This is the Cato Daily Podcast for Friday, August 7, 2015.

I'm Caleb Brown.

After the financial crisis of 2008, not much has changed, at least not in a way that might prevent or soften the effects of another crisis.

And now that the Fed has moved more directly into credit allocation, the path back to a coherent

monetary system seems longer than ever.

So says Judy Shelton,

co-director of the Sound Money Project,

at the Atlas Network.

We spoke last week during Cato University.

Why is it that you believe that the global financial system, the monetary system, is set to have a repeat

of what happened in 2008?, I think it's completely without order.

We've lost sight of what is the primary role of money.

It's supposed to be a unit of account. It's supposed to convey price signals in an

accurate way. It's supposed to be a reliable store of value. And we talk about free markets and a global economy and yet if free markets are to work,

you have to be able to make decisions based on the price signal.

If the money unit can be corrupted through the discretion of monetary officials,

it really distorts financial capital flows and you have lots of investment in

unproductive activities and I think that's why we're seeing such a disconnect

between the performance of the real economy and the sky-high

valuations of financial assets in global markets.

Well let's dig down a little bit in terms of this separation between what happens in the real economy and the

valuation of financial assets. Why do you believe that separation has occurred

...