DAVID: UNBELIEVABLE.
EDWARD LAWRENCE, THANK YOU VERY
MUCH.
FOR MORE ON ALL OF THIS, LET’S
BRING IT KEVIN HASSETT, FORMER
COUNCIL OF ECONOMIC ADVISORS
CHAIR, AUTHOR OF "THE DRIFT,"
STOPPING AMERICA’S SLIDE TO
SOCIALISM.
ALWAYS HAPPY TO GIVE THAT BOOK
CREDIT.
>> THANKS, DAVID.
DAVID: TALK ABOUT THE SLIDE TO
SOCIALISM.
I THINK THE MARKET AND VOTERS
WILL STOP THE SLIDE.
THE BIDEN ADMINISTRATION IS JUST
IN FLAT-OUT DENIAL WHAT IS GOING
ON.
SO THEY WILL NOT CHANGE
DIRECTION AT ALL.
IT WILL BE THE VOTERS APTHE
MARKET, I THINK THAT COMBINATION
WILL DO IT.
WHAT DO YOU THINK?
>> WELL, YOU KNOW, I HOPE YOU’RE
RIGHT BUT THE FACT IS THAT
AMERICA’S PRETTY MUCH EVENLY
DIVIDED AND SADLY THE BIDEN
ADMINISTRATION HAS TAKEN THE
POWER THAT VOTERS GAVE THEM AND
ENACTED A WHOLE BUNCH OF
ECONOMIC POLICIES THAT HAVE
DRIFT THE ECONOMY INTO THE
GROUND.
I THINK THE DALLAS FED THAT YOU
STUDY THAT YOU MENTIONED
HIGHLIGHTS SOMETHING WE SEE IN
THE DATA ALL AROUND US.
WE HAVE ABOUT THE WORST ECONOMY
WE’VE HAD BY IN SOME MEASURES A
COUPLE DECADES, BY SOME MEASURES
ALL THE WAY BACK TO
WORLD WAR II.
SO WE’VE GOT HIGH INFLATION,
PEOPLE ARE NOT KEEPING UP.
PEOPLE CAN’T AFFORD TO BUY WHAT
THEY BOUGHT LAST YEAR SO REAL
GDP IS DECLINING.
WE’VE BEEN IN A RECESSION SINCE
JANUARY.
THIRD QUARTER GDP MIGHT NOT BE
NEGATIVE OR A LITTLE POOF BUT
THE ECONOMY IS FLAT AND PEOPLE
ARE WORSE OFF NOW THAN THEY WERE
WHEN JOBE JOKE TOOK OFFICE.
SO HE IS OUT THERE PITCHING THAT
STORY HE IS PITCHING BUT IT IS
INCONSISTENT WITH THE DATE TAKES
I DON’T REMEMBER.
YOU MENTIONED WORLD WAR TWO.
I DON’T REMEMBER WORLD WAR II
BUT I DO REMEMBER JIMMY CARTER.
THAT WAS THE FIRST ELECTION I
VOTED IN AS A MATTER OF FACT,
THE ONE THAT HE LOST AND HE LOST
PARTLY BECAUSE OF THAT MALAISE
SPEECH WHERE AT LEAST HE HAVE
HAD THE HONESTY TO RECOGNIZE
THAT THE UNITED STATES WAS IN A
MALAISE.
INSTEAD FROM THIS ADMINISTRATION
THE SITUATIONS IN MANY WAYS JUST
AS BAD, IN SOME WAYS EVEN WORSE
I THINK IN TERMS OF ENERGY,
ET CETERA BUT HE IS TALKING
ABOUTING PROGRESS AND HOW LITTLE
BY LITTLE THE FOLKS ARE GETTING
BETTER.
I MEAN THIS DENIAL IS VERY
WORRISOME IN MY MIND?
>> RIGHT.
WELL, IT COULD BE A MASTER CLASS
IN POLITICS, RIGHT?
SO IT COULD BE IF YOU LEVEL WITH
THE AMERICAN PEOPLE RIGHT NOW
ABOUT WHAT IS GOING ON YOU GET RUN OUT OF TOWN.
RUN OUT OF TOWN.
DAVID: CARTER DID LOSE, YEAH.
