Than wall street she’s here to try to help me make sense of what happened this week hi carol how are you hey glenn great to be with you happy friday thank you happy friday to you okay so i have several things i want to ask you so
Let’s see if we can just tick these take these off here real quick and then if you want to add something uh beyond this i’d love to hear it um we’re two quarters now two quarters of contraction uh they’re trying to say that that’s that’s not a recession that is a recession correct
Glenn i told you and your listeners about this months ago i predicted this is what’s going to happen because the group that is charged with officially declaring recessions the national bureau of economic research or nber gives themselves latitude intentionally of course they’re going to they can’t have
Political spin they can’t extract a fee if we can all just look at the data and go oh obviously this is a recession um despite all of that we’ve all in the financial media in the economic predicting realm everybody colloquially agrees that two quarters of economic contraction is a recession
Because if you have something that doesn’t have a definition people can’t understand it there’s no way to create any policy around it you can’t just have something that that completely has no definition so yes there is is latitude and that is why i predicted given that latitude that they would do exactly what
They are doing now um so the other thing that happened this week where so we we had the announcement we are in a recession no matter what the white house says uh and then the fed increased the rate 75 basis points so we’re up to 2.225 or 2 2.5 right um uh and
At what point does this become uh a stall of the engine do we have any idea at what point it starts to get dangerous are we already there so if you believe the sort of economic theory that you know two percent-ish is the neutral rate that if everything expands at two percent and
The fed funds rate two percent is their target neutral rate then we’re just around neutral right now and it shouldn’t be that much of a concern frankly we had an artificially depressed set of fed funds rates for a variety of reasons and so bringing that back to a
Normalized level isn’t that bad to get down the inflation that they have caused they probably need to bring it up a little bit more but i do think that if we start seeing something that has uh what we fancy people call a four handle on it where
You know it’s four percent or higher gets out of the three range then that’s when you’re going to start really seeing people freaking out and having a major impact on the economy but is i mean i i’m old enough to remember volcker and we had 18 19 interest rates
And that was just from the inflation that we we had jimmy carter it was nothing like this inflation how are we expected to bring inflation down with two four five ten percent inflation i mean 10 interest rates well here’s the reality is that the fed’s tools aren’t going to fix some of the
Issues i mean we have a supply and demand imbalance so unless the fed can stop printing money and start printing oil and printing food they’re not going to fix those areas the only thing they can do is completely jam up the economy so bad that we’re in a massive recession
And then you know everybody’s sort of hoarding their money and that’s how those supply and demand metrics come together but they’re really focused on the demand side not the supply side what we need to be focused on is how do we get more supply in these key areas so
That we balance out that from the supply side not the demand side it’s a rudyard kipling wrote a poem about 100 years ago and the line that keeps coming to mind was we had plenty of money but nothing our money could buy so help me out we’re trying we’re fighting inflation
We can’t do it really effectively like volcker did because it would just choke us to death um and then mansion comes in and we change buildback better into something called the inflation reduction act how can you spend an additional 700 billion dollars and reduce inflation i
Yeah this is like i might get a little aggro here this is making me so angry because we were going to throw a parade for joe manchin he was the one that stopped back broke he was the one that saved us from even more inflation taking inflation to hyperinflation now
When we’re all really happy about then heaping praise upon him he is backtracking and so they’re like we’re gonna go spend a bunch of money to fight inflation but the reality is chuck schumer came out and he said it this is green new deal light this is about
Spending more money on their climate hoax instead of fighting inflation he put it out there it’s in a tweet on twitter that i responded to they’re saying the quiet part out loud they don’t care this is what they’re trying to do and this is why we have glenn i’m
Calling it the great reception so a recession it the great recession was from the financial crisis this is from your wonderful book the great reset this is the great recession this is this is intentional they are doing this to us on purpose yeah it is incredible that uh even john
Kerry came out and said we have to do this we’re gonna have to spend billions and if not trillions of dollars on this uh and that in the end will be an uh anti-inflationary and it’s like that that that doesn’t even make any sense that’s worse than common core math and
They’ve been wrong on everything i mean these are the people everything there is no inflation they told us the way to fix crime was to defund the police they were wrong on kova they’ve been wrong on everything including the energy transition that’s affecting us not only here but in europe and now all
Of a sudden we’re going to say oh you’re going to know how to do this by spending more money i mean it is just basically congress is just theater and money laundering at this point so correct me if i’m wrong historically speaking volcker when he made the tough decision
