s looking at the drug problem first as a health issue rather than a criminal justice issue.

NSD: I guess I find it hard to understand how you can say that you think the country would be better off if we legalized all drugs, but you’re not advocating that.

GJ: Well, if I were to advocate such, I would never get elected because I think that’s just too much for people to bite off.

NSD: So are you saying that you would do that were it politically feasible?

GJ: The world would be a better place.

When you look at Portugal, which ten years ago decriminalized all drug use–Portugal has 60% of the drug use as that of the United States. That’s on a per capita basis; that’s marijuana; that’s hard drugs; that’s kids, and that’s adults. Ten years ago when Portugal decriminalized all drugs, they did it in response to a heroin epidemic they thought that they had. In the last ten years, they’ve documented a 50% reduction in heroin use.14

Well, this is harm reduction that I’m talking about. So, the reality of what everybody thinks is going to happen hasn’t been shown to be the case in the only two countries which have embarked on this, which would be Holland and Portugal.

NSD: So, I’ve read a lot about your views on the size of the federal government and your views on domestic politics, but I’ve found almost no information at all about your views on foreign policy. Did you have any foreign policy experience as Governor of New Mexico?

GJ: . . .

In part two of this interview, Governor Johnson discusses his views on a wide range of foreign policy issues and his chances of winning the presidency.

Edited on 7/18/2011 7:05 PM EDT: Corrected a factual error in footnote eleven, and reworded the footnote to reflect the correction. Thanks to commenter Scott for catching the error. We apologize for any confusion.
Edited on 7/19/2011 6:27 PM EDT: Added links to part two.