>> YEAH HE DID, IF YOU THINK
ABOUT IT, GO THING BY THING
JOE BIDEN IS MUCH WORSE THAN
JIMMY CARTER.
FOR EXAMPLE, JIMMY CARTER,
PEOPLE FORGET HE STARTED
DEREGULATION BEFORE
RONALD REAGAN.
DAVID: THAT’S TRUE.
>> RONALD REAGAN ACCELERATED IT.
JIMMY CARTER CALLED HIMSELF A
DEREGULATOR.
INFLATION IS NOT AS HIGH AS LAST
YEAR.
WHAT IS WORSE THE IRANIAN
HOSTAGE RESCUE THAT DIDN’T WORK
OR AFGHANISTAN?
IF YOU LIST ONE BY ONE I WISH WE
HAD JIMMY CARTER INSTEAD OF
BIDEN.
DAVID: THE MOST SEVERE CUT IN
PAY AMERICANS HAVE SEEN IN 25
YEARS AND THE TRAJECTORY YOU
JUST SUGGESTED IS EVEN WORSE,
MUCH WORSE.
FOOD ALONE HAS INCREASED 13 1/2%
IN TERMS OF THE IN-HOME FOOD WE
HAVE TO CONSUME.
IT IS REALLY HURTING THE MOST
BASIC NEEDS AND NECESSITIES THAT
AMERICANS HAVE.
>> YOU’RE RIGHT, DAVID AND THE
OTHER WAY TO THINK ABOUT IT IS
IS THAT THE FED RATE HIKES WHICH
ARE OUT THERE BECAUSE INFLATION
IS OUT OF CONTROL AND IT’S
APPROPRIATE FOR THE FED TO DO SO
HAVE YET TO REALLY HAVE FULL
EFFECT ON THE ECONOMY.
SO THE RECESSION THAT WE SAW
OVER THE FIRST HALF OF THE YEAR
WAS NOT BECAUSE OF THE FED
TIGHTENING.
IT WAS BECAUSE INFLATION JUMPED
UP SO MUCH THAT REAL INCOMES
DECLINED SO THERE WILL BE
ANOTHER SHOE TO DROP.
AS BAD AS WAGES HAVE BEEN OVER
THE PAST 12 MONTHS IT WILL GET
WORSE SADLY OVER THE NEXT 12
MONTHS BECAUSE FED POLICY WILL
TAKE THE WEAK ECONOMY, THE
SHALLOW RECESSION LIKELY TURN IT
INTO A DEEP ONE.
VIRTUALLY EVERYBODY WATCHING
WALL STREET IS SAYING THAT.
DAVID: I WANT TO GET TO THE FED
IN A SECOND BUT I WANT TO TALK
ABOUT SOMEBODY THAT IS
OVERLOOKED.
WE TALK ABOUT AMERICAN WORKERS
FIRST AND FOREMOST.
THE AMERICAN SAVERS ARE GETTING
KILLED.
THE 401(k)S ARE GOING THROUGH
A TERRIBLE TIME PARTICULARLY IN
THE LAST COUPLE MONTHS AS THE
MARKET HAS BEEN GOING DOWN.
LOOK SINCE BIDEN CAME INTO
OFFICE, HE DID HAVE THE INITIAL
BUMP IN THE MARKETS I’M TALKING
ABOUT BUT THEN THAT HAS COME
DOWN AND WE ARE NOW AT LEVELS,
IF YOU ADD NASDAQ IN WITH THE
DOW INDUSTRIALS AND S&P, WE’RE
DOWN OVER 10% IN THE MARKETS.
PLUS, YOU ADD ON IT’S A
DOUBLE-WHAMMY.
YOU ADD ON THE INFLATION
KIBBLING WE GET, THE KICK IN THE
PANTS I MEAN, AND YOU’RE LOOKING
AT LOSSES OF YOUR 401(k)S IN
TERMS OF REAL VALUE DOWN WELL
OVER 20%, IN SOME CASES 30%
LOSS.
IT’S REALLY HURTING THE RETIRED
FOLKS OUT THERE.
>> YEAH, YOU KNOW, YOU’RE
EXACTLY RIGHT AND THE FACT IS
THAT HOMES ARE ABOUT TO HEAD TO
THE SAME PLACE THAT EQUITIES
HAVE BEEN HEADING BECAUSE
MORTGAGE RATES ARE NOW SO HIGH.