He made the tough decision to hurt the american com economy to save the dollar and to save the world’s reserve currency and so we had some credibility um i have been worried ever since tarp that the world is going to despise us because we have we have destroyed the currency
Which is destroying the economies of everyone in the world so we can not suffer that’s what we’ve been doing when i heard joe biden say yesterday well inflation but you know there’s inflation all over the world i thought yes because they hold our dollar are we not causing the inflation in germany and
Every place else are we not the root of that problem i think the central bankers in europe and japan and some other areas can share some of the credit but here is the amazing thing and you’re so spot on about volcker you know back when we really were this world’s reserve
Currency and we had somebody like volcker who was trying to do the right thing we had a dilemma the trifens alumni we talked about this before where you have to make a decision do you make decisions based on keeping the world currency stable for the world or do you
Make decisions based on what’s right for the united states incredibly we have done neither we have destroyed the value of the dollar and the purchasing power here in the us and we’ve also created a horrible situation for everybody around the world so nobody’s happy and so yes we’re having inflationary issue across
The world and now because of all these other central banks and the strong dollar we also have a potential debt issue in the emerging markets because all of not only their commodities but their debt is dollar-denominated last last thing i have on my list is we had some inflation numbers today
But it’s not the cpi the consumer price index which is at 9.1 i think it’s something else and i think it is uh shoot i had it written down the pce what it was employer cost yeah employer cost index is what they’re talking about i don’t what is that
One so this is a sub component that’s not really one of the core ways that they look at inflation it’s more of an indicator that’s stuck in the middle of other indicators um but the ones that you know we’re most focused on are the cpi which is sort of the one that the
Headline the consumers focused on the one that the fed is most focused on is the pce which is the personal consumption expenditures uh and that’s a different reason no surprise that hang on hang on just a second that that’s the one that they’re raising the interest rates and doing all these
Things to discourage us from buying things right they need us to slow down the velocity of money correct i mean i don’t know what they’re doing because they’re trying to get us to quote-unquote like you said slow down the velocity money slow down our spending cool demand but then the
Government’s out you know sending money to you know everybody in the world and spending more so i honestly have no idea what they’re doing but yes theoretically that that’s what they’re doing but the pce number is what the fed is going to be focused on it is many percentage
Points lower than the cpi so as that comes down you know in tandem you’re not going to need to see the cpi at three or four for them to feel like they’ve done what they need to do and this is the crazy thing the wall street journal they
Every month they go out and they um interview economists more than half the economists think by the end of next year that the fed is going to be cutting rates again i know this this i read that it is this is all a game and they think
That they know what they’re doing but the reality of what they’re doing is they’re creating these boom and bust cycles that benefit the wealthy and wealth connected that wash out the average investor and transfer wealth from main street to wall street this is all that they’re doing and we have to stop them
It is amazing i look at this chip thing that they spent what another 250 billion dollars on that is corporate welfare so that is taking our tax dollars and giving it to these giant corporations i saw that and i thought all they’re doing right now is impoverishing the little
Person the person on main street is paying the taxes they’re making it so we don’t have any purchasing power we don’t we can’t we can’t go anywhere because of the gas we can’t do anything we’ll start to lose our houses we’ll start to default on our loans on our cars
They’ll be fine with it and the government is now saying i’m your consumer so you businesses you do what i say because i’m going to be buying isn’t that what’s happening absolutely is the bar belling of the classes you’re going to have the complete hollowing out of the middle
Class and the working class and we’ve seen this throughout history before you know at the late stages of empires this is what happens where you get that wealth that’s concentrated in fewer and fewer hands and then you have everybody else who’s poor and nobody else is in
The middle and that’s exactly was my reaction when i saw this i mean not to say that we don’t need to compete with china but these are very well you lessen the red tape exactly you just lessen the red tape thank you thank you but yeah they’re just giving more corporate
Welfare and by the way the elizabeth warrens in the world who stand up and say bad corporations they’re all going along with this it’s bizarro world uh carol thank you so much i really appreciate all your hard work on this and keeping us informed you can follow her on twitter carol j uh
Carol j s roth or you can go to carolroth.com and she’s a writer and and uh working on a new book that i’m very excited about uh you should announce that at some point um but uh she’s also she also writes uh for um the blaze.com
And uh is a frequent guest on this program thank you so much carol appreciate it have a wonderful weekend glenn