  1. The Governor of New Mexico and most other governors in the United States have the right to a line-item veto, in which the governor can veto some parts (e.g. lines or items) of a bill without vetoing the whole. The President of the United States does not have this right, and the Supreme Court has ruled that it is unconstitutional for the president to have such a right.
  2. For more on the Barton bill, see our article about its introduction or the full text of the bill. For more about pending US federal legislation on online poker, see the relevant section of our useful links page.
  3. Most credit card companies, including Visa, provide customers with a wide range of protections against fraud, theft, and abuse. However, because of the unresolved legal position of online poker in the US, it is unclear how unambiguously legal online poker would be treated by credit card companies. Currently, poker sites typically do not contest many chargebacks from US customers, and they incur significant losses as a result. All current proposed federal legislation to license and regulate online poker bans the use of credit cards on poker sites.
  4. According to the Federal Election Commission’s website, as of their most recent filing, President Obama had raised $45.4 million for his 2012 presidential campaign and Republican front-runner Mitt Romney had raised $18.3 million. Governor Johnson had raised $180,237 as of his most recent filing on June 30th.
  5. The Two Plus Two Forums are largely policed by a staff of volunteer moderators. (Subject: Poker authors Brian “ZBTHorton” Horton, Isaac “ikeHaxton, Karak, and Noah “NoahSD” Stephens-Davidowitz, the author of this article, are all moderators on 2+2.) Moderator gregorio of the popular News, Views, and Gossip forum, where Governor Johnson’s thread is a sticky, publicly resigned, saying, “It seems like Two Plus Two is moving more and more towards focusing its resources on the Gary Johnson campaign, and this is a cause I do not support nor have any interest in volunteering my time towards.” He also accused Two Plus Two owner and founder Mason Malmuth of hypocrisy, citing earlier statements from Malmuth disallowing solicitation on 2+2.
  6. These views are not necessarily those of gregorio or those of Subject: Poker. We contacted gregorio and obtained his permission to publish this portion of the interview provided that we clarified that these views are merely hypothetical. And, of course, Subject: Poker has no position on government intervention in general.
  7. Again, the views to which Governor Johnson is responding are neither those of Subject: Poker nor necessarily those of gregorio.
  8. Governor Johnson’s Wikipedia page discusses his education policy while he was Governor of New Mexico and his battles with the state legislature.
  9. Governor Johnson is talking about a proposed system of school vouchers, in which the government pays for a child’s schooling in a private school or in a different school district. He made school vouchers a major issue in his campaign for re-election in 1998, and it featured heavily in his second-term State of the State speeches. However, the legislature did not support his proposals, and New Mexico did not adopt a school voucher program during his tenure as governor. More about Governor Johnson’s policy of school choice can be found on his campaign website.
  10. The federal government paid for an estimated 10.8% of elementary and secondary education in the 2010-2011 school year. The fourteen cents that Governor Johnson is referring to the total federal education budget, which includes the cost to run the Department of Education, as the money given to the states for primary and secondary education (i.e. the 10.8% or the eleven cents that Governor Johnson referred to), and the money that the federal government spends on other education projects. This is estimated to reach $94 billion this year, or about 14.2% of the estimated $662 billion spent by states on primary and secondary education in the 2010-2011 school year. This money comes from federal tax dollars, not from state education budgets, so it is not clear why Governor Johnson chose to express this number as a percentage of state education spending. The “strings” that Governor Johnson is referring to are federal education mandates, which impose various requirements on the states. It is impossible to accurately attach a cost to most federal education mandates, but Governor Johnson’s sixteen percent estimate is well within the range of common estimates.
  11. The US federal government spent about $3.5 trillion in 2010, but collected only $2.2 trillion in taxes, leaving a $1.3 trillion deficit or about 37.4% of total spending. About $685 billion was spent on the military in 2010. Since the economic collapse of 2007, the US Federal Reserve has twice enacted measures of quantitative easing, in which the bank bought assets by creating electronic currency. The most recent round of quantitative easing, nicknamed “QE2″, started in November 2010 and created a total of $600 billion before ending about a month ago. This equates to about 46% of the 2010 federal deficit, or about 62% of the eight-month federal deficit. This money is used by the Federal Reserve to buy various financial assets, including large quantities of government bonds.
  12. Governor Johnson’s views on drug policy can be found on the drug policy reform section of his website.
  13. Cocaine does not put holes in your heart. However, it can cause heart attacks, which can sometimes lead to necrosis of heart tissue, which may be what Governor Johnson meant. For more about cocaine’s effects on the heart see this article.
  14. Portugal’s drug policy was implemented in 2001 in response to extremely high HIV/AIDS rates in intravenous drug users. At the time, an estimated 0.5% to 1% of the population had used heroin, compared with an estimated 1.2% in the US in 2003. In response, they formally removed penalties for drug abuse, after years of de facto decriminalization. Instead, drugs are confiscated, users are given a summons, and they are sometimes fined or sent to rehabilitation. They also increased clean needle programs and other support programs for drug users. Statistics measuring the effects of this action are questionable because of the difficulty of identifying drug use in the population. Drug-related deaths have dropped, and HIV diagnoses in drug users dropped by 71%. However, reported lifetime use of drugs has risen from 7.8% to 12% as from 2001 to 2007. Reported lifetime use of heroin increased from 0.7% to 1.1% in the same time period. This might be do to an increase in reporting or due to an actual increase in drug use. Reported use of any illicit drug in the last month remained constant at 2.5% from 2001 to 2007, compared with an estimated 8% of Americans over the age of twelve.  Subject: Poker was unable to find the exact numbers reported by Governor Johnson, but since drug use statistics vary wildly with methodology, they are certainly plausible.

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12 Responses to Interview with Presidential Candidate Gary Johnson – Part I

  1. Scott
    July 18, 2011 at 4:06 PM EDT

    Hi Noah,

    Love this guy, who essentially claims to be republican when he is really libertarian. Still, he has zero chance of becoming president and only a small chance of influencing the election.

    Also, I would like to know your exact support for this claim: ” In fact, it is illegal for the Federal Reserve to create money to directly finance the government.” I think you need to check this one a bit more carefully.


  2. Scott
    July 18, 2011 at 5:26 PM EDT

    “However, this money was not used to directly finance the deficit.” – Not correct, you should check your facts.
    “This money is not used to finance the government directly, but rather to buy assets from private companies and individuals in the hopes of preventing deflation and encouraging lending.” – Also not correct. TARP did have programs to buy some assets from private sources, but these were all financial institutions in one form or another.