THE CLOSING IN ON 7%.
AND WITH MORTGAGE RATES THAT
HIGH THEN ALL OF SUDDEN PEOPLE
STOP BUYING HOUSES.
SO HOME PRICES DROP AS WELL.
I THINK YOU’RE PROBABLY RIGHT,
BY END OF THE YEAR, FLOW OF
FUNDS DATA FROM THE FEDERAL
RESERVE, THEY WILL SAY AMERICANS
LOST 30% OF THEIR WEALTH THIS
YEAR BECAUSE OF JOE BIDEN’S
FAILED POLICIES.
DAVID: I THINK YOU’RE RIGHT.
THE FED, LOOKS TO ME LIKE WHAT
THE ADMINISTRATION IS DOING THEY
KIND OF LED THE FED DOWN THE
GARDEN PATH, OH, YOU GUYS ARE
FREE TO DO WHATEVER YOU WANT TO
DO.
NOW THEY’RE ESSENTIALLY SETTING
UP THE FED AS THE BAD GUYS.
THE EVENLY PERSON, ONLY GROUP OF
PEOPLE RESPONSIBLE FOR THE
RECESSION ACCORDING TO THE
ADMINISTRATION, I SEE THAT
COMING IS THE FED.
THAT’S WHAT THEY’RE GOING TO DO.
IS THERE SOME TRUTH TO THAT?
I MEAN IS THE FED, COULD THE FED
AVOID A RECESSION EVEN THOUGH IT
DOESN’T HAVE A FISCAL POLICY
BEING DONE RIGHT BY THE
ADMINISTRATION?
>> YOU KNOW, WHAT YOU HAVE TO DO
IS LOOK AT THE CHAIN OF
CAUSALITY BACK TO THE BEGINNING,
SAY WELL WHO STARTED THIS?
WHO STARTED THIS IS JOE BIDEN
WITH HIS RUNAWAY SPENDING.
THAT CREATED THE INFLATION THAT
HAS CAUSED THE FED TO HAVE TO DO
WHAT THE FED HAS TO DO.
SO YOU KNOW, I THINK THAT IN THE
END RIGHT NOW THE FED IS GOING
TO MAKE IT WORSE BUT THEY’RE
DOING THAT BECAUSE THEY’RE
FIGHTING INFLATION THAT BIDEN’S
POLICY STARTED.
DAVID: YOU DON’T HAVE TO, THIS
IS ONE THING I THINK A LOT OF,
EVEN PEOPLE LIKE LARRY SUMMERS
AND EVERYTHING WHO HAVE PROBLEMS
WITH WHAT’S HAPPENING WITH THE
ADMINISTRATION.
THEY’RE VOCAL ABOUT THOSE
PROBLEMS EVEN THOUGH THEY’RE
DEMOCRATS THEY THINK THE ONLY
WAY TO CURE INFLATION IS KILLING
THE ECONOMY, BY RATE HIKES THAT
PUT US INTO RECESSION, PUT
MILLIONS MORE PEOPLE OUT OF
WORK.
YOU DON’T HAVE TO HAVE A
RECESSION TO GET THINGS WORKING
AGAIN.
WE SAW THAT WITH THE REAGAN
ADMINISTRATION.
ONCE THE TAX CUTS OF THE REAGAN
ADMINISTRATION KICKED IN AND WE
HAD STIMULUS TO THE PRIVATE
SECTOR EVEN THOUGH WITH THE
HEIGHT RATES FROM THE FED YOU
HAD RECOVERY RIGHT AFTER THE TAX
CUTS KICKED IN WAS LOW INFLATION
RECOVERY, OR LOWER INFLATION
RECOVERY.
>> RIGHT AND THE ECONOMICS OF IT
IS JUST THIS, WHEN THE FED
TIGHTENS IT RAISES THE COST OF
DEMAND.
SO IF YOU WANT TO BORROW MONEY
TO BUY A CAR IT COSTS MORE SO
YOU BUY FEWER CARS.
IT LOSSES RAISES THE COST OF
SUPPLY.
IF YOU WANT TO BORROW MONEY TO
BUY A NEW MACHINE IF YOU BUY A
FACTORY THAT COSTS MORE TOO.
SO DEMAND GOES DOWN, SUPPLY GOES
DOWN BUT DEMAND GOES DOWN FASTER
SO INFLATION STARTS TO BE UNDER
CONTROL.
IF YOU HAD SUPPLY SIDE TAX CUT,
OTHER SUPPLY SIDE POLICY WHILE
THE FED WAS HIKING, SUPPLY WOULD
GO UP, DEMAND WOULD GO DOWN,
THEN THEY GET CLOSER TO WHERE
THEY NEED TO BE TO HAVE PRICES
IN LINE.
SO IT’S A BIG MISTAKE TO HAVE
MONETARY POLICY DO IT ALONE.
DAVID: FINAL POINT I HAVE TO
MAKE WITH YOU, ON BEN BERNANKE
GETTING THE NOBEL PRIZE FOR
ECONOMICS.
I WENT BACK, I WAS KIND OF
INTERESTING WHAT YOU THOUGHT
ABOUT BEN BERNANKE’S POLICY.
I FOUND A LETTER YOU AND OTHER
ECONOMISTS WROTE TO BEN BERNANKE
IN 2010.
THAT WAS 12 YEARS AGO.
YOU WERE TALKING ABOUT THE
LARGE-SCALE ASSET PURCHASE PLAN,
THE QUANTITATIVE EASING AS IT
WAS KNOWN, YOU SAID WE DISAGREE
WITH THE VIEW THAT INFLATION
NEEDS TO BE PUSHED HIGHER WHICH
IS PART OF THEIR PLAN AND WORRY
ANOTHER ROUND OF ASSET PURCHASES
WITH INTEREST RATES STILL NEAR
ZERO OVER A YEAR INTO THE
RECOVERY WILL DISTORT FINANCIAL
MARKETS AND GREATLY COMPLICATE
FUTURE FED EFFORTS TO NORMALIZE
MONETARY POLICY. IT LOOKS LIKE WHAT YOU WERE
IT LOOKS LIKE WHAT YOU WERE
FORECASTING CAME TRUE.
I HAVE TO SAY, KEVIN, WHAT YOU
WERE FORECASTING IS HAPPENING
NOW?
>> I HAVE TO SAY BEN BERNANKE IS
A GREAT ACADEMIC.
HIS ACADEMIC WORK I WOULD GIVE
HIM NOBEL PRIZE FOR THAT.
THEY MENTIONED HIS FEDERAL
RESERVE POLICY THERE, IS OPEN
DEBATE WHETHER HE DID THE RIGHT
THING.
I WORRIED INFLATION WOULD BE OUT
OF CONTROL AND BE VERY HARD TO
GET BACK UNDER CONTROL.
I THINK THAT IS WHAT WE’RE
SEEING NOW.
I THINK UNUSUAL THING THEY
SPECIFICALLY MENTIONED ACTIONS
OF A POLICYMAKER IN THE NOBEL
PRIZE WHICH IN THE PAST HAS BEEN
A PURELY ACADEMIC THING.
THAT IS THE THING THAT JUMPS OUT
AT ME.
ON ACADEMICS.
HE WROTE SOME REALLY, REALLY
IMPORTANT STUFF.
DAVID: WE’RE STILL NOT SELLING
THE ASSETS.
WHAT YOU WARNED ABOUT 12 YEARS
AGO, WE’RE STILL NOT DOING IT.
THAT IS PART OF THE PROBLEM,
RIGHT?
>> THAT’S RIGHT.
THAT’S WHY INFLATION IS OUT OF
CONTROL.
DAVID: YEAH.
>> YOU KNOW, I THINK THAT HE
WOULD ARGUE IT WAS AN EMERGENCY
AND THEY WERE TRYING IN THE FOG
OF WAR TRYING TO KEEP US FROM
HAVING A GREAT DEPRESSION.
I DON’T KNOW IF WE HAD A GREAT
DEPRESSION.
I WOULD LET STUFF DEFAULT.
MAYBE WARREN BUFFETT WOULD OWN
MORE THAN HALF OF THE ECONOMY HE
DOES.
DAVID: THAT’S TRUE.
>> PEOPLE BUY STUFF IN DEFAULT.
THAT IS HOW CAPITALISM WORKS.