    The Fed ‘creates’ money buy buying assets from banks (certainly not from private individuals) – the principal source of assets are US Treasury’s which are direct obligations of the US government, although mortgage paper has also been purchased with a haircut. How this process works (buying bonds from banks) is through lending and bank deposits and there is a multiplier effect, which you can google if you so desire. But when they buy directly from the treasury, they are creating money (and hence financing the US government’s deficit). Nevertheless, the Fed has been and remains an active participant in all auctions and as a direct purchaser of government bonds is financing the US government by creating money. I dont have exact figures, but absolutely QE2 led to the Fed monitizing the US deficit through direct purchases of US Bonds from the government (see
    The FED has created actual inflation in the economy for decades using this same process of artificially creating money annually, in a ‘managed’ way, to the tune of about 3% per year, but it accelerated in the last two years due to measures taken to during the financial crisis. The Fed believes that QE2 has created ‘excess’ reserves in the banking system that have not be lent (and this is true so far), and that the effects of QE2 have not created inflation, but helped ward off the potential for deflation. The Fed also believes that they can use the same process of selling bonds to unwind the effects of QE at any time and drain these reserves from the system.

  3. Scott
    July 18, 2011 at 5:28 PM EDT

    “Richard W. Fisher, president of the Federal Reserve Bank of Dallas, has said that the U.S. is monetizing debt through QE, referencing the additional $600 billion created for QE2, “For the next eight months, the nation’s central bank will be monetizing the federal debt.” [72]”

    Here is a direct quote from your Wikipedia citation.

  4. Scott
    July 18, 2011 at 5:51 PM EDT


    Not to belabor the point, but here is the complete Federal Reserve Act:

    Show me where in this Act that the Fed is prohibited from buying debt of the US to ‘directly finance the government.’ In fact, as you will note in ’14 Open Market Operations’ the FED is specifically allowed to buy and sell obligations of the US government at will under the direction of the board of governors. This is a better example:

    When the Fed buys bonds directly from the treasury, it then ‘creates’ enough currency (whether electronic or not, it matters little) to pay for those bonds and deposits that with the treasury. The treasury then uses that money to pay its bills, or the bills of the federal government. So, I am not sure what is the basis of your comment that it is illegal for the Fed to do this.

    You might find this site useful – I use it a lot for American politics:

    • Noah Stephens-Davidowitz
      July 18, 2011 at 6:56 PM EDT

      First of all, please feel free to belabor any point.

      You’re right. That wikipedia article is wrong, and it cites a source that also gets that wrong. Frankly, it’s embarassing that I didn’t stop to think about that.

      I’ll correct the footnote now. Thanks for the correction.


  5. Three
    July 18, 2011 at 7:15 PM EDT

    Sorry to see you wasting space on this guy. He’s polling less than 1% everywhere. It makes poker interests look clueless.

  6. Scott
    July 18, 2011 at 7:31 PM EDT


    No problem and am sorry to shift the focus on something that wasn’t a major focus on your work. But, I am a bit picky when it comes to financial accuracy! Keep up the good work you are doing!


    • Noah Stephens-Davidowitz
      July 18, 2011 at 7:38 PM EDT

      NP, sir. We’re proud of our accuracy, and we appreciate it when people correct things that we get wrong.

  7. Mark
    July 19, 2011 at 2:03 AM EDT

    “So, how much did I compromise being Governor of New Mexico? You could argue that I really didn’t compromise at all, that it was about doing what was right.”

    “Well, if I were to advocate such [legalizing cocaine], I would never get elected because I think that’s just too much for people to bite off.”

    If you’re going to go out there, don’t flinch. It’s not like you’re going to lose anyone that would vote for you because you think cocaine should be legal.

  8. SteveCut
    July 19, 2011 at 4:21 AM EDT

    I would like to thank Gary Johnson for trying to help 10 million potential voters and wish him godspeed in the daunting task of familiarizing himself with the Barton bill. I do hope that Mr. Johnson himself will join the ranks of online poker players when able to do so. His astute mathematical acumen (e.g. reduce the military budget by 43% because national borrowing is 43%) would certainly make him a very popular addition to the player pool. I can say this with my hand on the holes where my heart once was (literally, of course.)

    Seriously, this is a quite splendid interview, with excellent, intelligent questions and follow-ups. Subject: Poker is the nuts.

  9. William
    July 19, 2011 at 5:35 AM EDT

    “GJ: Well, if I were to advocate such, I would never get elected because I think that’s just too much for people to bite off.”

    LOL – he’s got no chance anyway, might as well stand up for what he believes in.

    This was a good read. I like how you kept after him when he tried to dodge question.

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